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

Join hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at Razorfish, and Scot Wingo, Founder & Executive Chairman at Channel Advisor, as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.
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Now displaying: March, 2019
Mar 28, 2019

EP168 - Bombas founder David Heath

 

 

Bombas CEO David Heath

David Heath is the CEO and Co-Founder of Bombas (@bombas), a fast growing, energetic e-commerce apparel company, focused on making the most comfortable socks in the history of feet, while helping those in need. Founded because socks are the number one most requested clothing item at homeless shelters, for every pair they sell, they donate a pair to someone in need.

In this interview, we cover a wide range of topics including the Bombas founding story, their SharkTank experience, the DTC business model and growth challenges, social marketing, innovation, the brick and mortar.

If you’re inspired by the Bombas story, they are hiring!  FREE SOCKS included. https://boards.greenhouse.io/bombas

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

Episode 168 of the Jason & Scot show was recorded on Friday, February 22, 2019 from the eTail West tradeshow in Palm Desert, CA.

http://jasonandscot.com

Join your 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.

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this episode is being recorded on Friday February 22nd 2019 live from the etail West trade show,
here in semi Sunny Palm Desert
I’m your host Jason retailgeek Goldberg and unfortunately Scott is trapped on a plane so we’re going to talk about him and assign him a bunch of action items.
One of the top trends we always cover on the show is direct to Consumer Brands and so we’re excited to have on the show one of the top DTC companies in the apparel industry,
so joining us from bombas we have the CEO and co-founder Dave he.

David:
[1:01] Thank you.

Jason:
[1:02] Hey Dave thanks very much for being on the show a long time listeners will know we always like to get things started by getting a little bit of the background about how you came to your current role can you tell us a little bit about your bio.

David:
[1:13] Yasso born and raised in New York and I don’t think we need to go back that far,
but I so actually my dad’s not to renew are so very early on it I knew that entrepreneurship was something that I wanted to do was very inspired by him and watching him build a business from,
the basement of our house to you know something that I think we’re all very proud of I need to go to school for entrepreneurship at Babson College and then upon graduation.
I always found that every job I had I can end up working for a smaller and smaller and smaller and smaller company ultimately landed at a media company where I was the seventh employee Rana clean up where I ended up meeting one of my co-founders Randy Goldberg,
it’s been 6 years there we developed our relationship and kind of always shared his mutual passion for wanting to start a business together one day.
We developed business plans for numerous ideas ranging from services to pack the product,
ultimately it was kind of one of these moments of Fate that I think let us to where we are today I have Andre scrolling on Facebook back in 2011 I came across a quote that said that socks with the number one most requested clothing item at homeless shelters in.
I immediately wasn’t like oh my God there’s some business to be had here I just kind of stopped me in my tracks and I was like what you said something that.

[2:38] I’ve never spent more than a second of my life or day thinking about is perceived as a luxury item for somebody else,
so I remember walking over to Randy’s desk and I remember sharing the quote with him and then over the next couple weeks we both found that we just couldn’t shake this idea,
obviously followed entrepreneurship and the other Trends were happening in the startup World in,
Tom’s was in there 50 or business and growing incredibly fast where we park her just announced that they had launched about six months prior and kind of bug and reinvigorated the conversation around the one for one business model cuz when more be first launched.
They were one for one I wear that was kind of their remains take they’ve more position to be a fashion brand these days babe.
That’s some kind of the light bulb went off and we were like, what if we created a company where we donated a pair of socks for every pair of socks that we sold to help him solve this problem in homelessness.
Remember like okay well what type of socket we integrate how are we going to create,
no carve out our place in the in the market and so we spend the next two years looking at your doing research and development trying every pair of sock on in the market and ultimately landed on was.

[3:55] I’m much more comfortable and Innovative kind of everyday casual
athletic sock so at the time Brands like happy socks and Paul Smith we’re coming out with these brightly colored dress socks and your funky dress socks for men wear a trend
Randy and Iraq start of guys we were jeans and sneakers to work everyday.

Jason:
[4:14] And you are tube socks up till then right.

David:
[4:16] Oh yeah totally totally you know Walmart all packed everything,
and so what we ended up realizing was that there was this large gap in the athletic Market where you guys are.
12 pack from Walmart or you buy these individual premium price products that were really aimed towards the runners and cyclists and basketball players and hikers that were costing 15 1820 $38 a pair
and so I was like what did Linnaeus a $38 pair of socks from a $2 pair of socks.
So all of this technology and Innovation seamless toe arch support comfort footbed you know high-quality fabric new articulation in the heel.
Amounted actually a lot more Comfort just an everyday wear but I was realizing that all of these sock companies are marketing all of these Innovations just towards the enthusiast.

[5:04] I’m kind of waiting our light bulb moment our our our our our moment way so what if we took all those Innovations and marketed towards the mass Market consumer and,
pitched in a while seamless toe is better for standing on your feet every day as a nurse or a firefighter or a baker or you know,
mom chasing after her kids or a school teacher.
And that’s bombas was born and we launched the company back in August of 2013 and here we are five and a half years later we’ve just donated I believe our 15 million pair of socks.
Team has grown significantly we continue to double your over here and sales yeah it’s been a wild ride.

Jason:
[5:47] That’s awesome I put your key like there’s some pesky details that might have stopped some people from pursuing that like expertise in like design or Manufacturing,
Jane or a bunch of stuff I didn’t hear you mention having a having a rich background in.

David:
[6:04] Did not did not at all.

Jason:
[6:06] Yes I’m sort of curious was bombas able to happen because,
those things are now easier to Outsource in your able to leverage that or did you guys just jump in and learn how to do stuff and make some mistakes and kind of grow the expertise organically.

David:
[6:20] Yeah I think it was I think it was a mix of luck and the fact that we didn’t have any expertise that allowed us to create a product that was I think far superior than anything that we had,
ever experienced it say the lock portion of it was so when I sat down.

[6:36] Early early days of the idea I sat down with my dad and I was like I got this idea for a sock company,
yeah expecting him to be like that’s one of the worst ideas you’ve ever had but do you think I’m leaving your godfather was in the sock business for 40 years and I know that you did really well by himself can’t go talk to him,
so I called him up and it turns out that in the late eighties and early nineties use presidency of Gold Toe,
I’ve been left Gold Toe to start a private label stock manufacturing company which ended up being one of the largest private label stock manufacturing companies in the world so.
Falling into kind of expertise and somebody who literally knows every single supplier of socks in the world and knows how to manufacture any type of sock in the world,
was a massive advantage and something that I totally totally a tribute to lock,
the component that wasn’t luck that I think once we started the R&D and design phase,
with the fact that we had no bias and no snow we weren’t skewed by any preconceived notions in manufacturing and I remember.
Very vividly talking with one of our manufacturing Partners I said to them I said I want to put a seamless toe on this athletic sock.
They’re like why would you want to do that like that’s wildly expensive you only find seamless toes,
ano Italian made dress socks because they’re so thin you can actually feel the same they’re like on athletic socks you can’t feel the same cuz they’re cushiony was like I can feel the same like I want to go to see what’s the weather like.

[8:06] Do you know how expensive that is on a per pair of socks be so it’s like I don’t know you know how much and they’re like $0.10 a pair and I was like.

[8:13] 10 senses like I can makeup 10 said that my godmother was like no I used to make socks for less than a penny a pair whose like this is why they’re pushing back on this but I think the fact that we were.
Truly designing this coming at it from a consumer’s perspective,
and not coming out of her manufacturing or you know resellers perspective of oh well we need to create a product that has this much margins that weekend we didn’t think about it we were just like let’s create the best product possible,
and see if people like it and so that’s how we came to me.

Jason:
[8:42] That’s awesome and I feel like in some ways that’s not an uncommon story that the disruptors one of their their core advantages as they don’t have the bias of all these preconceived notion of the the people that did them before in some ways II,
I feel like I’ve heard similar iterations of that story from like the Tommy John guys or you know a bunch of other even Dollar Shave Club like where,
if you would come from Joe at it probably would have been harder to imagine Reinventing the.
Product like that exactly so early on the model was that we’re going to put the socks on a website and sell them direct-to-consumer and was that,
the the idea why did you guys ever kick around being a wholesale supplier of socks or.

David:
[9:30] I mean so rainy and I came out of the online media business so the online space was I think what we knew and I think we were the most comfortable I believe we also thought that you know early days we,
United States early days when 2013 doesn’t exactly feel like early days of the internet when you think about it it’s only e-commerce is only been around for you
20 + years or so yo it’s still relatively early days I think we thought that you know.
For building a brand around another wise commoditized product like a pair of socks we we need the,
the unlimited landscape and palette by which the internet affords to tell deep and enriching stories and produce really great content which is ultimately what builds great brands are at least we believe build brick builds great brands,
and similar let you know it’s like the Dollar Shave comes over all that you know I think having.
The ability to use things like video and deeply Rich photographic content and copy in a way to talk about a really small product that on a store shelf,
would only got you know what to in of packaging space to tell a really how do you tell a deep story like that and so I think.

[10:48] Are whole thesis early on was,
let’s see let’s put our content in a brand that’s why we launched an Indiegogo we created a 3-minute video about the socks
I only like I don’t know if you’re going to sit through a 3-minute video about Sox ultimately they did and I think the product in and our brand resonated,
with the customer base and I think that’s kind of sad our path and I think we always talked about.

[11:14] Wholesale at some point we just launched a small wholesale Partnerships last year with Nordstrom’s Dick’s and QVC.
But I think it wasn’t I think we felt like there was so much room and still believe they’re still so much room to grow,
online where you kind of really got to have that one-on-one relationship with the customer around and otherwise.
Forgotten or not thought about product like a pair of socks.

Jason:
[11:41] Yeah and Sumter is one of the things a lot of DTC companies talk about as one of them obviously,
is your name higher margins when you’re selling direct to Consumer but a big thing is customer intimacy and you get like the immediate feedback what what’s tough customers like what they didn’t like you hear directly from the voice of customer inside there’s always this hypothesis
we can iterate our product faster we can make our product better because we’re directly connected to the customer as opposed to just turn feedback from the Walmart by or something
curious if that’s marketing speaker that’s true why are your sock the same as they were the day they want or have you have they evolved in integrated based on customer feedback.

David:
[12:21] I mean I think for us I mean it’s it’s not marketing-speak I think a lot of the.
The ways that the company is involved and you know I wouldn’t say that we we changed our core product in a whole lot of ways.
I mean without without any sort of you guys think we’ve nailed it I think we got it pretty right but things like.

Jason:
[12:44] He’s doing a little dance while he’s saying that just so you know.

David:
[12:46] I remember one one very distinct moment through customer service we kept getting a lot of Outreach from people saying why don’t you make socks that are size 13 to 15.
Or like extra large that’s got to be a small market for us you know who’s really going to buy them.
And we were like now is put it on hold us but I’ll hold it like customer service to be like we keep getting request for extra large socks when I okay fine will produce a small number of extra large socks,
in kind of summer are course I also,
and it ended up representing 10% of our overall business I mean in the in the industry on a whole I think it represents someone like three to 4%.
But I didn’t because we were there listening to the market and then serving that market where owning a much larger share of that because we’re producing a product.
Foreign otherwise probably over over seen part of the demographic it’s that was one instance and then another one in the incense is wise we,
earlier cuz I’m sure you hear from a lot of other d2c brands or Scrappy so like all of our photo shoots for basically like.
Me and my other co-founders we happen to be for white males and we got a lot of feedback from from customers of color being like.
Yeah why don’t you give him.

Jason:
[14:07] Why can we get a good looking feet in that yeah yeah.

David:
[14:09] Baphomet why don’t you representing African-American feed or or or more people of color and we were like you’re absolutely right we should you know it wasn’t something that.
We had really thought about but we took that feedback and then immediately our next photo shoot we have wide range of diversity and and now it still continues to be one of the pillars
of all of our photo shoots and content going for is it we we always learned from an eye of inclusive inclusive and diversity
which I don’t leave our socks around ass or shelf I don’t know if we would ever,
if we ever would have gotten that feedback all the way back to us but listen to our customers and having that relationship with them we can react and say like yeah.
We talked up on that one we oversaw it like shame on us will fix it but we can’t we have the ability to fix it pretty rapidly going forward,
and the response we get back from those customers is like,
the extra large like I can’t believe you listen to me you were going to buy a ton and then you know the people who are proactive on the photo shoot stuff,
they wrote back at me and be like wow thanks for listening to me and and implementing change.

Jason:
[15:13] Yeah you know it that’s interesting cuz again I feel like I’ve heard that similar story for my Andy Dunn bonobos and it’s like the exciting take away from that for me is.
The because we never had the relationship with that brand that was sitting on the shelf to even care.
And said they tasted like that a better connection with you give you feedback might have started off as a negative that it turned into this this positive opportunity to get closer to the customer.
So first place I can buy this oxygen to go go I’m guessing you’re going to tell me you were oversubscribed and that was a wildly successful launch.
And so the back in 2013 you got all right now I got to stand up a website to sell these things and in 2013 it might not have been totally obvious what the best way to do that was so I’m just I know you’re not the CTO but I’m just curious.
Did you guys decide to build your own site from scratch did you find Shopify back then and you remember what you did.

David:
[16:09] Yeah so I actually had the fortunate nature of two of my co-founders were former creative agency guys so.

Jason:
[16:17] Hold that against him as a creative agency guy.

David:
[16:20] It’s been a it’s been a massive massive advantage that have them on our team so they both built design number of websites for clients in the past so it wasn’t.
It wasn’t that foreign to us and I think that having worked at this Media company we put a lot of microsites and kind of manage that aspect for four different clients as well,
so at the time we were like well we want to be an Enterprise company one day so you know obviously going to go with Magento because Magento runs out of the enterprise software and they had Magento community in Shopify was,
not I mean they didn’t have + when we started and it’s amazing to see how how much they’ve grown over the years but.
Probably one of the worst mistakes we made was not launching on Shopify to begin with you have a Gen 2 ended up being a bear super resource-intensive you know,
from all of this press bike so we got on Today Show Good Morning America Shark Tank every time our website would crash and it wasn’t until we got on Shopify eventually,
that we’ve never experienced any of that pain going forwards I’m a big big big Choppa by fan.

[17:33] But yeah I mean it wasn’t signed up we would put up with magenta community site within about 30 days post our Indiegogo campaign we really wanted to capitalize on queue for sales that year and yeah I was Bruce.
Relatively easy against again again borrowing against some of the.

[17:54] Bumps along the way I think managing managing the site was not something that was super foreign to us.

Jason:
[18:00] Sure sure and don’t beat yourself up I feel like the path forward was very much not clear in 2013 if you like them I feel like the options of four for the incubation stage of clear.

David:
[18:12] I couldn’t afford demandware and so.

Jason:
[18:14] Fast forward your next problem what you should be on when you’re selling a billion dollars a year and socks like the answer is unclear at the moment to buy,
but that’ll be a first world problem I think to solve so then remind me how far along you were when you went on Shark Tank.

David:
[18:30] I so we were fourteen months at 11:13 months old so we launched in August of 13 and R episode.
Aired September of 2014,
they did reach out to us in April that it’s our Indiegogo campaign I think one of the things most people don’t know is that there is an actually there is actually an active casting department at Shark Tank which is.
After being on it an hour and I watch the show pretty regularly I now see you there like yeah we had a successful Kickstarter I’m like they found them.

Jason:
[19:09] Fishing they weren’t that what they didn’t stumble upon.

David:
[19:10] So so what are the tips of your they want to get on Shark Tank have a really successful Indiegogo and Kickstarter campaign cuz that’s where they look to reach out to us an April kind of thought of it as like a laugh to begin with her like really like we want to do that like,
like I guess what’s the harm and went to the went to the interviewing process and you created the videos and flew out there and film
and then you fill him in there like.

[19:36] Cool with you may or may never hear from you may or may not ever hear from us again if you do will let you know like a week or two before your episode airs,
don’t plan on anything basically in the meantime run your business is normal and so we were in the middle of fundraising at that time and so,
no I was like man if we are going to be on Shark Tank like,
I want to be able to like use this as leverage to like raise a better valuation but ultimately we closed the round about four weeks before the episode aired
we got the call and then I cure episodes good are in 2 weeks
not a whole lot you can do at that point we staffed up significantly on customer service cuz we just did it now luckily I talked to my friend over Nick over at plated who been on
and he was like Overstock customer service he’s like that’s the one thing like that you can actually do before you,
go on air everything else is he can’t buy more inventory can’t fix the website you know just going to kind of cross your fingers and hope it all goes well,
so yeah we hired I think 30 customer service people and ended up I think’s going up to like 50 that weekend cuz it was just so overwhelming.

Jason:
[20:51] It’s in his crazy that you get so little notice there’s an earlier iteration of that phenomenon like Oprah’s West Wendover used to be on
and literally by the the end of Oprah’s run she had a full-time team that just helped those aren’t for entrepreneurs like Harden their business to get ready for the show airing because.
She put them out of business.

David:
[21:13] Yeah yeah you can actually crush a business.

Jason:
[21:15] Intermountain my senses shark tank is a lot more there now then it sounds like like I do like that you get more notice than 2 weeks now is that not true or okay.

David:
[21:23] I think so I mean at least not from what I what I hear look at the end of the day ABC is trying to reduce the television show.
I think they obviously have interest set you know they want to see their their entrepreneurs succeed but at the end of the day they have to protect.
They’re their IP and make sure that nothing leaks in advance and yeah they really want to control you know.
What businesses are going to be on in and in the messaging around then I think,
there’s probably too much liability on there and 4 if they tell you too far in advance is probably going to lie that you’re going to tell somebody and then it’s going to end up in the Press somehow like I think the Press would really give a shit about,
like cool your man with long with nine other brands but.
You know I hope you know I hope no like ill will against them and neither our interests are two different things but we’re trying to run a business and they’re going to reduce television show.
Is partner’s past Shark Tank ABCs been incredible I mean you really do become part of the ABC Family when you when you close a deal with a shark in,
you know you got on Good Morning America you get on The View and they put products in you know the Bachelor and dancing with the stars and they do a lot of cross-promotion across their platforms.

[22:43] So they’ve been they’ve been really fantastic since them but in the early days they’re just like you got to run your business.
Cuz I also think they don’t want it cuz I’ve also advised the number of other.

Jason:
[22:54] Oh yeah don’t ramp up like you’re going to die.

David:
[22:57] And I have to say that like I’ll say you have to prepare for the best-case but expect the worst.
Because I’ve seen people who bought hundreds of thousands of dollars worth of inventory and then they do like $10,000 and say us.
It’s no telling what it’s not like Oprah where I think it’s a little bit more Oprah endorses it it’s probably going to go through the roof if you go on Shark Tank with.
Alarm clock that fries bacon how many of those are really going to sell.

Jason:
[23:26] One right here but I take your point.

David:
[23:27] I volunteer.

Jason:
[23:31] Yeah I tell you I tell you get it I know you’re in the ABC family so feel free not to, but like I feel like early on there were some entrepreneurs they were smart enough to say hey this is a great customer acquisition opportunity and I don’t really care if I get a deal and I feel like one of the the secret things that that ABC is done to combat that is
they now like they charge a piece of equity just to be on the.

David:
[23:53] They don’t actually anymore now so they did that for the first five seasons but actually,
Mark I think threatened to walk off the show because he felt like it was to turn good businesses from coming on the show right cuz if you got a,
10 or 20 million dollar business you’re not going to walk on this phone and give up Equity car blondes without knowing really what the outcome is going to be in so.
Look I think the way that they try to combat that.

[24:22] I think anybody will realize and admit I mean I could M you even being on it yeah it’s a great obviously exposure opportunity but what I will tell you in the research that I did going on to the show.
From the like six or seven brands that I talk to.
The people who ended up getting deals ended up having higher success rates from immediately you know airing the episode than those that don’t I think there is a little bit of that Oprah effect where the customer validates.
The product or the business if a shark actually invest in it versus if they down is a truss a month,
I’m sure there’s probably a number of cases where people have seen Monumental success Following the show just from the exposure from our standpoint we were really like we want to create it we want to do a deal because we know that all kind of guarantee
higher degree of success once we are and then also say following that being a part of the ABC family and then kind of the value that we’ve gotten since then and obviously having a shark in our corner,
yeah I certainly certainly paid for itself.

Jason:
[25:29] That’s awesome and I just wanted something which I truly appreciate so remind us you were funded and who who was your.
Daymond John who sort of in the space so that was,
probably an aspirational shark to get I always chuckle in this particularly I feel like comes to play with like Robert and Mark is.
I have a sentence that like in general the sharks are looking for good deals right like inside other very often is an argument that that you should give away more Equity than you might to.
Traditional funding source and part of their argument is always we’re going to bring all this support and expertise and technical help and and Mars always oh and I’ll take care of all your website and all that stuff
and as we now know from falling a bunch of these usually what that means is on the throw you on shopping and I’m like.
That could be good advice I’m not sure how much Equity I would want to give away for that advice alone so I’m always curious to hear from sharks that they feel like they’re the they got more value than just the cash from there,
there shark.

David:
[26:35] I mean in our case it’s really been a level of mentorship
you know I think Damon will be the first to admit and he always says he gives us a ton of accolades he’s like let these guys understand e-commerce way better than I do you know he understands the wholesale and brand-building side of the world but,
there were moments where you’re we were talking about going in the new product categories are going into wholesale and having him as a sounding board.
And I think that that’s why each of the relationships are super unique thing in our relationship it’s been.
Mutually beneficial because it we were two business guys that come from startup world would come from the online background can we knew how to build a brand.
We need to kind of build and scale online we had to do digital marketing so we weren’t there calling him every step of the way being like how do we do this how do we do this how do we do this how to do and in some instances you know I think there are.
More inventors are than entrepreneurs or like I came up with this really cool idea and think of my garage.
Are the first thing about starting a business and for them the advice of go on top of eyes like they wouldn’t even know which I was I was so it’s hard to.
Argue you know somebody doesn’t know something and they got to a path of there with the path of least resistance.
Yeah what is the value.

Jason:
[28:01] It’s a view from an expensive mistake like absolutely,
and I think it’s so a I sit there with a box of popcorn and risking no personal Capital heckling that show all the time and one of the things I feel like is really involved is all of their perspectives about,
the value of various channels right now if you like early on it was like oh you might do direct-to-consumer until you could get a wholesale but whole sales only way to get scale and I feel like more recently and I’m like damn John in particular he’s reference
did he learn from you guys and I feel like like I said there was at least one show where he mentioned like as a result of my experience with people like you,
I’m now a lot more weary about that wholesale model and a lot less excited about it and I think it even says he’s liked it at his own business,
based on some of this morning so that’s it like you should be getting some Equity back I think that’s when he calls I’ll tell him.

[28:55] Yeah so so that is totally awesome.
One of the things that we see with a lot of direct-to-consumer companies is based on your value proposition there’s a certain Market out there that’s really easy to acquire right in.
That’s says the market could while they vary between different kinds of businesses.
Whatever it is you launch you grow really fast you get to that point like we’re in the old world if you’re opening Gap stores it might have taken you 5 or 10 years to acquire all the customers that were predisposed to love you
today you get all those customers in the first 6 months and so you get this nice first Spike but then most companies,
hit this Plateau where the new customers stop being quite so easy to acquire and so I’m always curious for for folks like yourself of kind of,
in my perspective gone by that first raunch like like did you go through that and then what what if you had to do and how do you think about things differently about acquiring customers today than you did back in your Indiegogo Shark Tank like.

David:
[29:59] Yeah so how how much time do I have okay.

Jason:
[30:03] The recorder will be out for 12 hours.

David:
[30:05] It’s a great question I think I think it’s obviously something that any d2c brand is constantly thinking about right when is this is when is this going to run out I think for us you know.
There are there are number of levers that we continue to Paul that allow us to continue to acquire customers profitably on first purchase and that’s always been our kind of marketing.
Principal and guidelines from day one is a we were never going to chase LTV you saw what it did other companies you know you saw that over paying on customers early on that you thought we’re going to repeat
didn’t repeat yo ended up
tanking the company sue you are always thinking okay as long as we can focus on some of the core metrics that will define success in the business which are.

[30:52] Produce a high margin products as long as you got high margin then you can you’ve got a lot of dollars to work with then contribution margin on on aov so if we
start to reach a plateau in terms of being able to acquire that customer how can we raise a OVI you know one of the
key things that we did for the beginning we used to be a singles only company that we moved the packs the day that we moved to pack sorry you if you went from $36 to $60
since then we’ve introduced higher-priced product so we’ve got Merino wool and you know ski socks and
bar product mixes as is grown from a merchandising perspective than our aov is like $86 so we’re constantly finding ways to combat,
yo the inevitable growth of cost-per-acquisition on a customer base is so this year when we introduce a new product categories that all have a much higher price point hopefully will raise its over the $100 mark,
simultaneously we’re always looking to optimize channels and I think one of the things that people are people under value,
or they don’t think about and it’s one of the things I constantly advised some of the early-stage startups that I either investing or mentor.

[32:03] Is the power of creative.
Really really really good creative can actually lower CPAs sum when we introduced to our our million pair video campaign
original you’re like okay this is just me a thank you to our customer base will produce this video not really expected to go anywhere and then our CMO is like,
I want to test this in marketing or like okay fine potestas in marketing but it’s always like a 2 minute long video or like no way this thing is going to work online,
it’s scaled so rapidly we were getting like CPAs in like the $9 for a few months were getting like low team CPS,
are the time when we are averaging a thing you are average CP is probably 40 or 50 bucks the time significantly drop that campaign ran.
Over a year until it started to see fatigue I think that videos to date is over a hundred and fifty million views probably attributable to close to,
10 to 15 million dollars of Revenue off of that one single piece of creative and so.

[33:10] That was that was a real eye-opener for us we’re like how we need to constantly be reinvesting in in creative and sweet built out this.
Full basically internal agency model which is nice cuz two co-founders from Regency people you have a lot of that skill-set internally but we develop.
So much creative more constantly pumping it into the marketing field you know and 90% of it.

[33:35] This garbage you know it doesn’t work but the 10% that does well you kind of start to distill down and distilled down into still down to the power I think of e-commerce is that,
are being able to see when you put money behind an ad be able to see what performing and why it’s performing in on what audience base is it performing well then you can try to replicate that across similar audiences and then tweaked it,
and as long as that engine and you start to build you know that engine up and start a leopard the data you can start to become really really smart about the way.
We also have to be willing to take risks is one piece of creative that we came up with last year our laundry back guarantee we’re basically said.
Never lose it one of a pair of bombas in the laundry will replace it for free did horribly on Facebook.
And our CMO is like well I think this is such a great campaign I got such great press coverage like let’s put it on TV.
And I was like why are we spending any more money on this piece of creative it did terribly on Facebook why do you think it’s going to do well on TV,
and miraculous agents really really well on TV so you know I think the ability to kind of create content tested iterated but also be able to take risks on where you’re publishing that content,
with an eye again towards those metrics.

[34:52] Is for us would what is allowed us to continue and also diversifying channels I think that was the other thing I think realizing.
Early on it take 90% of all of our spend was on Facebook,
our budget continues to double every year on Facebook by Facebook I think represents 40% of our overall spend today.

[35:13] TV represents a large power podcast audio direct mail I mean every single of these channels add up.
Yeah direct Mills great CPAs hard to scale it you know it doesn’t scale like TV in Facebook,
but it gives us a really really competitive CPA is so having the overall mix bring the overall cost for a cost for a position.
Facebook is higher these days but as a blended mix that’s all we really care about while we also in one of the other advantages of our businesses,
kasaks a replenishment item,
naturally and we have a very very high repeat Ray and repeat is what ultimately drives the profitability of the of the company,
Zack gives us the ability to reinvest into new channels and.
Yeah I got not every businesses as fortunate or set up the way that you know our margin structure is or some of the repeat rates but.
What’s a lot of Cisco.

Jason:
[36:09] That’s why you would spend some time picking the right product categories suicide note that that seems like one
path to success has to be really smart about your Performance Marketing and and do great executions and really agonized unlock trade even try lots of different things and learned that’s one way to go is to just spend like a drunken sailor
and then I hope to get a choir to go public before anyone notices so I’m just saying for listeners to pads you choose.

David:
[36:39] I would recommend against the ladder pass.

Jason:
[36:41] I would too but like more.

David:
[36:42] Super super stressful yeah I think those are fewer and farther between I think if you look at the Acquisitions that Walmart made by mod fast forward 70 million dollars and they raised 75,
I don’t know I don’t think anybody really did well on that deal.

Jason:
[37:00] I think the only one that wasn’t a value acquisition was yet for sure.

David:
[37:04] Yeah I mean I owe dark bonobos was was in there somewhere.

Jason:
[37:07] I think it was close to like One X Revenue.
Which it like I would argue I’d like to get a lot more but that’s where you may not be closed yet what we shall see.
Once I take you didn’t mention but I feel like I have not been in a in a car in the last year and not have you remind me about the seam in my socks is it is radio or really affected part of the.

David:
[37:33] Killer yeah yeah podcast Radio audio serious all the way across the board that continues to be one of our largest growing,
are fastest growing channels by spend I think we tripled,
tripled spending audio over the last two years represent probably 15% of our overall spend now.
Yeah we can meet at 8 it’s a little bit more hit or miss I think it’s like TV and then you’ve got to find the channels that resonate for you and there’s not,
unless we will find a podcast that does really well for us and then I think we saturated over time and then it stops performing so it’s kind of move on audio two kind of mining for gold tonight might find you know
one that does really well you dig really deep and then the other one the other mine
dries up and you got to find something else but across-the-board audio does pretty well but it’s time-consuming for sure cuz you got him that it you know it’s you got to create the spots.

Jason:
[38:35] Podcast in particular one thing that podcast from notorious for his like the attribution model is kind of tough.
You Tennessee products that are like really fast direct sell direct all the action and it’s usually you’re cracking attribution based on like a URL or promo code is that how you guys look at podcast or do you feel like you have some sense for.
Building in that kind of thing.

David:
[39:00] Like if anybody I think I think if there was anybody who figures out how to do multi Channel or multi-touch attribution in e-commerce well I think they would.
Yeah I think they would be the next multibillion-dollar company honestly we were lying on a pretty easy.

[39:18] Way we do we do how’d you hear about us surveys and yeah we cross metric that against the data coming through the coupon codes for the sights but,
what you’re fine and yeah I think the big maybe it’s not a big secret but I think,
what most companies do is the same offer that you’ll get by Just landing on their website is the same offer that the promote within a podcaster on a radio show.
So what we end up getting is a lot of people just type in bombas. Com and see the promo offer 20% off your first order and then they just go through that.
What we find is we got probably,
a four times after bution on the how did you hear about a survey when we overlay that data so if it was $100 CPA office specific podcast will come down about 25 bucks.
Once we kind of overlay that how did here but you know we’re in so many channels now it starts to become really challenging like did they first learn about us some podcast was that the last one touch point of entry into how many times today
you know see us on Facebook or television or you know Direct Mail which was the channel that ultimately got them over the hump
this is why were I think.

[40:32] Monitor Channel by Channel acne or cost-per-acquisition to look at efficiency I think the thing at the end of the day that we really really care about it’s just overall cost per acquisition across all channels
that’s that’s truly the one metric that allows us to know whether we’re on the right path or not.

Jason:
[40:48] Got it so that ends up being your sort of next best dollar calculus is
is customer acquisition cost with that makes perfect sense that’s a perfect to my next question you mentioned earlier in the show that you’re just starting to pile at some some wholesale partners and I’m curious.
Are you thinking of that is a separate channel in separate piano and just evaluating the ROI from that channel on its own or are you thinking about,
that exposure in those those high-traffic retailers as a customer acquisition marketing tactic as well.

David:
[41:20] Yeah I think it’s I think it’s a mix of both I think that when I.
You know when I eat when I look at the future of the company and we have plans to be a billion dollar company in the next 10 years.
I don’t think that the rate at which e-commerce is growing,
will we be able to necessarily do be able to do a billion dollars of Revenue just online and look if you like fashion over or proving that you know you can do seven hundred million dollars of Revenue online cuz I got things up first for a,
branded only retailer Nan Marketplace retailer to be doing those kind of numbers I think I think more and more brands of get there but.
When I look at our strategy and kind of diversifying where we’re going to get growth probably need to be a little bit more strategic about it and not going to put all my eggs in one basket and so I still see you,
a large opportunity and also assume there’s a lot of other brands that are in our space I look at Stan’s you know.

[42:21] Over a hundred million dollar your company predominantly at wholesale so when I look at that I’m like okay well apart of the market share you know can I take you know how big can bombas be not necessarily competing against ants and when we
interview our customers the majority of our customers are coming from Brands like Hanes for the loom
your jockey there they’re buying up rather than buying over.
And so when I look at how big of a market share those brands have at retail,
Mike well if we’re doing this online we surely should be able to carve out a nice little business for us at wholesale that will just add to the revenue stack over all but.

[43:00] Interesting lie enough when we launched at Nordstrom’s dicks at Nordstrom’s and Dick’s specifically,
we were over indexing pretty significantly against every other sock in the category,
and remember I was like I can’t believe you know I knew that we were confident that we were going to be successful at at retail or wholesale but,
I didn’t think that we would be two to three times the sell through rate of of the next best-selling sock in the category and I remember sitting out with our private Equity partner and they’re like.
Will you realize there’s not another sock brand on the Shelf spending $40 a year on marketing and I was like,
all right so I think that we’re benefiting at wholesale from a lot of the radio ads and TV and stuff that we’re thinking is all direct response
what is actually having a lift at wholesale as well because there’s brand recognition if you’ll rocking through the store is there
yeah maybe they’re listening to us in the car and then they get into a Nordstrom’s like alright that’s the brand I just heard about I’m going to buy a pair of those
I don’t think we ever kind of really thought about the the overlap effect.
Are online or online marketing I just did Eric Woods would have in the offline world.

Jason:
[44:14] I’ll put their clothes in the show notes so people can see him,
you know you talked about hitting that like billion dollar threshold and you say like how many direct-to-consumer like native brands have gotten a billion dollars and it’s it’s pretty small right,
and then you go all right well what about the traditional House of brands that dominate the retail shelf the VF Corp sayings like how many billion dollar brands of a built in the last 10 years smaller
so you know where all the new 10 billion billion dollar run rate brands are coming from the retox.
It’s cat and Jack its lights to Target to lunch 5 billion dollar brands in the last 2 years Kroger has billion dollar brain is crazy.

David:
[45:03] Gary Wright coming out of Aeropostale.

Jason:
[45:06] Yeah so there is this to me there’s something to like.
And I don’t like using private label cuz I actually think these new brands are our evolution of private label it’s not just a cheaper version of the national brand on the show.

David:
[45:20] They put like brand thinking and jolly.

Jason:
[45:23] Microcytes they do all these things but you think about it what the common denominator of those Brands is.
That retailer has the same customer intimacy that our direct-to-consumer brand has they know the customer to have a direct relationship and then they have us the scale visibility and low customer acquisition cost.
Retail some you know if or do I give all that infrastructure has already been amortize somewhere else and so it is like I do and I say you like man,
part of the equation for digitally native Brands to get to billions of dollars probably means some you know some blend of that that brick-and-mortar presence is.
So this is all been great I do just in case I was stupid enough not to ask any of the right question is there anything that you feel like you’ve learned in this run that would surprise new entrepreneurs are new direct to Consumer brands that,
that you’d care to share with us.

David:
[46:21] Yeah I think I think one of the biggest piece of advice that I got really really early on for one of my friends who worked at Tom’s was the.
The ability to focus our main focus on a relatively small product set.
When I remember when we had done like $500,000 in sales those like we’re killing it Riley sales in her first six months we need to be producing shirts and underwear and sweatpants and sweatshirts and he sat down and he was like.

[46:52] We at times is that we sold the first we sold one silhouette in five colors for the first I think like four years I am built like a multi hundred billion dollar company off of that he’s like don’t underestimate.

[47:05] How small you are or don’t overestimate how small you are.
Compared to like the larger population and we’re over a hundred million dollar brand today and I
still and now I’m not surprised by you no bite as much when I meet people in there like oh I don’t know I’ve never heard of bombas before I cuz I was it just like more humbling at this point where I’m I have to assume
that nobody else has heard of us despite our size and even though I think that puts it in respect that you can be a brand over a hundred million dollars,
go to the middle of the country and ask people at Warby Parker is our guarantee most of them are like I never heard of Warby Parker I think I remember of somewhere and I was like oh Casper mattresses,
what’s a Casper mattress and I like right you live outside your like New York in LA and you know some of the bubbles that we live in
and yeah these Brands don’t penetrate quite as deeply
as you as you may think there are that’s what brands are thing like Target or able to you know it’s been up brands in a much easier it cuz they owned those customer bases across every single Geographic and demographic,
Physicians I would say don’t like don’t overestimate.

[48:18] Your size and stay focused on the one thing that you do really really really really well and frost I was producing socks and selling them online that’s why we didn’t get distracted by going to wholesale we didn’t get distracted by producing other products
here we are five and a half years later we still just sell socks,
and I still think that we’ve got hundreds of millions of dollars more Justin our core product category just online.

Jason:
[48:42] That that is awesome and don’t forget to get out of the New York l a bubble sometimes figure out what the customer in Muskogee wants Muskogee is in Oklahoma,
people Walmart frequently talked about like that’s the prototypical Walmart customer at Muscogee random facts on the Jason and Scott show
so we’re running out of time I want to get one last question in when you and I are back at the show five years from now you have any sense for how the the market in the world might be different if you have a view for the future of,
of Brands and like do we have the same assortment of direct-to-consumer and wholesalers and things that we have today.

David:
[49:25] I think there will be a might have been anything there’s going to be some consolidation I think I think it would be great if,
I think there’s so much efficiency to be had by rolling up some of these e-commerce Brands together by centralizing marketing centralizing back office operations,
I think Andy at Walmart that was kind of their you know what he was charged with I’d love to see him pull it off.
If not him I think there’s I think somebody should should come into the space and and kind of wrap up a bunch of these big Brands to make them even bigger.

[50:02] So that’s what I’m kind of hoping for over the next five years and,
I bet you will also start to see I’d like to hopefully see some more Acquisitions in the space that aren’t that better,
not billion-dollar Acquisitions right I think you know a hundred million two hundred million dollar Acquisitions for the small the native deodorant company right I think those are,
in the end the next round of entrepreneurs that I’m meeting interesting Lee enough are all in the product categories that they’re all developing.
Are not sitting down being like I’ve got the next billion-dollar idea I think they’re saying that I mean like,
I see an opportunity to carve out a 40 million dollar you know Market in this direct-to-consumer space and hopefully somebody will hire us for a hundred hundred twenty million dollars and I think that’s the right mindset of this next round of entrepreneurs you don’t need to go out and raised
50 to 300 million dollars of capital to build this Behemoth or and that’s going to take oatmeal a world domination and be the next P&G,
yeah I think I think we’ll start to see a little bit more of a fragmented space and smaller smaller fundraises and smaller a relatively smaller acquisitions.

Jason:
[51:13] Interesting in that lights up.
I think we talked about the fact that I got our business can be a great business for a bunch of employees I can solve a consumer problem and the challenges,
which businesses in that size is they don’t offer the return on investment for the traditional VC model and so if you build your company based on that VC model like that BC does not want you to see.

David:
[51:38] We could have a whole nother podcast about vcu’s and where I think their place is in building direct-to-consumer Firenze versatile.

Jason:
[51:45] So that’s that’s kind of what I was like in the short version of that like you talked about raising less when you say raising less do you think that’s raising last from the traditional funding sources or do you think that’s a newer funding sources.

David:
[51:59] I mean,
you know I use us as an example we were we raised $2000000 to seed funding in 3 million in our and haven’t raised a single dollar ever since we raised four million dollars and total and built a hundred billion dollar company in 5 and 1/2 years at Super profitable.
It can be done right you don’t need to go out and raise $50 hundred million dollars to build a hundred billion dollar company is like that that’s like to me is like asinine thing k,
answer this next wave entrepreneurs I think they’re looking at margin or looking at cost-per-acquisition they’re looking at contribution,
they’re looking at the financial is in a much more surgeries way and they’re also not just looking at online they’re looking at omni-channel they’re being a lot more strategic about how they’re bringing products to Market and you know how they’re acquiring customers and realizing that,
there’s a subset of Angel Investors and there’s a new wave I think of you to see entrepreneurs like myself and Andy and you know Jeff reiter and all these other due to see CEOs that are now investing in this next wave of companies and saying
you don’t need to go raise 20 million dollars from you no first-round or any of these other big you know no knock on them I just think that.

[53:06] They serve a great purpose in writing in funding Technology based companies that require massive amounts of capital that don’t
have 90% margin profiles that shouldn’t you know that that don’t generate cash in the first year but like if you’ve gotten retail brands have been being built for the last hundred years without.
Massive amounts of VC funding because if your business is set up correctly.

[53:31] As a consumer business you should generate profit on your product like it it sounds crazy to be like stating that as a fact today but like your.
Fundamentally if you have the right model setup your business should generate cash and that cash at scale should be able to fund growth I don’t know.

Jason:
[53:50] That’s a wildly controversial position I’m sarcasm fully intended totally agree and I
that’s a great place to leave it because we’ve done it again we blown through are a lot of time making some people stay at the gym a little extra long for this episode which I like.

David:
[54:05] Look at this excerpt Rhapsody.

Jason:
[54:06] Exactly I got nose I need them if folks have some comments or questions about the show feel free to jump on our Facebook page will continue the conversation there as always.
If you really enjoy this episode we sure appreciate if you jump on iTunes and get us that five star review Dave if folks want to connect with bombas or follow some more of your thought leadership is there a place on the internet that it’s best to hang out are you a Twitter guy.

David:
[54:31] I’m not at it I’m actually not a social media user much to my communications Apartments Chagrin but.

Jason:
[54:38] I can put your mobile phone number in the show note so that would be better.

David:
[54:40] Founder it’s out there somewhere I get a lot of random phone calls from.
Bender’s but no I mean by myself, we’ve got to buy me something on Instagram that’s what the kids are using these days but I’ll plug that we’ve got 55 open positions the company right now,
incredible company culture so if you’re interested in a job in New York go on our career pages and definitely.

Jason:
[55:07] That is awesome and that that best Pat there is the Gear Page on bombas.com will put that in the show notes as well Dave really appreciate your time and really enjoyed our conversation until next time happy commercing.

Mar 21, 2019

EP167 - Instagram Checkout Hot Take 

This episode is a hot take on Checkout on Instagram feature.  We cover the main features, details about the closed beta, potential pros and cons, and a recommendation for brands thinking about selling on Instagram.

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

Episode 167 of the Jason & Scot show was recorded on Wednesday, March 20th, 2019.

Join your hosts Jason “Retailgeek” Goldberg, Chief Commerce Strategy Officer and Scot Wingo, CEO of GetSpiffy and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

New beta feature – Google Automated Transcription of the show:

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this episode 167 is being recorded on
Wednesday March 20th 2019 I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-host Scott Wingo.

Scot:
[0:40] Jason and welcome back Jason Scott show listeners
yesterday Facebook announced an exciting new feature for Instagram called checkout on Instagram those marketing Geniuses over there so today we wanted to give you our hot take on that.

Jason:
[0:58] I am excited to talk about that Scott but before we jump into it you are officially podcast cheating on me now.

Scot:
[1:07] I am I am you know we need full disclosure I told Jason I was going to do a podcast use very supportive
so we have an open podcast relationship if Jason wants to do a podcast that’s fine but I really know he doesn’t have time to
so when your Chief Commerce retail e-commerce strategy officer don’t have time for one podcast baby
new podcast is really kind of a spiffy thing so it’s the future Vehicles so I was framework called vehicle 2.0 where we talked about
what’s eclectic are changing car ownership electrification an autonomous vehicles so if any of those things are interesting to you at over the vehicle to. Get spooky., and you can find a new podcast would love to bring some Jason Scott show folks over there
another funny thing is we got a call a couple weeks ago from Lyft they’re having a big event in Houston it’s a rodeo to Sunday your.

[2:10] Find out your first review and 30 Day Rodeo can you imagine a lot of people that go to the
just a lot of radio and
so we didn’t experiment which is pretty interesting we did a kind of driver rewards thing where we set up right near this rodeo and lift would send messages out
two drivers that were doing a lot of work on their Network and giving free car washes so that was fun we wash over 400 vehicles in a pretty short 3-day.
It was three days around but it’s really time or in the evenings so
does a lot of car washing soap not it’s exciting to partner with companies like Lyft there are also in their IPO process if people are interested in IPOs the lift.

[2:57] Roadshow is available it’s really cool by 30 minute video I think it’s well worth your time
you go to Retail Road show.com the SEC makes companies now publish their Roadshow
and it’s a little known fact that they do that so I can go out there and do that it is only up there for about a week so we’re recording this on the 20th and I think I’ll probably be down by the
3rd or 24th so rachaelrayshow.com to watch Lyft IPO it’s a really cool another aspect of what looks spelling
so that’s what’s going on in my room.

Jason:
[3:30] That is very cool you in one of your first podcast episodes for vehicle 2.0 you broke down the Lyft s-1 filing which was also very informative and interesting.

Scot:
[3:43] Yeah yeah and unkind of swing that back over here diepio pipeline is is just bursting with with all kinds of
convenience really goodness so we could lift in there Ubers rumored to be in the pipeline instacart Postmates are also candidates and then
as he sings come out we’ll be covering all the distance cop show if they’re little more relevant than this was.

Jason:
[4:09] Yeah in sign up for a long time listener G of course to know that I used to be a rodeo clown and I can tell you those 30-day rodeos are exhausting you are super sore by the 30th date.

Scot:
[4:21] Your Barrel by the end of your Barrel your rubber Barrel this is all dented.

Jason:
[4:25] Exactly fun but yeah there’s actually a lottery for which Clown goes in the barrel every day so you’re not generally in the barrel all 30 days.

Scot:
[4:33] Wow what to do a whole episode Deep dive on Jason’s rodeo clown.

Jason:
[4:38] Exactly
that one that would be super interesting and I did get a chance to listen to several your podcast they were super informative I’m right up to the point where you have gas so I’m I’ve done a full dose of Scott wingo and I’m excited to
to hear from I think the CEO of smart car.

Scot:
[4:56] It’s exhausting God doing it on you cuz I’m not used to talking so much.
I usually get like 5 minutes out of 50 and now I have to like there’s a lot of a lot of space to fill I miss you.

Jason:
[5:09] I bet you I got to we having a cute version of that problem
and then the last thing before we we jump into it I am too busy to do another podcast but to be clear it’s what makes me too busy to do another podcast is my job as the audio engineer for this podcast.

Scot:
[5:26] Yeah I learn from that we have we have a ghetto person for that.

Jason:
[5:34] Thank you for not saying like confident person.

Scot:
[5:38] Not nearly as good as you are but they have a lot more time to work on.

Jason:
[5:42] I was I was a little jealous about that aspect that I’m excited and I’m a subscriber.

Scot:
[5:48] Cool let’s talk about Instagram so if you’ve been living under a rock Instagram is a very popular social media Network driven by pictures of the kids in my family have a rule
when we get we’re at a restaurant
this doesn’t apply to Applebee’s or anyone basic but if we’re at a fanciest restaurant no one touches her food until we instead because
instant or it didn’t happen so that’s what I’m talkin about tonight so Instagram is very popular as a refresher it was acquired by Facebook
for a huge at the time record-breaking billion dollars in 2012 looking back from 2019 most people feel like that was quite a seal and other stuff so
show history there was a reminder that that Facebook owns Instagram.
Ceaseless jump into the announcement I know as the chief Commerce strategy officer you probably about this for a while what were the highlights.

Jason:
[6:55] Yep before I jump in that we always like to have useful tidbits on the show and so I feel like the the valuable one for this show is going to be that there are actual,
psychological studies that have proven that when you take pictures of your food before you eat it you actually enjoy the food West.
I’m super sorry.
To share that with you but I feel like the Wingo family could actually be enjoying your meals a little bit more if you weren’t interested in them. I’ll put a note to those studies in the show notes and you can decide.

Scot:
[7:25] I’ll try that with my kids but I think it’s actually more correlated to the number of likes your free picture gets sick.

Jason:
[7:31] Yeah Isis I suspect that that is true and who cares if you enjoy your food if you get new new follower,
yeah so this is obviously a feature for Instagram that for a while Instagram has had the ability to pin products to organic content.

[7:52] So you you can have some hot spots on photos and click that hotspot and there’s been a vehicle where you could sort of Click through
2 e Commerce site that had that product so it would take you out of Instagram to the mobile version of the,
the Brand’s website to look at a product detail page in in most cases and so what the what they’ve done here is they’ve eliminated the need to leave the Instagram app and go to the e-commerce site so you now get a
a native product detail page in Instagram
can let you do attribute so you could like selected their shoes you could select a color and a size and then you can add it to carts
and then there’s not really not add to cart they’re sort of just a checkout button because you’re only allowed to buy one thing at a time and when you check out you enter,
your your name and address and your payment information and they will ship you the product,
so essentially Instagram is becoming your favorite thing on Marketplace wedding letting,
primary Brands and in most cases at the moment did you need a Brands sell stuff natively on the platform they’re paying undisclosed.

[9:10] Take radar feature to Instagram and the Hope from Facebook Sandpoint is,
we have people like in this visual platform that are doing a lot of product Discovery and had a lot of high buying intent and now we’re dramatically reducing the friction to convert that buying intent into
purchases.

Scot:
[9:32] I have I’ve been busy washing cars and haven’t had a chance to look at experience I know I looked at the launch Partners a lot of them were in the fashion category that in fashion we have the age-old problem of of styles and colors
I have they saw that or do they just kind of plan on that neat have a different PDP for each.

Jason:
[9:52] No no they do they have a dream you drop down so you so you can select a size and color
they a little bit about it’s a closed beta at this point so there’s 22 Grande selling
if you’re a brand interest in selling the you can’t apply or sell right now
yeah but you can have up to five products in one piece of Instagram content this is only organic content so this is not an ad format so you can.
Certify visibility for this content you have to be publishing content that that a lot of viewers are already consuming and they say that the way they selected these 22 initial.
Partners are folks that were already heavy users of the Instagram platform and we’re getting a lot of Engagement and we’re already tagging their content with product and so
you know that apparel and Beauty category did it heavily skewed towards apparel and Beauty it’s mostly digital-native Brands you know some of the.
You know so it’s it’s the Warby Parker’s and the Unicorn clothes.
There’s some laundry stuff like Prada Nike and Adidas to me are the big mainstream manufacturers,
there on the platform but there’s also like Burberry and in the oscardelarenta and revolve clothing some folks like that.

[11:21] Yeah so they do let you do those attributes. General question what they there are some from my perspectives,
limitations to what they do let you do on the product detail page and I’m actually going to hold off on.
Hitting those now cuz it we are going to come in and walk through some of the.
The the pros and the cons at least as you and I see them but you know we’ll put a link to their actual announcement and I’ll try to find,
a product what are the limitations is this only works in the Instagram mobile app so it’s only on a mobile it’s only a nap but I’ll try to list a product so that you can click through it yourself
they do have a video demonstration on their on their blog announcing it so you can kind of watch a video of someone checking out.

Scot:
[12:10] Call is it IOS and Android or did they just pun.

Jason:
[12:13] Yeah it’s all the platforms that other mobile platforms that are Instagram supports it is also only in North America right now.

Scot:
[12:19] Okay yeah and then
I should actually know this but do you know so let’s go back so there’s been a long history of social networks trying to kind of Mary e-commerce and frankly a lot of success what are some of the historical highlights of
biscuits have been tried that you recall.

Jason:
[12:41] Yes it is it it’s an interesting conundrum there’s been a lot of efforts at what I’ll call the social commerce in the US,
like a particular bunch of iterations and sort of social by buttons and none of them have really been very successful and yet there are Platforms in particularly China by throughout Asia
where this this Paradigm is super popular in heavily adopted and so for a long time we’ve always wondered are.

[13:12] Eastern consumers just fundamentally different than Western consumers are they even more digitally native and Savvy in China and therefore ahead of the US consumers and so this will eventually catch on or you know it is the,
are the experiences that the Pinterest and Facebook have tried.
Fundamentally inferior to the experiences that that we chat and and others have done in China like.
Don’t know the answer but I can tell you that Facebook launched e-commerce on the platform in 2010 and there was actually a pamper store where you can buy your diapers on Facebook back in 2010.
That really didn’t go anywhere and in the subsequent 9 years.
They’ve they’ve dropped a lot of Commerce capability some that wasn’t adopted and it’s been sort of abandoned and others that are that are still utilize but aren’t you don’t fall short of actually letting you do the transaction.

[14:14] And so you know I think like 2014 that they wants to Facebook buy button.
Which is you know not not in service today but they also wants things like collection ad formats which were like a,
Commerce oriented ad format that let you have multiple products in a single ad,
in 2014 and that that so is used today if you know it doesn’t let you go all the way to the by,
in some non us markets Facebook actually lets small sellers host or friends on Facebook and they’re they’re powered by Shopify.
So that’s interesting in some markets.
Course in 2016 they made a big push to doing Commerce in the Facebook Messenger platform and there’s some.
Some examples of that being useful but that certainly doesn’t you know have.
Have brought engagement and you know their competitors have had similar challenges to Pinterest as as.

[15:17] You know incrementally added shopping features like Rich pins and shoppable pins and Shop the look but hasn’t really you know been able to do transactions on the platform.
Twitter had the the buy button for a little while and killed it Google has some shopping for mass that had buy buttons in it then aren’t aren’t.
You know hugely successful and Broadway deployed so there’s a checkered past here and it’s,
going to be interesting to see if now is the time that works if Instagram is resolved some of the fundamental
challenges or you know the timing is just right I have my own Theory which I I promise to reveal by the the end of the podcast.
The you know,
one of the things that most of these efforts have in common and I I think I did notice this about the the Instagram one is if they do get successful one of the Whitney in ways they envision
brand being able to publish their content to the platform is through this company I I think I’m familiar with Kyle Channel advisor.

Scot:
[16:26] Yeah yeah yeah so I was
as surprised as you are to see jamas are there so I’m not involved in the day-to-day but you know the usually when someone needs a Marketplace integration Channel that’s what it’s called
and then Spirit of of kind of.

[16:46] Open the other partners that were announced where Shopify and Bigcommerce which are more kind of SMB e-commerce platforms so there it’s not like an option where you say hey if you want this widget to show up on your website you can also make it shoppable on,
Instagram and then more of a competitor to channel advisor is called Commerce Hub there more
XML you Dropship e but a lot of similar kind of connections that we have them so they announced kind of the for lunch partner Sarah
Channel visor was excited to to the apartment I actually don’t know so I was going to ask you earlier I’ll swing back that,
when Twitter first came out the buy button we got in this really big argument with them because
they just wanted a retailer to put the Spy button up there and tell them inventory one time and then they would keep track of it going forward I said well
that’s okay but you see these retailers have all these pools of inventory so,
it’s very easy for you to get in an oversold situation because you know on on Tuesday March 1st when the retailer said they had a hundred of these widgets.

[17:52] Then here on the 20th and they have zero days do it listen to us and turn off it end up being kind of a
Calamity and they had to go back and figure it out you know how the inventory kind of checks are done on the sir they kind of,
get the better systems will do you can either sink inventory I’ve been kind of constantly update it,
I or you can do kind of call back when something’s about to be out of the car is she going to say hold on one second let me go back and verify I still have this widget in stock do you have any idea on how that’s working.

Jason:
[18:21] Yeah it’s a great question I don’t have super detailed.

[18:31] Sort of architecture understanding of the solution I can tell you that all of these 22 vendors have bespoke Integrations and they specifically mentioned that they did Integrations with,
customer service and with OMS in so what that means is.
Like they say they do have some sort of robust automated way to talk to the order management system of those individual sellers.
And it in the one thing that’s interesting to me very often went a platform like this watch as a service.
By the way they they they do an integration with like one or a few popular platforms and then they pick beta partners that are only using those platforms.
That does not appear to be with what Instagram did they pick 22 brands that were popular on Instagram and figured out how to integrate with all of them and so my suspicion is.
Some of that these Integrations are likely more robust than others and so.
You know it wouldn’t surprise me if the higher volume sites is like the Nike and Adidas there’s probably a real-time Perpetual inventory system in there with her it’s pull or push I don’t know.
But it’s not going to surprise me if.
A few of these Brands you know are doing that integration via you know file sharing and in nightly uploads or something like that and and could have some some real disparity on availability of they ever,
ever had a product go viral or something.

Scot:
[20:00] I know I’m speaking for listeners when I told us out here what would be really helpful Jason is if you could do some experiments for a so you can go order between one and three hundred items from let’s say I’ll pick a random on here
Prada and then let us know what your your your rate of receiving goes in and out of stocks I think they’ll be super useful.

Jason:
[20:24] I would totally do that but I’m afraid that that that this purchases would come out of my Star Wars budget which would be tragic.

Scot:
[20:30] You have a very large Starbucks Star Wars budget.

Jason:
[20:34] I think the parts going to be expensive.

Scot:
[20:38] So do you think this is going to kind of finally bring that Chinese level of of Engagement and activity to the marriage of Social and e-commerce.

Jason:
[20:51] I don’t so so to be clear like I actually think this is,
probably a good step forward I think Facebook and Instagram were smart to do this and I think in certain circumstances that makes
sense for the brands to take advantage of it so I I think I could have some adoption I think it could be more successful than any of those.
Serta previous efforts that we that we highlighted earlier in the show but at the same time I don’t think this solution as is hits the sort of.
WeChat level of of a shopping engagement.
I don’t think this is going to end up being a primary selling platform for any Brands and I would certainly argue.
It should not be a primary selling platform for any of these Brands it ought to be.
A smart sort of secondary platform the brands leverage but not the primary way that there.
That they’re looking at getting their product in the hands of consumers and so in that way I don’t think it’s going to have the same kind of adoption that some of the.
The really big brands have had success with in China.

[22:08] But I will like so if you know in the way I got to that is kind of just thinking through the pros and cons of this experience in there are some clear benefits to this right so I mention early on.
That Instagram is very much a discovery experience right in there the.
There you know there was a great quote earlier this year and now I’m I’m spacing on and who was from that I want to get.
Attributed to Katrina at 6 fix that like Google saw Amazon solved.
Buying but ruined shopping.

[22:49] In the gist of it was essentially that e-commerce has gotten really good at the transactions of trading goods for for currency but that we haven’t really figured out how to do this sort of.
A surprise and Delight of browsing for stuff in discovering stuff you didn’t know you wanted and in the modern digital era in North America the two platforms that scene.
To do that sort of serendipitous Discovery the most are Instagram and Pinterest.
Enso adding Commerce to a platform where people are already doing a lot of browsing and Discovery experiences.

[23:29] Makes a lot of sense and it it frankly fills in a gap like there just aren’t that many consumers that are.
Shopping for designer clothes by you know thumbing through Pro detail pages on Amazon.
You know I know Amazon would like to change that but at the moment that’s just not the case so I think it’s it’s super smart and important that this is a discovery experience-based.
Platform,
you know we’ve talked a lot in the past on this show about the mobile Gap that you know the whole shopping audience is moving from laptop to mobile phones but they actually convert much poor on mobile phone,
are mobile websites they convert really poorly on apps they do better but almost no retailer or brand can get a meaningful audience with her app that almost all cases the app has very poor reach and so you have this problem.

[24:22] Bad experience on web small audience on mobile apps and Instagram is a potential perfect solution to that it’s a nap.
With a huge a highly engaged audience so it you know it it potentially can be that that solution to the mobile Gap,
like all marketplaces one of the big things it’s bringing to the party is a bunch of eyeballs right and so there’s a lot of traffic on Instagram that you get to monetize if you’re participating in this.
And you know there’s a lot of brands that even though you can’t do Commerce on Instagram before this feature.
The Instagram and other social networks are already a super important part of the marketing mix and so a lot of.

[25:07] Particularities digital-native Brands you know really.
Launched by creating organic content on the social networks and having that content go viral and that’s,
really one of the primary ways that they do customer acquisition and so you know there’s a ton of brands that invest a lot of money in content for these social networks,
and you know one of the challenges has always been you no attribution for that content like what’s the ROI for that great viral story that you did on on Instagram,
they didn’t have a Commerce call the action will now it can have a Commerce call the action and you can you can monetize that and you can attribute that so suddenly you have a better way to,
attribute value to all that that effort and content York rating on the platform so to me those are all favorable things that would make it appealing.
To try this new platform of course there’s also some cons.

Scot:
[26:06] What is the current Jason.

Jason:
[26:07] Yeah well so a big one right off the bat hat is this a platform that’s owned by Facebook and you have to enter your credit card information into it right and there has not been a lot of favorable news,
about Facebook lately and they’re certainly has not been a lot of
favorable news about trust and security with regard to Facebook and so I do think it’s reasonable that Facebook is going to have a trust Gap,
that they’re going to have to overcome to become a Commerce provider and I think everyone that sells has this trust problem and I would argue that Facebook potentially at the moment has a more acute version and so,
that’s going to be super interesting in all these beta announcements Facebook has been super clear that they’re not disclosing what the fees are for the service.
And so you know it is going to be interesting to know what the take rate is here like is it.
You know a few percent that covers credit card processing then that could be a great deal you know is it.
Higher take rate than a sort of Commerce base Marketplace I got Amazon or Ebay than you know.

[27:20] That could be problematic because these are all brands that have a a direct-to-consumer economic model and they you know there.
They’re not expecting to have to give away a huge chunk of those margins to an intermediary I mention it’s a great solution for mobile,
oh, it’s only a solution for mobile and so if you’re someone that doesn’t use the Instagram app or you want to do Discovery experience on a on a browser or a desktop.
This is not going to reach you so the audience’s is inherently limited one of the big problems to me is,
mousse brands that decided to be a direct to Consumer brand did it because they wanted to have a direct relationship with the consumer and they wanted to collect first-party data about how that consumer was shopping for him buying their products,
and wanted to build a relationship with that consumer and have a higher lifetime value and most d2c brands would talk about how.
That the value of each customer is much higher than a single transaction and certainly much higher than selling a single SKU.

[28:28] This this solution breaks all that right like the brand selling through Instagram don’t get any customer data.
Instagram gets that customer data you don’t get the payment information Instagram gets that payment information and in fact at the moment they’re piloting a.
An opt-in choice to let Instagram share the buyers email address with the seller.
So so when you buy a product on this From Prada there’s going to be a checkbox you’re going to have the option of checking that says Prada can have your email address but if you don’t check that does not even going to know who you are or have any way to contact you,
and you know in those cases people don’t check boxes to opt-in for marketing stuff so,
I feel like first-party data is a big down or of this kind of solution.

[29:23] You also have a problem that that the first time you buy a pair of Nike shoes on this platform you’re going to have to enter your payment information in the Facebook which is kind of klujian in a pain as it is with most mobile phones.
But then Facebook’s going to store your payment information and so in the future if you’re on Nike Site and you want to buy some Nikes Nike isn’t going to have your payment information even though they sold you that pair of shoes you’re going to enter your credit card again.
But conversely if you later discover a pair of Adidas on Instagram that’s going to be a very low friction purchased because.
Adidas friends at Nike earlier you know got through that that friction hurtling got the customer to enter their payment information on Instagram so in a way.
You’re you’re giving customer data that benefits competitors as much or potentially more than it benefits you so that’s a little risky.
And then there’s just a bunch of.

[30:20] Tactical execution thing that like I don’t think as it stands right now the Instagram check out full of is a best-in-class checkout flow so you can’t use Apple pay for example it’s you know it’s.
Limited and payment types are all these edge cases that consumers sometimes want to do like gift cards or splitting a purchase on the two credit cards or things like that you’re not going to able to do any of these things for the Instagram platform.
The best practice for entering a shipping address right now is to use the lookup database so you start typing a street database and we find your old address and save you a bunch of keystrokes.
You can’t do that on Instagram if you got to enter all that the address Fields Me and You Lie,
a huge killer for a bunch of Brands is that you can’t sell multiple skus or accessories or upsell the customer doll you each item is a separate transaction,
and then you know one of the things that makes e-commerce most successful,
is having social proof on that product detail page having ratings and reviews having Rich content that tells a story about that product.
And you know there are no ratings and reviews on your product detail page on Instagram and there’s actually not a lot of rich media like the rich media is up front in the discovery experience but once you get to this conversation.
Yet you know you not getting like detailed information and description and selling points about the products.

[31:44] You know those are just a bunch of things that like if you were comparing it to experience you could deliver from your own e-commerce site are sort of in my mind inferior.

[31:54] And so none of those are deal-breakers they just are less than perfect right so you roll all that up and I was thinking about.
You know what I be advising my my clients to use this feature and the kind of conclusion I came to is.

[32:13] Most of those down sides are not negatives to the brand they are negatives to this one channel and so they limit how much success you could have on the channel.
But they don’t actually like fundamentally hurt the brand and so you know.

[32:31] In a mind if you’re a brand that’s already spending a bunch of money on Instagram content and you’re getting organic reach with some of that content then.

[32:40] Probably makes a lot of sense to try to monetize that and you know some of the negatives I mentioned will like slightly limit the success you can have but you can still have.
Pretty meaningful success but if you’re not someone that’s creating a bunch of of Instagram content then I think you need to think really carefully because there’s a major expense and commitment to this this is very different than a.
A transactional market place where you know you got a thousand skews and channel advisor and you just had publishing it sends a thousand of them to this platform,
that’s not going to help you here like you’re gonna have to create bespoke content that has tags to these individual skews and that content is going to have to show up organically to a meaningful a size audience on Instagram.
So if I was not on the Instagram platform and I was looking to grow I’m not sure I would look at this as a primary tool and I for sure
would never recommend to anyone that they say hey what’s not have our own e-commerce site that’s not have a direct-to-consumer effort let’s just selling Instagram like I think that would be a.
A horrific mistake to be sort of a digital sharecropper and try to build an audience exclusively here that you don’t own so
to me it’s a great secondary channel that can really accelerate things for some
people that are already good marketers but it’s probably not you know the holy grail for for replacing e-commerce sites and and those sorts of things for for everybody to see bran.

Scot:
[34:08] Yeah the the One Direction Twitter was going I thought was interesting in that it’ll be interesting to see if Instagram goes this way is it a lot of times,
people,
aren’t really looking at the brand pages and falling them their find influencers right so I’ll pick on a Kardashian or less a Kanye that’s about let’s see let’s say
LeBron James right so he sells Nike shoes and so he may want to put something on his content that’s actually a shop old Nike ad
but it’s like him wearing the shoes and chocolate that starts to get kind of complicated right so you know she doesn’t want just anyone kind of,
making an ad Nike shoppable so then how do you collaborate the influencers in the shop ability to see if Instagram tries to go that route or or if it stayed with the branch being the one stopping.

Jason:
[35:06] Yeah like that was an early question about this was is there an amenity for influencers or even a way to track a Filippi’s I can influence are referred to say the brand did do this content and did have a sellable product on Instagram
if if influencer directed an audience to that brand could they somehow be tracked and compensated for that because,
there’s a lot of of.
Influencers who is monetization like you know do use Instagram as the primary way to reach customers and it is pretty arduous at the moment to do at the Venetian on that and so
yeah none of that is in this platform right now you know I will say a couple months ago Mark Zuckerberg talk about the direction Facebook was going in and he mentioned that commerce was going to be a major
part
of the the future of Facebook and so I don’t think this is the only major Commerce feature that we’re going to see this year so you know I I won’t be surprised to see other,
Commerce amenities make their way into the various Facebook platforms and you know I do think there’s a
a huge influence our community that’s not perfectly well served right now so I wouldn’t be surprised to see some new products there but there’s no no hanser indication that that is.
Eminem or you know the next step of this.

Scot:
[36:27] Any last Lots.

Jason:
[36:31] No idea this this to me is one of those things like you know the bummer is as a brand,
you didn’t have this on your road map yesterday you had a big road map of initiatives that you drink we didn’t have enough resources to get and now you’ve got this new problem.
You know where it is hey Jason said this is maybe a good hit. So where does this go in the priorities do I bump something do I need to jump on this right away and let you know I do think a bunch of brands are going to struggle with.
Sort of figuring out how this fits in the privatization the good news is I don’t think they’re going to be opening this up to other brands in the very near future so I think we’re going to several months to.
To watch and see if we can get any any.
Tidbits about how customers are adopting this with these top brands before anyone really has to make the the decision to invest in it so it’s a little bit it’s a kind of thing you definitely want to know about him be falling carefully and it’s a you know.
However it plays out I think it’s an encouraging sign that the Facebook is trying more Commerce things I think that’s super important.
But you know I don’t think anyone is I don’t think it’s going to change anyone’s economic fortunes dramatically in the in the near.

[37:47] And that’s probably a good place to leave it because we’ve slightly exceeded our allotted time for this abbreviated hot take.
If we missed any questions that you have if you want to continue the conversation we do every to jump on our Facebook page or hit us on Twitter and won’t be happy to discuss it more,
as always in this hot take was helpful that great way to repair says jump on iTunes and give us that five star review.

Scot:
[38:15] Yeah thanks for doing the same one we always try to give you more podcast for your money so be enjoyed this episode.

Jason:
[38:22] And until next time happy commercing.

Mar 18, 2019

EP166 - Shipsi CEO Chelsie Lee

Shipsi CEO Chelsie Lee

Chelsie Lee (@ChelsieAnnLee) is the CEO and Co-Founder of Shipsi, a software solution for aggregating and managing last mile delivery services.

In this interview, we cover a wide range of topics including last mile solutions, curbside pickup versus delivery, changing customer behaviors, and the Amazon effect.

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

Episode 166 of the Jason & Scot show was recorded on Wednesday, February 20, 2019 from the eTail West tradeshow in Palm Desert, CA.

http://jasonandscot.com

Join your 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.

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this episode is being recorded on Wednesday February 20th 2019 live from the etail West Trade Show here in sunny Palm Desert,
I’m your host Jason retailgeek Goldberg and unfortunately due to travel issues Scott didn’t make it to the show so you get twice the Jason for half the usual cost,
but to make up for that we have a great guest listening to the show will know that one of the topics we spent a lot of time talking about his last mile delivery so we’re particularly excited to have on the show Chelsea Lee and co-founder and CEO of shipsi,
a company that helps retailers saw that exact challenge Chelsea who welcome to the show.

Chelsie:
[1:04] Thank you so much happy to be here.

Jason:
[1:08] Chelsie as a long time listener of the show you’ll know we always like to think that getting started by having to listen to get a little bit of background about how you came to your world so can you tell us a little bit about your background.

Chelsie:
[1:19] Absolutely I am a proud Minnesota native.
I grew up hunting and fishing with five uncle’s which is probably not as common as most founders.
Spend some time in Europe New York now reside in LA,
and spend a lot of time in corporate retail and then working in technology and Technology Consulting anyting EDI Erp and VI point-of-sale analytics was.
Was my passion for a long time and then,
I think it all started though actually my grandfather’s gun shop supply and demand and the fact that you can negotiate anything he wanted during gun season was was also really entertaining for me.

Jason:
[2:01] That’s awesome I’m a big family of a big fan of a family retail business as I can from a retail family as well I’m sorry I forgot that he missed you because he died r p e p o s are some of his favorite acronyms,
and his listeners will know I sort of think of Minnesota as their retail capital of the us having.
And a lot of time at Target in Best Buy a lot of lot of great retail in a lot of great retail people come from that region,
so what’s taking the ship see a little bit can you tell us how you came up with the idea.

Chelsie:
[2:37] So it originated because I was getting really frustrated that any brand that I was working with from Bob’s Bait shop and Nike everything in between they always have his big big Dark Cloud of Amazon.
So maybe not New York recently but yeah yeah.
It really stem from this frustration so I wanted to figure out how I could solve for it so I considered working for a private Equity Firm.
So I called my friend and a mentor of mine been who is now my co-founder and said what do you think you think I would like it.
And he’s a Serial entrepreneur angel investor and said,
I think you would like it fine but I think you should look at the side project I’m working on and it’s it’s called the shipsi and I said it sounds like Logistics I’m not into that you don’t want me and,
a solution that was originally made for traditional Logistics I looked at it and,
the Ben what are you doing this is the front of a nanny cam so we flipped it inside out and upside down and that’s Gypsy today.

Jason:
[3:46] Very cool give us a like what is the bullet like how does shipsi work.

Chelsie:
[3:52] Yeah so when I was speaking with Ben originally and we started toying around with this idea Banda Manatee cam,
I called every friends and old client in my retail networking and said,
if you could deliver within a couple of hours without changing any of your existing business systems and not pay for shipping,
is that something that you would find Value in would you invest in something like that would not fall in line with your priorities this year,
and it was really hard to find someone who said no.

Jason:
[4:27] It’s always a good problem for incubating a good thing to happen when you’re getting a new idea and so in my mind.
Unlocking all this inventory that a retailer had an individual store that can only serve visitors of that store and essentially turning that inventory into e-commerce in the far is it can be.

Chelsie:
[4:49] So we’re in a great an additional shipping option or add an additional option at checkout in any existing e-comm website,
and then we aggregate multiple last mile delivery networks on the back end so that the consumer is completely dazzled and gets the best price for it,
and then we also utilize existing infrastructure as you mentioned of stores warehouses distribution centers to basically open up an instant shipping option in whatever City those things are in.

Jason:
[5:19] Great and so I’m going to dive into the details in just a second but before I do I mention we’re etail West you were just on a panel that you tell West calls a tech tank and it was kind of like
you each got the picture businesses in the audience voted on the the business they would most likely want to adopt,
and how did you do.

Chelsie:
[5:42] Well it was an amazing thank you for all of my voters I swept it I would say so that the question or the what they were judging and I believe it was something like.
Which of these companies would you invest in within the next 12 to 24 months or seriously Implement within your business and I had over half of the votes in the entire room out of the the panels.
It’s definitely top-of-mind as you know we come in last my alarms are only a Hot Topic.

Jason:
[6:10] For sure for sure tank so congratulations on that wear with the inaugural Tech tank.

Chelsie:
[6:15] Yes thank you thank you.

Jason:
[6:17] Very exciting.

Chelsie:
[6:18] I plan to that so that I we could finish that before coming on here.

Jason:
[6:21] Yeah I didn’t want to spoil it but like I would have only invited you on the show because I knew for a fact that you are going to win.

Chelsie:
[6:27] I knew it yeah so where’s my tiara do I get a tiara crown or some kind of trucker hat Maybe.

Jason:
[6:34] So you know it said I was going to bring it to Yara and some of your people said that you just ordinarily wear a tiara and so it seemed like it would be redundant.

Chelsie:
[6:43] Depends on the day multiple hats yes.

Jason:
[6:46] That is that the job of a Founder rarely is one of those hats that Tiara but yeah.
So let’s dive into it a little bit so you’re solving Last Mile I think.
You know what I just heard that I would imagine you either hiring a bunch of people to deliver packages or maybe you’re on demand system where you’re using like gig workers to deliver packages is that what you’re doing.

Chelsie:
[7:10] No so we have the beauty of learning from a lot of other mistakes that last mile networks who are very successful now have already made,
so because they figured out a lot of heavy lifting I think for us in the beginning we partner with last mile delivery Network so a big piece of it is,
we don’t own the car is the warehouse is the merchandise nor employee kind of anyone within that,
we just you know basically are the master aggregator Wrangler coordinator.
And a really critical piece in that is that we set up different business rules are parameters to make the option up here or not appear so we don’t touch the traditional Logistics,
but let’s say a driver isn’t available or the merchandise isn’t available we build all of these profile and business rules or what we call a PBR,
behind the scenes so that the consumer sees the option and we can ensure that they get what they need.

Jason:
[8:04] God you you have to be careful cuz there’s a lot of hunting stores a PBR mean something totally different.

Chelsie:
[8:07] Yes.

Jason:
[8:10] So so let me make sure I have this right so I’m I’m a hunting dog, I have a website and I ship stuff out of my warehouse via UPS or the mail and maybe I have a store then my loyal customers come in and Shop.
You add the option to my website to say deliver same-day and then the customer pics that and then.

Chelsie:
[8:32] I’m going to make a slight correction on that it’s generally within an hour or two hours at most.

Jason:
[8:38] Even better okay so deliver in an hour as I’m about to go on a hunting trip and you’ve got that new training collar I need for my hunting dog,
so I clicked on that one hour delivery and then your software is deciding who the best,
Last Mile fulfillment partner is in you’re going to send that order to that fulfillment partner,
they’re going to fill that order you’re going to collect all the data about about delivery and all that stuff and feed that back into the Retailer’s.

Chelsie:
[9:06] Exactly and that’s a big piece of it that often.
You know it’s cool that we can ship something within an hour from point A to point B but the real value that I see especially in a couple years is having that,
Predictive Analytics on the on-demand market and to be able to feed that back to our Retail Partners so that they can in turn feed that into the rest of their supply chain.

Jason:
[9:29] So you’re sort of the middle layer between the last mile companies in the retailer and are there any particular last-mile companies that you tend to partner with other that westerners would be familiar with.

Chelsie:
[9:40] Oh yeah you know it ranges some of them are small Courier Services some of them are the Postmates of the world and it’s it’s just been amazing to see
us fueling every party involved with with more Revenue we will be making a big announcement in the upcoming months about another,
why is my old partner on major one as well today we’ve accessed over 500 cities across the US and by the end of the year we anticipate having,
over a million drivers through those driver networks to be available for shipsi deliveries.

Jason:
[10:12] That’s awesome so so pretty much a national reach at this point the are there any particular categories that you’re finding our are lending themselves to one hour delivery like what kind of retailer is best suited for the service.

Chelsie:
[10:25] Haha that’s a good question I wish the data skewed one way or the other would help our sales team know what to go after a little bit more but.
It’s really diverse I would say the younger women demographic.
Works a little bit is very slightly skewed some of the luxuries skewed but then there’s also things like a phone charger and birthday candles which has been really interesting to see there’s not a clearly defined,
category or vertical,
I should I’m not surprised anymore by our new customers because our first time customers were a men’s clothing women’s clothing footwear apparel accessories a sex toy company I mean.
Everything so to answer your question no we haven’t seen as a friend or vertical yet.

Jason:
[11:21] Awesome. You can’t go wrong with a vices I feel like everyone you know once devices delivered more quickly in.

Chelsie:
[11:27] Absolutely.

Jason:
[11:28] So chocolate in in alcohol might be good although there’s some complexities in the alcohol one.
So one of the topic categories we talked a lot and last mile delivery lately is around grocery are you doing anything in grocery or is that something you’re you’re thinking about.

Chelsie:
[11:46] So we have a little bit and grocery some more specialty gift food items such as edible which is a delicious edible cookie dough if you haven’t tried it,
and we.

Jason:
[11:56] Speaking of vices.

Chelsie:
[11:57] Yes he has absolutely so we are really focused on retail we’re actually really.
Making it a point to stick away from grocery but if you look at some of the trends that’s happening in grocery right now it is,
is amazing I think something like a Business Insider just recently published a report on 35% growth in grocery and that,
consumers wanted you know 69% of them wanted home delivery versus 31 or curbside and pick up.
So I see those Trends and Retail is is trying to catch up but we need to go fast.

Jason:
[12:38] Yeah I know for sure I should have asked you a question earlier but this will open up to my next set of questions,
so you’re you’re helping collect that order in your you’re getting that last mile person to show up in the store in in your model is the the retailer most responsible for picking the order in the store and having it ready for the,
the delivery person or the delivery person like going into the store and picking stuff off the shelf.

Chelsie:
[13:04] I have a delivery person is not picking things off of the Shelf,
the retailer either picks it up or there’s a dedicated place for shipsi delivery is just like there would be for a 7 to 10 day or two to four day whatever might be in the warehouse,
and then with some of our larger Brands we have a shipsi person that we have hired to say,
we will get you guys set up if it’s if the demand is so high or maybe in the first couple months will send someone from the ships that you to go work with your team in the store Warehouse to get them familiar and then we also have a,
customer service layer that is absolutely critical so that we can be one point of contact for the consumer for the retailer for the warehouse for the driver so that.
The retailer doesn’t have to deal with some of those things in the consumer gets what they need and feel confident about it.
Someone last week actually referred to us as The Wizard of Oz because they didn’t even know is a retail customer of ours and.
So many things that we do the retailer doesn’t know about it so every 10 seconds word checking in order to make sure that everything is okay and when it’s not we catch it.
99.5% of the time before the retailer or the consumer even know.

Jason:
[14:18] Got an internet metaphor they didn’t want to even know what’s behind the curtain they just wanted to see the magic so.
The whole curbside versus delivery thing like I feel like there is in the abstract there’s a consumer preference.
But I do like price also comes into play in that so like presumably the more you have to charge for home delivery,
the more likely a customer is to opt for the convenience of curbside pickup versus delivery so I would assume if you can get the price low enough or at least the price as perceived by the consumer,
then do every it heavily skewed towards delivery but in places where the unit economics don’t work for that like it might for a real grocery store,
side becomes more popular.

Chelsie:
[15:05] Absolutely there’s actually two points for our business and why that matters one is because we’re aggregating multiple Last Mile networks and Courier Services,
we’ve seen really drastic scenarios where maybe one specific last-mile Network says that it’s going to be $51 and then another one picks it up for maybe $6 is a really really bad,
differences in that so one piece of it is the aggregation and the our ability to do that II is that,
the retailer is no longer responsible to pay 12 bucks to drop it off to FedEx or USPS because the consumer sees exactly how much it is,
so we have a couple of retailers right now that we’re playing with the pricing and they say well I already have $12 allocated in my p&l for FedEx,
what if I throw 10 to the consumer well in many cases it ends up to be a dollar for the consumer to get it now and obviously there he comes sales skyrocketed,
they’re doing silly Facebook videos and so that’s been really really exciting and we’re finding out a lot about,
really what the consumer is willing to pay for but especially when the brand allocates a couple bucks towards it a lot of times it’s a dollar or dollar is $5 you know ten bucks and we’re just been really exciting to see him.

Jason:
[16:21] Yeah it is you know pricing consumer pricing is one of the interesting things here because,
because we’ve sort of overwhelming data that in general consumer don’t like paying for shipping right inside you know the the Dirty Little Secret is something like 68% of all e-commerce.
Is sold with free shipping like that in that free shipping is of course never free to the retailer.
Readers are being forced to pass to absorb those costs rather than pass them on so I’ll call it a premium delivery service it’s doing 1 hour.
Like it’s interesting like our consumers more willing to pay for shipping for that one hour premium and they perceived that that’s that’s okay or do they have sort of the same attitude that they do with regular shipping they feel like they shouldn’t have to pay for it.

Chelsie:
[17:10] I cannot wait until a more data behind it I will say we have a brand right now that 68% of their consumers last month pick the ships the option when it was available to them which is,
phenomenal right I was thinking well if we have 10% 20% growth that’s amazing you know who knows what we’ll find,
what does to have one that 68% of their consumers are picking the ships the option and,
as a Founder it is so exciting to have this I want to color a team camaraderie with a lot of our retail clients because I’ll get a call that says child’s we just broke a record this week,
and I said quiet so did we because we just seen a consistent growth every single retailer has had,
higher shopping cart more dollars in the every in their shopping cart collectively and also Maury come orders so it’s just so exciting to see that that growth with those brands.

Jason:
[18:08] That that’s awesome I do feel like you’re benefiting from the sort of rapidly changing consumer expectations as well.

Chelsie:
[18:14] Yes yes.

Jason:
[18:15] I had a number of clients that sort of piloted not even one hour delivery but piloted same day delivery.
A number of years ago before I would argue before like in particular Amazon have,
had like set that expectation and back then there was this really interesting learning the same day delivery was considerably more expensive than the other delivery options,
and it wasn’t selected by very many consumers back then again they didn’t have the perception that that that was the the expected time frame and so it looks like this premium option,
even back then what it did when you added this really expensive same-day option it dramatically increase the number of consumers that would select the two day shipping option versus the slow shipping option so we started that price anchor.

[19:02] The the middle shipping options seem more appealing and you know fast forward,
we’re getting benefit from it even though there wasn’t really high consumer adoption and now you fast forward 5 years and it seems like that’s completely changed and per your experience when you throw that,
getting an hour button on it sounds like at least in some cases,
the majority of customers are now picking that option so that’s that’s a key lesson I think in this whole industry is.
You can’t just learn something once and assume that’s how it’s it’s going to work like the customer expectations are changing really quickly and what wasn’t a requirement for your business last year may well become a requirement.

Chelsie:
[19:49] And it’s interesting to see the price Dynamics I’m part of a woman’s group and we were working with some younger women who were in a,
I can’t quite work all the the name of their group but they were you know Middle School elementary school women who we were going to have to work with Friday,
someone had raised their hand after I was explaining shipsi and I I had an example where the ships the option was less expensive than the overnight option and so I think the girl must have been seven or eight and she stood up and said well.
Why would anyone pick the more expensive overnight option if I can get it in an hour for less less money and it was just,
that’s stuck out to me it because and I think my response was something like,
what is a really good question I don’t know why would someone pick them or extensive longer option but examples like that and and when children maybe point that out it’s fun to see that.

Jason:
[20:44] Yeah it’s always a good time when your business model can survive are you smarter than a 4th.

Chelsie:
[20:48] Yeah.

Jason:
[20:49] For sure so it wouldn’t be a Jason and Scott show if we didn’t mention Amazon and sewing in Scott’s absence I’m going to try to channel my my inner inner.

Chelsie:
[21:00] Okay let’s hear it.

Jason:
[21:02] It does feel like this is a major area of emphasis for an Amazon and they’re building out this Flex network of their own drivers the buying tens of thousands of their own delivery trucks,
and,
in the most recent earnings statement they did an interesting thing you know that they wished the the competitors that they that you should be worried about any added a new phrase to their competitor list shipping and logistics companies,
which I find very interesting so the fact that they’re winning so much into this is that,
competitive threat is that an opportunity how do you feel about about Amazon vs shipsi.

Chelsie:
[21:43] I actually think that it works to our benefit because I don’t know Jeff Bezos personally but I would say that he.

Jason:
[21:52] I’ll probably call you after a year.

Chelsie:
[21:53] Absolutely I would say that it would be shocking if Amazon didn’t take a big brother approach,
the things and I love the fact that we humbly sit in the background and support our retailers and that they are the hero they get the credit at the end of the day,
so I actually have seen the the expectation that Amazon has set on consumer expectations work to our benefit,
because any other retailer needs to figure out how to keep up and that’s when hopefully I got a call from them and they work with shipsi.

Jason:
[22:29] Yeah I would totally agree it seems like,
Amazon has like super access to Super inexpensive capital and lots of it so they build out this big infrastructure and that raises the expectations,
for all those consumers and tell every other retailer that needs you to figure out a more cost-effective way to deliver that same capability that I am.

Chelsie:
[22:49] Yes yes.

Jason:
[22:50] Best it in so you can only see that Dynamic playing out in your space are there any sort of case studies or initial clients that you can tell us about.

Chelsie:
[22:59] Yeah absolutely I said we’re working on a release that’s going out within the next couple of weeks so a few of them will be mention there but Atlanta vinyl is a really hot one for us right now edible who I mentioned,
there’s it’s really every shape and size and small and large and we cater to kind of their volume that they’re doing,
we also have a partnership with Oracle as part of a woman’s Founders program so that will essentially give us access and,
I’ll be able to cater to any any retailer that is currently running on that but yeah it has been so fine like I said,
one of the best parts about being a CEO is when we get calls or I got to call and I think it might be a customer service issue or or maybe something bad when someone on my team does they really want to talk to you right now right now right now,
we broke another record thank you I guess it’s just so so much fun.

Jason:
[23:53] Yeah for sure in general it’s it’s usually not a good thing when the retailer calls and demands to speak with you so it’s fun when it it’s it’s been when it’s happy news.

Chelsie:
[23:59] Yeah right right straight the other does another interesting one and they’re kind of in this younger women demographic so yeah it’s it’s been really exciting to see to see the progress.

Jason:
[24:13] Very cool you imagine the partnership with Oracle are there any particular software platforms that retailers run that you like a prickly well like that you have pre-existing Integrations with or you’re particularly well suited for.

Chelsie:
[24:26] So the way that we work as we would partner with our we do partner with the demand where is the netsuite or the I’ll call him that sweet forever because of my background but,
Shopify so we do a prebuilt integration,
if we have that pre-built integration it can be a couple of minutes until someone’s up and running and live with shipsi or I can be a couple hours,
of course we do some tests orders that we initiate or if we initiate with them,
and if it’s one that we’re not currently connected to our average time is anywhere from 6 to 12 months to finish that pre pre built in a gracian,
so we’re not not necessarily limited it’s just some of them are in a matter of minutes and some might be you know a month or two months yeah absolutely.

Jason:
[25:11] Got you but that’s a mean it’s big chunks of marketing Shopify alone you mentioned that sweet which is a quartz nail in my Oracle with that stuff to get used to it ain’t even tougher our friends at Salesforce want us to start calling demandware.
Salesforce Commerce cloud.

Chelsie:
[25:25] Commerce Cloud I will never and sweet Cloud it’s a yes.

Jason:
[25:29] Yeah the consolidation and name changes are up I do want to dive into what like are often perceived as some of the challenges with this model so you know one of the the challenges with using as on demand delivery services are the,
the drivers don’t work for the retailer right and so the retailer can’t make the driver deliver something like the reader can merely,
offer a deliver delivery in the driver can decide to accept it or not.
The majority of the time that works great and it’s a great career for you know this gig economy,
but there is this challenge with Pete demands right so everybody wants to deliver on Valentine’s Day and everyone wants to deliver the day before Christmas and a lot of those gig economy guys are working for multiple services and they.
You know might be making more money doing Uber deliveries then postmate deliveries on those peak days and so I think one of the perceived challenges with on-demand delivery drivers is,
shoot on the day I most need to promise the consumer I’ll absolutely get the package to them.
It’s the day that’s most risky that the gig economy drivers actually going to deliver that pack.

Chelsie:
[26:38] Yes yes.

Jason:
[26:39] Do I have that right and how do we solve that problem.

Chelsie:
[26:41] Yes absolutely so there are so many things that go into working with multiple last-mile networks one is the size weight and dimensions of whatever we’re sending soap just because someone has a specific type of car,
maybe that’s why we’re aligning them,
and we also have very strict criteria on The Last Mile networks that we work with because we want to always dad’s all the consumer expectations so maybe,
it’s a certain peak time that we don’t even pull from that last mile Network maybe it is,
specific merchandise or not during food hour is if it’s a food-related one so we have a last-mile Network that has just over 90% accuracy,
when they’re on their own but we build all of these blocks if you will blockers so that they have to deliver within that,
and we’ve gotten ones that are on 90% on their own up to a 98.5% delivery,
accuracy because we building a lot of those blocks and parameters.

Jason:
[27:42] That toy makes sense and I also Imagine because you work with multiple delivery networks you have the ability to sort of spread that risk around more than someone that’s working with a single delivery Network.

Chelsie:
[27:55] And automatically fill someone else in and yes absolutely.

Jason:
[27:59] So then the other thing that’s scary is there’s a lot of points of integration where data is flowing through the system,
Ecommerce is flowing through this way super Antiquated point-of-sale system that’s keeping the inventory and you have to get data from those systems and they have to send data to this wide variety of different,
delivery networks and get it sounds like a lot of real-time data back from them about the status of those deliveries in those are two things,
I feel like we’ve all been at a a restaurant that’s like struggling to do all their their various food deliveries and you see the printer jammed up in like,
everything goes off the rails like there’s there’s some fear that there’s a lot of fragile point of integration in this.

Chelsie:
[28:44] Is a lot there is a lot and something that was really critical and important to us when building the business,
is it’s not our reputation that is at stake it is the retailer with their consumer which is why it makes all these complicated systems even more important that we don’t screw it up,
because it’s not our reputation at risk it’s really the retailers which is why we have that customer service and the real-time tracking but something else that.
Is that an investor pointed out to me actually was probably almost 2 years ago.
And we had been working with a couple hundred Alpha and beta customers at the time and he said this is just too messy and complicated you can’t do this and if anyone who first and only remember you professionally knows me.

Jason:
[29:28] The wrong thing to say or the right thing to say.

Chelsie:
[29:30] Are you yes yes it let another fire under my ass off I know you don’t think so great watch me and I delivered something to him within 21 minutes and had him initiate the order,
and yes it is complicated but you know we have an amazing Tech Team and I think my CTO all day long that they finish things before I even really know they were a problem so thank you been,
and it’s just been amazing to see it come alive.

Jason:
[30:00] One thing we failed to bring up earlier the economic model for your Retail Partners do they pay you a fee per delivery is there something like is it a red sheer like what’s the,
I am not looking for the actual price but like what’s the basic model that a retailer buys into.

Chelsie:
[30:15] Yeah the basic model is the based on four different tears so it’s based on the size of the volume of orders that the retailer is doing so that we can cater to the Bob bait shops of the world and also the Nikes so it’s a monthly subscription,
and then a small portion of the delivery fee but keep in mind the retailer isn’t paying for shipping,
so we have seen that actually we should we charge about 10 times more than we are but we really like retailers and we’re on boarding as many as way we can right now so we’re just going to keep rolling with it it’s fun to see them breaking records and US breaking records as well.

Jason:
[30:51] Yeah I feel like there’s some hidden costs that are saved in last mile delivery that people sometimes forget about.
Packing cost to make something UPS a bowl can often be a lot higher than the poly bag that you might.
Deliver in until there are some places to take costs out of the system when you do this kind of delay.

Chelsie:
[31:12] Yes and we’re working on some cool case studies right now with some of that because people that have to pay a lot for the packaging like if it’s dry ice or if it’s fragile or things like this we one of our tears of retailers we actually offer a,
like a matte black bag so that the driver picks it up instead of a sexy matte black bag or a box because the retailer doesn’t have to,
packaging and some kind of fragile packaging and yeah there’s also saving money on the packaging and the materials as well.

Jason:
[31:41] Yeah but in the end we talked a little bit about the the price that is offered to the consumer at it sounds like,
researchers are testing different price points are there any best practices that have emerged so far like like what where do you recommend retailer start in terms of pricing 1 hour delivery.

Chelsie:
[31:57] So we either we have a couple different options option one is just a display what the exactly what that price is we are completely transparent about that cost and filter it through directly from The Last Mile Network we don’t want to mark that,
up or down because we wanted to be as low what we want to do is low for the consumer as possible so that they pick up more.
The second option is if the retailer subsidizes a portion of that,
we’ve seen Jurassic success even if they only put 3/4 or box towards whatever that might be,
and it’s easy if you already have something like that built in European L and I already have a line item for that just throw that into the shipping cost so,
I should know we haven’t seen any crazy you know they always pick it up at the dollar that’s easy to say or try not to use always and never but.
Very very very very often when it’s a dollar or I would say under 5 is kind of a no-brainer for consumers,
it’ll be interesting when you asked me that question in a year looking forward to to finding out more about that.

Jason:
[33:04] Well we will take you up on that offer to come back in a year and share some of that data
and that’s going to be a good place to leave it because it’s happen again we’ve used up all our a lot of time as always it was nice have a burning question for Chelsea feel free to jump on Facebook and we’ll continue the conversation there
if you enjoyed the show we sure would appreciate that five star review on iTunes Chelsea of listeners want to learn more about shipsi,
where should they find you guys.

Chelsie:
[33:30] Yeah I would say probably the first guess is a hello at shipsi. Com otherwise feel free to reach out on LinkedIn.

Jason:
[33:38] So we’ll put those links in the show notes for folks that are driving please don’t stop and write that down but it is a ship SI.

Chelsie:
[33:48] Phi PSI.

Jason:
[33:49] Yeah on a podcast you might be imagining that your ship.

Chelsie:
[33:52] Yes.

Jason:
[33:53] In the letter c so wanted to highlight that Chelsea really enjoyed chatting with you thanks for being on the show.

Chelsie:
[33:59] It was a pleasure thank you so much.

Jason:
[34:01] Until next time happy commercing.

Mar 13, 2019

EP165 - Amazon Alexa's David Isbitski

David Isbitski (@thedavedev)is the Chief Evangelist for Alexa at Amazon.

In this interview, we cover a wide range of topics including the growth of the Alexa platform, the evolution of the developer community, the future of voice, and voice commerce specifically.

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

Episode 165 of the Jason & Scot show was recorded on Friday, February 22, 2019 from the eTail West tradeshow in Palm Desert, CA.

http://jasonandscot.com

Join your 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.

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this episode is being recorded on Friday February 22nd 2019 live from the etail West Trade Show here in not completely Sunny Palm Desert
I’m your host Jason retailgeek Goldberg
and unfortunately Scott is trapped on an airplane so we are going to make a lot of fun of him and hopefully assign him some action items for after the show,
long-time listen to the show will know that if we were to make a word cloud of everything that we’ve said in the hundred and seventy something episodes.
Amazon would be the biggest word on that word cloud and Alexa would probably be third I think Star Wars might so I can let you be.

David:
[1:02] Well that’s good to hear.

Jason:
[1:03] Be ahead of Alexa,
but obviously we talked about a lot on the show so I guess we’re super happy to have on this week’s show is Dave a bitsky who’s the chief of Vangelis for Alexa at Amazon welcome to the show.

David:
[1:17] Thanks for having me super happy to be here.

Jason:
[1:19] Yeah so I record a lot of these for my home studio and the first thing I have to do is mute all of my Alexa devices.

David:
[1:28] Oh yeah I’m the same way yeah in fact even when I’m on stage if I’m Kino to hear something when I say her name there’s still that thread that goes through my head waiting for a response.

Jason:
[1:42] Oh no it’s something going wrong.

David:
[1:43] Yeah yeah.

Jason:
[1:45] So David for a long time with some of the show we always like to start by getting just a little background about the the guests can you tell us a little bit about your backup.

David:
[1:52] Yeah sure I guess it depends on how far you want to go back.

Jason:
[1:57] I have your high school records of.

David:
[1:59] Yeah yeah exactly so I grew up in the 80s in Commodore and this this vision of how,
science fiction and Technology was a future rights what do you mention Star Wars growing up on Star Wars and things like,
the black hole right and Star Trek and all of that and I just,
man I want to be a part of it and I remember speech technology TTS text-to-speech back then be able to do stuff like that I had to do that and.

[2:29] I just I was like man when is this going to happen right and I started out any e-commerce 96-97 building.
Commerce pipelines actually competing against Amazon was just getting started the time at this company called microwarehouse macwarehouse and then I did web whole rise of the web did want you to. Com Consulting did I,
Enterprise gig in a large pharmaceutical company,
and that was my me trying management and realized it wasn’t my cup of tea I just I love that I love being,
I love traveling talking to people and using new technology which is right and around 2007,
October to a Microsoft December roll to I have now there a lot of stuff around games and mobile and worked on Windows phone and Xbox Kinect,
and then I joined Amazon,
oh gosh 2013 help out with the we are kicking off the Android App Store that we have with the new Kindle Fire tablets did that watch Fire TV is Saint with fire phone and then.
I am super fortunate I was Employee one for Alexa skill marketing team around 2014,
and now it’s crazy where everything is now in 2019.

Jason:
[3:45] That’s awesome so I don’t listen to the show will know that Scott and I are two of the four Alexa fire owners so you.

David:
[3:51] But thank you I still have mine.

Jason:
[3:52] We sometimes we have our suit we sometimes predict it shall rise again I’m not asking you to.

David:
[3:59] The dynamic perspective stuff still awesome.

Jason:
[4:01] Yeah there’s that there’s some cool features so that’s going to be interesting to see if you have a rear job and Amazon you mentioned liking to talk to people I would argue the majority of Amazon employees are not encouraged to talk to her.

David:
[4:13] Yeah I’m just I’m one of those rare birds where I approved,
Alexa’s spokesperson Amazon spokesperson,
I’ve been doing it for a long time though I’ve been in very much these Community Building public-facing you know kind of marketing PR working with marketing and PR roles,
and there’s always a need for that because you know.
I have this belief like large companies we all have processes and there’s so many things that if it falls out of that process gets lost,
and I’ve always looked at my job to be the person that’s finding all those anecdotes cuz they’re so important cuz a lot of times there’s signs for things that need to change or that we missed and that we need to do better,
and I’ve always I left startup mentality and unfortunate Amazon is just as Perpetual startup mentality it’s not for everyone but it’s it’s Scrappy man it is like and that’s,
I love that I love where things aren’t to find you got to figure him out there tough problems you’re constantly inventing things you have to think about the customer problem and dive deep in the stuffing,
I’ve just been able to make a job out of that you know it’s it’s funny because funny you ask that I’ve gone on a couple podcast,
the past few months cuz that seems to be the big thing is like.

Jason:
[5:30] I guess to warm up with a couple of those farm system podcast before they come here so that’s all.

David:
[5:34] Yeah it’s like you got to start thinking about cuz you cuz it’s so all over the place there’s no defined like I went through this. Where I was like,
I’m old enough that all of my friends now are turning into CIO CTO xorbee peas and I’m like I’m doing this thing,
what is this thing exact but I love it and I would talk to him if you like crazy but we do sucks I would love to do what you do. So it’s like just Embrace what you’re passionate about and get down there and if I like to look at it like if I saw 12 year old me,
and he was asking me when all this Tech was going to happen I make it happen for him and keep him happy.

Jason:
[6:13] I like it I like it I also like your Amiga Roots I actually work for, nor in the.

David:
[6:17] Oh man we got to talk.

Jason:
[6:18] Yeah that that text-to-speech engine was called Sam so Sam was the person.

David:
[6:22] Yeah yeah well I still have it I have I have been working Amiga fully 1000 or 2000 I’ve 600 1200 I still Google Talk.

Jason:
[6:30] That’s why I sent my nigga 1000 predates, door and it’s actually in the The Tech Museum in San Francisco.

David:
[6:34] I have never been but I’ve always wanted to go.

Jason:
[6:39] They’re a couple of those key Engineers one of them is a Google Now RJ Michael.
And one of them Jim Mayer Who did all the hardware chips is actually the the Chief Architect behind the Roku.

David:
[6:53] Yeah yeah.

Jason:
[6:54] Fancy Nails guys continued.

David:
[6:56] And Dave Haney is I’ve seen him out in so where I am cuz I’m near Philly there still it’s like in,
in like Wall jersey there’s this Tech thing and he comes out there and people talk about forgetting his name but he helped build Amiga 3000 and 4000 and a couple of things like that he’s out there,
but a lot of people stayed in the area after Valley Forge after a little.

Jason:
[7:22] The the USA quarters for, nor was in West Chester Pennsylvania I was based in San Diego and so my boss never trusted that I was working cuz if you’re in Westchester in winter.
That you don’t think the young kids in San Diego doing anything years later I visited a client in Westchester and I’m getting at the address to their thing it’s the old commodore.

Marker 01

David:
[7:42] Yeah well that’s on its QVC or Home Shopping Network is one of those owns that whole campus map.

Marker 02

Jason:
[7:50] Jumping back to today stopping at appreciate the reminiscing.

David:
[7:55] We can look forward without looking back.

Jason:
[7:57] Absolutely you talk a little bit about your role love to hear just a little bit more about your turn trolling as it is it mainly like developer poking focusing is it mainly like consumer adoption.

David:
[8:06] No we hire teams that are on that now I would say you can think of me as helping incubate new Alexa businesses,
so I worked a lot with Alexa for business helping them get started a lot of what I do is helping Brands nowadays to what does it mean in this boy’s first world how do you connect with your customers.
How do you build better quality conversations things like that so it’s it’s new areas yeah it’s,
the nice thing about having such large teams is once I’ve done something and I can operationalize it it’s not something that I never need to do again and I burnout least called isbitski burn out when I was growing up where,
I’m always it’s funny if you look at personality test like if you know anything about the five core traits I have super high in enthusiasm and.
Open to new experiences and assertiveness which basically means that even when I was a kid,
I would get super excited about something I make all my friends go and follow me and do that thing and then six months later I’d be excited about something else and I feel like we all need to try this now right now Amazon with all the different things that we’re doing now,
to be able to do that.

Jason:
[9:20] That’s awesome couple quick things we want to get out of the way like what’s your personal wake word at home for your Alexa devices.

David:
[9:26] So it’s always been Alexa I mess around with computer when it was out but by then we already had a relationship with Alexa and it’s interesting here’s a little anecdote Cell 2014 when I would talk about it,
and I would talk to press and think everybody would say the Amazon Echo,
and then I noticed about six months in people would say Alexa and that wasn’t like anything from that people just started saying Alexa cuz you hadn’t you could say Amazon you can do it was a smart speaker.
Now when I talk to people they say our Alexa I don’t know if you picked up on that which is super interesting because it’s become part of the family it’s our Alexa right it’s not Alexa that’s hard Alexa she has her own way of knowing what we like.

Jason:
[10:05] Indeed she does and I know we we love all our children but do you have a personal favorite Alexa device.

David:
[10:13] Oh boy well I love the new show at home I would say there’s three I had love the new show Thomas cuz super big screen,
and that’s the main one on my desk if anyone is curious I really loved the spots and that’s my kids have enough and I also have one in the den cuz it looks like a clock,
you know it’s just a perfect little little size and my third favorite is I have a head for years are Garmin speak which looks like a little tiny Echo dot in my car,
and that’s why I listen to podcasts because I have a Honda and so I have Android auto and I have carplay Nike all that but what I find is just saying with voice to go ahead and without having to hold down a button or doing anything and just pause,
play the latest episode of and then I mentioned this in the keynote today but you know if you do a lot of trouble and you listen to podcast news in the audio books are sometimes where you’re like,
especially stuff I was sometimes it gets deep and you’re like my brain shutting off I just want to play a game,
so I play games I played like Westworld and it played Skyrim and I put Jeopardy and a car I think this,
I’m a I’m a huge gamer so right by my own gaming rig at home and I have consoles I have Xbox One X and PS4 Pro.

[11:31] When I’m in a car and there’s an Alexa skill available I’m surprised how much I’m engaging with that stuff so I think there’s you know it’s it’s,
it’s about the situation you’re in right and in continued conversation as fun my kids doing and yeah.

Jason:
[11:46] I like it I like all those devices I have to say my new favorite though is the Billy Bass.

David:
[11:51] Yes but I if you look if you go to my Twitter there’s a link to a dead reinvent so that team they weren’t they were going to watch that,
and so a Tremont I did a talk and I did the actual unveiling,
of the twerking Santa and Bear,
I think about like a even a little man with a flag if you need to take your medication use and that’s just a visual for somebody in the home like my parents are old to be able to see that they walk in and they see it you can’t have light but there’s all sorts of things you could do it right,
somebody can make that maybe you’re delivering a package again little guy carrying a package or something like that right it’s just it’s integration with his of objects I think it’s pretty neat for notifications that way.

Jason:
[12:36] The old digital physical things going to continue to be an amazing at Lowe’s,
you alerted your talk today so your topic was how to talk to your customers in a voice person world can you give us a little bit of a recap about like what the what the topic was there and what you got.

David:
[12:52] Yeah you know it’s a sew-in audience like this and with the 25-minute keynote it’s like what do you talk about right and so for me a lot of it ctas and so I always break this down into three things,
is there going to be people never heard this they’re going to be people that have a relationship with Alexa already and so.
And then maybe people getting gas how do they do this until I always start it off with what does the future look like cuz I’m constantly thinking about that what does it look like 5 years,
you know head and why we we look back right so we start off with that kind of paint with a futures.

[13:27] Make sure people know that this is Amazon is just part of that,
but this whole voice first is huge you need to think of it like the internet even even bigger right it’s it it’s the interface for everything it’s the human technology relationship moving forward,
and it makes everything accessible and simple and so
I make sure people understand that and then explain some of the Core Concepts because I think even for me when I start my shift same for me cuz I’m stupid
everybody should just assume for me the first time I use this is I use voice control before the stuff doesn’t really work right and that’s not what this is this is understanding intention,
something called natural language understanding is not TTS it’s not looking at phonemes and actually translating them into the letters right it’s different so getting people to understand that and ways that doesn’t get to computer science he and,
try to make myself look smart or anything like that right side motor stand in terms like that and then,
third party that is okay well what can I do today and what have you learned.

[14:30] Because I get to you lot I have this unique view of the field when I talk to somebody customers I have access to so many teams at Amazon I’m always thinking in this space A lot of times when I meet with people they just,
used to freak me out was like what what can I have to offer and they’re like
Dave your view the field this you meant just share with us something so you know and so that’s what I try and do as I learn new things and I talked to customers and we’ve released new features based on that feedback I includes those in the Kia Soul a lot of it is
this is what customers are saying this is how people are using it today they could be using it differently a year from now and this is what you need to be thinking about and,
starting to focus on.

Jason:
[15:08] Fair enough and so most of the listeners of this show are our brands are retailers like.
4 Brands like how should they be thinking about like is it a no-brainer that they should be building a branded skill is there a different more nuanced way they should be thinking about it.

David:
[15:23] That’s funny.
I always feel like I’m in a Morpheus in The Matrix and they might my Syfy should write my what if I told you what if I told you and you could talk to your customer,
everyday in the moment where they are on their own terms.
That’s an Alexa skill or Flash briefing or in any pain but that’s what this is doesn’t exist is always been a barrier and so if that interests you it’s about what I like to call meeting your customer in the moment,
and it’s your tongue got really like I was growing up in Jersey I had it you know I work two jobs since I was,
gosh like 10 with a paper out but I remember one of my favorite jobs work in a movie theater.
I can still tell you I would have to say to people would you like to upgrade that to a large popcorn and a large soda for only $0.25 more the big combo special right but it was that up sale in brick and mortar
right there and it’s in the moment and that is,
completely different than it did not purchase react hit the side button or use your fingerprint or any of that kind of stuff right you’ve already enabled it knows your voice you can set up a pin but it’s seamless and nothing beats time,
right and that’s what that’s for Brands is something they just think about is customer in the moment having a conversation with them every day and.

[16:48] What would they say if they could talk to you today what brands don’t know other than the help desk tickets right and I’ve seen companies now.
Where they are now looking at the Amazon skill reviews as part of their entire ux cycle to know what new features they need to be releasing because it’s the easiest thing that people can just talk you know and so you need to be thinking about those things and then,
lastly what I tell them is what is your brand sound like Miami for us you know podcasters and listen to felt like for me I just,
I loved one for me audio I love conversation I’m always thinking in those terms but I find most brands it’s still very visual social is visual so it was a bunch of images and video and so what does it mean.

[17:34] Do I use Alexis voice do I use my own voice do I have create a new voice of the company,
write like Jeopardy skills Alex Trebek that you here right and then we you know based on feedback we provide more and more voices so you can generate through what we have a service and Amazon web services closed poly so I can
generate all sorts of voices if I need to do that but that’s another thing that they need to start thinking about in the moment,
what do I sound like one of my customers asking for where they want to have an early day so it’s,
Newcastle new customer acquisition is not going to be like what you think in Mobile and wet right it’s early like early mobile web days but man if you have an existing customer and they have a device,
and I’ve ordered something from you and I can just say reorder,
or when is that coming right or check on a status or even games like Destiny made us feel other games and made a scale where you can just say hey what’s my friend score right like you’re just like that it’s interacting again without what I was talking about is it is human,
technology that relationship together and that’s really what’s enabling and that’s to me is a couple spaces where it’s just a huge and exciting business brands,
Auto Vitaly.

Jason:
[18:56] It is interesting the likes of the there certain brands that.
Needed we have this permission to have a daily conversation with a client because of the nature of the brand in the product or whatever and it seems like it’s a no-brainer for them that they need to have a scale and be there a way to have a.

David:
[19:14] There’s certainly some of that like the early web days where it was like I have a skill and then you talk to the scales just about the company I mean I was building those websites for Brands back in the early 90s.

Jason:
[19:23] But if you’re the Weather Channel or something like it would be foolish not to.

David:
[19:28] Yeah yeah.

Jason:
[19:29] Have a skill there because again there’s people are going to get up every day and want to know what the weather is and how to get dressed.
The children have a little bit with some Scott like it’s just needed to voice we talked a lot about app fatigue on the phone right and if you’re not one of the apps on the front page of the phone you get forgotten pretty quickly.

David:
[19:46] Yeah.

Jason:
[19:47] On voice we don’t even get the visual cue so the problem is there to be 300 great skills that I’ve enabled on my Alexa echo system,
if I don’t have a daily reason to use them I’m likely to forget a bunch of them exist and so that like so some of these by I probably don’t want a daily relationship with Charmin toilet paper.
Sherman still thinking about how are Branch it evolved in a world in which voices are super important in her face like any advice for those cut like I feel like you’re mostly going to interact with Charmander,
through the native utterances on the on the Alexa platform is going to be at.

David:
[20:25] But what’s interesting is like.
Why have a mobile app to write like you these are all of it doesn’t change any of those questions what it does changes what’s the relationship of my customer right the demographic of the customer ships,
voice,
you mean somebody has to understand they have to have a smartphone they have to know how to patch it after I have downloader app get the latest version of your dad if they’re using a web browser they still have to be able to patch the OS on a computer do all those things,
in some of these devices you’re talkin like 5 $10 right and it’s always the latest version.
There’s never been a technology as a brand where your customer has the latest version of your experience at all times right,
cuz even the web I mean man,
I spent so many years with all the different web browser differences there is not I’m sorry there is not one version of your and anybody that’s how to program client-side knows that and you know jQuery and other things made things easier but gosh,
that is in a nightmare so it’s that except my dad and he said my mom still print out emails.
But he’s never did with his money right really gave you really turn on computer my dad,
you know he’s a butcher he’s retired now never touch computers life and when we’re hanging out he tells me about songs he pulled out and thinks he’s talked to you with Alexa.

[21:44] And that’s when the light bulb went off for me is I’m like this is empowering man like this is like anybody can do this stuff and so maybe toilet paper isn’t important for me and my age but maybe,
it is for somebody else that needs to think about stuff that right so it’s that’s what you really need to think about what’s the demographic,
your customers if any demographic had access to it cuz there’s kids that are talking to everything now,
because they’re used to Alexa right I hear from customers are expected to so when that happens right that opens to meet new possibilities,
and so you need to focus on those things and look at existing customers when I like to tell people is.
To get to the utility of speed right nothing being speed go look at your mobile app and look at the top 10 things people are doing what are they doing everyday they’re probably doing that one thing everyday cuz it’s fastest on mobile.
So if you can make that faster,
even if it’s just checking on the status even if it’s just a reorder or maybe it’s getting information we try to do things to make it easier to have conversations and so we have the ability for you to say something like that.

[22:57] Alexa how do I remove a grass stain now I may not know what brand but a brand can respond,
right cuz that’s a human being to think we may not remember the full invocation or anything like that until we try to do more and more of those things or Alexa play a game and I get some suggestions but it’s about,
what you think about this is Alexis going to learn about you what do you what do you like your right and what are what’s,
getting reviewed well and things like that so if that’s kind of I think.
To me and this is going to sound crazy from a guy that’s spent so many years building app stores across so many platforms,
but to me I don’t see that 10-15 years down the road,
right cuz I put all the onus on the human being would I see 10-15 years down the road is an AI that knows me intimately that’s already out there,
and remembers things so can be like hey Dave and we had a conversation a month ago about XYZ topic I just found some information about that if that’s what we want we never had that and that’s what voice is going to enable imagine trying to do that in a mobile app.

Jason:
[24:02] Yeah I totally agree I feel like a lot of these things that we have to explicitly enable is apps or skills or whatever like become implicit like apis or capabilities that we just.

David:
[24:12] I could always do it because for some reason computers,
I just nerd it out on them I love them just even in like we talked about it maybe I just spent two hours like making my icons perfect. It was fun,
and I used to get upset that I couldn’t share that with people cuz it’s such a joy to me and people like right like they just didn’t like it and so I knew
did that was just inherently broken if there’s such that technical divide that something else has to be there right and this is it man this is the.
The big enabler.

Jason:
[24:44] Why don’t you mention the kids screaming at the Alexa ideas funny like two things that come up in my newsfeed a lot lately you are,
advice for parents that we need to teach our kids to use politeness with our our Alexa stop Alexa devices because there’s some risk of.
That’s raising a less polite culture because kids are used to sharing commands at the other devices and they respond.

David:
[25:07] My anus is there and this isn’t a belief isn’t that starts with the family what starts with the individual first in the family and then the family.

[25:18] These up to the Community Practice Community is a bunch of families and so regardless of what technology was introduced we’ve always had a set family Rules so when.
Screen when we first started getting iPads and and the Kindle Fire and things like that we had to set rules around screen time.
And some of those rules where you do homework first you do not know when we wake up on the weekend first thing I’m doing is not logging you into these things when we eat dinner as a family for us everybody put phones away. Included,
right and so that is in something that comes with the manual for that technology has something you decide as a family and then as a culture so voice for me absolutely was that because when we first got it early days I be playing music and my,
so this is 2014 so gosh she was six,
and she would run into the room and say Alexa tell me a joke and I be like that’s listening to music so then we had to do a family joke that said you know like this is what’s rude this is not with rude,
and you can do stuff like we did hear from families,
so we enabled stuff like a follow-up mode so if Alexa does something and you say thank you she’ll say you’re welcome back she recognizes all of those things or whisper so if you a little one at home and you can be like Alexa,
quiet and she’ll Whisper back which is a very interesting the first time you hear it cuz it’s so human to do that you know and so you can enable whisper mode.

Jason:
[26:46] Yeah I know it’s totally totally cool like the other parental thing that’s happened is Amazon has completely wiped out the the female child’s name Alexa.
Parents don’t want to name their kid for you no fear of triggering all those devices Olive.

David:
[27:02] Yeah well I do I talk to families that have names that are similar in that they are all Amazon or Echo.

Jason:
[27:11] So it might be my family I have a sister-in-law named Alexis which is close enough inside where we’re at Echo family cuz we also for work say Amazon to off.

David:
[27:21] What’s going to be the new left handed right.

Jason:
[27:23] Exactly is that at that is exactly what it is so I mentioned the other listeners are retailers,
the default position for a retailer is Alexa is the evil,
front door of my competitor and I’m desperately rooting for any other artificial intelligence technology to win because when Alexa wins that comes attached to my competitors store,
are they.
If that’s true that’s fair enough like I mean there’s a lot of competitors in the world is that true or is there a way in which we like Israel and which Walmart should be thinking about how to leverage Alexa or are they right.

David:
[27:58] They could completely make an Alexa skill it’s open to everybody it’s interesting because even and this is going to be in iOS use Amazon services,
was because they weren’t locking into an ecosystem I could use my Amazon video,
my Windows device on my Android device on my iPad and I could get my Kindle book on the Kindle I had 10 years ago where I can download it onto my phone
audible working across everything so it was always I always viewed Amazon.
It always depends on the space that you’re in right so I always do that was on as this Innovative tech company and that that was not locking it is all about giving in the customer choice right and so for me.

[28:50] I never looked at it as what you’re you’re saying that’s just a personal on an Amazon note,
from day one this is been open everybody don’t charge the idea has been that voice,
review is the next big disruption it’s the human.
Technology interface so it has to be everywhere so we’re not going to be the one to do that we’ve got to open it up to everybody,
and so that’s why you see it in the IQ and I we can make our own Echo,
there’s hardware specs to lake house and then you and I can go sell it on Amazon for five bucks and we can make it the retail geek Echo,
write and let me know that that Tech and so it’s,
that but that benefits everybody because it’s helping customers its helping push it for its I view that the people that aren’t that would say something like that are the people that would say cuz I dealt with this years ago to that would say,
that I’m not going to use HTML in the internet because Google Microsoft phones.

[29:50] And no they don’t own it it’s the way that human beings are going to talk that’s what this is there’s no single company infected.
Jeff has said I completely agree with him is that there’s going to be hundreds of a eyes in real life not just okay I mean Alexa maybe the one,
I want you spray but there’s going to be all sorts of him and eventually we’re going to want them although to talk to each other,
and that’s what this is this isn’t some smartprix speaker that you can order stuff on although you can this is a new way of human beings interacting with technology and it’s going to be in everything everywhere.

Jason:
[30:25] It involves the normal Trend like usually these Technologies come about and they start out as like wall Gardens where everyone wants like everything in their own echo system so I got I go to CES every year for 30 years.

David:
[30:37] My apologies.

Jason:
[30:38] It’s like I did not say it is a matter of pride,
the first year there’s a voice interface for televisions everyone has invented their own voice interface and it only works in their echosystem than they imagined you can buy all the devices in your home from just from LG or Samsung and you know you walk that show three years later and.
Frankly like this year there’s an Alexa and a Google logo on every one of those devices and it just.

David:
[31:00] Customer choice.

Jason:
[31:03] How to make is a better experience with a customer.

David:
[31:05] Nothing’s nothing’s in a vacuum all of our lives have multiple endpoints and we just want to simplify that.

Jason:
[31:11] You talked a little earlier you’re like hey if we looked at that uses on the phone there’s like certain things that would have weight higher usage because they’re just the the low-friction best best things to do in the phone and like there certainly is an analogous twist,
her voice and relax all right until we’ve seen some of the surveys and it’s,
people overwhelming we are going to use it to play music to get information you know there’s and you probably know the exact list on making it up.

David:
[31:36] Because we’re at bombers show.

Jason:
[31:37] Commerce show like we always notice like at the moment Converse is pretty low on those lists like it does not appear.
The primary thing very many people are using their device for is to place orders for for stuff and I’m just curious if you have a POV is.

David:
[31:55] Is

Jason:
[31:58] You are truly an adoption or is it never likely to be the dominant thing we do the invoice or what your.

David:
[32:04] It will be the dominant for everything is my opinion but I mean I’m old enough to have heard people say that about the web and mobile as well,
and that’s what you want man you want you want it to just you want in those early days where you’re going to see it up Tick and get in cuz that’s when you can build a really strong brand and really strong relationships.
It’s early days but there’s nothing like in the moment so I’ll give you an example.
If you follow like the thinking of like app store,
where you can buy like Jeopardy you can buy extended and you can do more questions and things like the offer that you can do premium subscription answer today.

Jason:
[32:52] Forgot to take stuff the bus.

David:
[32:54] Nice nice and you can do the innocent and I think people are familiar with that but people were familiar with that in the beginning I mean I grew up I’d buy go to Electronics Boutique and buy a game and that was it man
I wasn’t like I was spending five bucks a week on a skin I just paid one price right and so it’s funny we can get used to it and so there’s that model,
but there’s also did integrates with Amazon pay so physical Goods in things like I’ve started seat like you guys have a podcast maybe you have somebody on the podcast that has a product if you had an Alexa skill where people can listen to your podcast
right in the middle of it you could say you know for 50% off would you like to purchase this and then you’re getting,
physical Goods in you’re getting part of that Amazon affiliate program and things like that right then you have other types of skills that look at it as an endpoint.

[33:43] So I do this is It’s At Its if I don’t do it all the time but it’s my it’s my guilty pleasure I love the Domino’s thin-crust Pizza I’ve always have the grown up in Jersey and,
so if I’m when I’m not traveling and we calling my house Friday night party table I’ll be like all right Friday night and so as I do is say Alexa,
ask Domino’s for my easy order boom it’s already got credit cards not going through Amazon that’s an existing customer relationship,
we have something that we call account linking so you don’t even have to go through Amazon use Amazon pay you don’t have to use login with Amazon you can have your own existing customer relationship they see screen it’s like a mobile,
analog in a waffle those kind of things so you could use any of those providers or your own so it’s an existing customer through a different endpoint,
and I’m surprised even in my own life the use in that and so I think this is my thought.

[34:46] Is that nothing as human beings when it comes to technology and this is especially with purchasing beats speed.
That’s why I think I shipped it and most people shipped it to mobile.
Because I don’t want to go log on to my what the title is a desktop and a laptop and patch and get to the browser and figure it out is in the website and then using them over I mean it’s Common Sense instead of even using the mobile,
I just say Alexa ask your brand to order my stuff.

[35:17] So what does that look like when people started using that year after year after year was that look like 5 years what does that look like.
People who may be caught the people that would call up a number to order stuff right I have I won’t name my in-laws that she is huge QVC Home Shopping Network all of those things.
Call the number doesn’t use the app you know and so and she picked up in a wax on her own and I and was telling me about all these skills it was funny,
I just want to run away maybe 1,000 scales and I were over 80,000 and.
She’s like I brought it to play the Eagles she’s huge Eagles fan and I was like,
you know I already I already pulled up every album I know how to search might like I I’ve never had,
a relative a family member ever just run with a new piece of technology have you it’s like you literally you go there over the holidays in your patch and stuff and your training and maybe you’re trying to reorder some what are something new cuz what they have is so outdated,
the song it’s like it’s an appliance the hardware is the appliance,
this day is getting smart and smarter over time said that I think if you just naturally think about human behavior.
Write an end how we act and if you make something easier and you give me incentives that’s just naturally the way things are going to go.

Jason:
[36:45] That’s right I mean I feel like there’s two points and then I would totally agree with theirs.
The experience and product are going to get an exponentially better because I just wanted some everything at the magically improves and it’s just better than next day versus like these,
product we have to make one go back to the drawing board design version 2 and you know it’s a much longer duration and for sure I have also in my life via in-laws seen the leapfrogging Where do I,
there’s a bunch of the user interfaces that are so complicated my relatives are never going to learn them.

David:
[37:16] But then just let prognose in her faces yeah.

Jason:
[37:16] I just left brought those interfaces the laptop in the phone and now you know the voice they are they’re totally capable of embracing,
the I do and I I’ll be honest I’m nervous about this opinion because I’ve shared it a bunch of times and I have the whole deck of Ono was ever going to buy clothes on the internet no one’s ever going to buy a TV on the internet and like almost any time you hear that.
Precondition to no guarantee that’s going to be wrong.

David:
[37:43] Info.

Jason:
[37:46] So voice Commerce I have a slightly nuanced guess,
I feel like there’s a category of stuff that people probably aren’t going to buy any internet that are high consideration,
they require a bunch of complicated brand specific attributes right like so I’m not likely to go hey Alexa order I will leave Urbana leopard skin size medium.
Address for 2-day delivery here’s my promo code right like out I probably will never wear in the vernacular to order a dress for the first time with all those custom words in it.
But that’s how you know just one chunk of Commerce incident okay I see that Jason but I think all of this like consumables and replenishment and order the peanut butter everyone’s going to do via voice I get that response a lot and I would even say.
The easiest stuff I actually think Amazon’s going to figure that out without voice like I feel like you’re just going to send me the Charmin toilet paper,
and no I need it before I need it right and so.

David:
[38:44] Yeah but that’s just making customers lives easier.

Jason:
[38:47] Which is a good thing so it to me voice is going to fit in this middle Zone which could be a huge chunk but I called the Goldilocks zone.
Too complicated to learn how to say and stuff that’s not perfectly predictable what my consumption pattern is right and so are your point like the pizza is.

David:
[39:06] Make a perfect example in this.

Jason:
[39:07] Check example in the Starbucks and hey I have family coming over double my peanut butter order all those kinds of things like manicuring aren’t my reoccurring.

David:
[39:14] Super Bowl commercial with Harrison Ford and so it’s it’s super interesting because it’s,
individual based like maybe this was two or three holiday seasons ago we released like what people ordered through Alexa and people were ordering like huge stuff.
Like like stuff that was like thousands of dollars I think maybe something was an engine or canoe just like.

[39:43] Everybody’s different In-N-Out.
And it’s also I talked a little about this on my weasenforth With Friends Podcast is as somebody who’s been gaming for 30 years it’s I buy favorite genre and I still play is massive multiplayer online game.

[40:01] But I see with my kids the battery out the fortnite’s right and now they want Apex and there is a genuine General shift.
In those patterns with gaming just like there is and how information is shared through social media just like information the and any parents who have teens know this they FaceTime all the time,
there’s there’s did the visual seeing each other I’m more comfortable with text the chatting all right so,
where’s that how easy is it for me to be in the middle of an Xbox game and or PS4 or whatever and say something like,
buy me another skin pi to half up right now,
just walking down the street you see you know the pizza boxes people holding it up horizontally they’re talking into it now they’re talking to text you know all of those things occurring is,
there’s a study of science with epigenetics we’re with our Behavior actually turns off and on genes,
and so over time is people get more and more used to that the Comfort level increases that to me is the most important thing that has happened in voice.
In five years is there are people now.

[41:21] And I include myself as part of this when I want to use a piece of technology to try to talk to it that’s the first thing that goes through my mind I try to ask Alexa or whatever.
I didn’t exist five years ago so that to me is what.

[41:37] Stuff gets ordered online because I can see you talk about I remember cuz I where I started out,
in e-commerce like I was talking about and this Mac Warehouse might get some of those you know there were $5,000 $6,000 and then it was servers and stuff and so are people going to order that,
cuz or they want to talk to somebody and have them walk if it’s a comfort level you know and so I never I think it’s going to be different I think it’s going to fall down into,
and I think you’re going to be surprised I think people be surprised where the engagement is like this is one of things I talked about in the keynote is.
I had a picture up of both a younger gentleman and an older gentleman and I said I pointed the older gentleman I said that maybe your biggest future customer.
That somebody or targeting today.
Gagement stare right and so I think you know those people have never had a chance because I think about if I had an opportunity to just order stuff.
Cuz they’re come from.

Jason:
[42:40] The thing that lowered that friction enough that they can finally do it or not.

David:
[42:43] Wait cuz we’re basing all the data we’re basing all the data on a certain generation of people who were familiar with technology or who ramped up right and you can and so I think all that’s going to change over time.

Jason:
[42:56] No I told you buy that there’s tons of funny videos on YouTube of the toddler’s to get handed a magazine and they’re like trying to swipe the magazine.

David:
[43:03] Oh yeah my kids are like that when they are young yet.

Jason:
[43:05] Magazines just an iPad that’s broken to a toddler right and there’s this clip by using a lot of Dex but you may you may need to steal this but one of the original Star Trek movies they like go back in time.

David:
[43:15] Scotty computer.

Jason:
[43:17] And it’s Scotty talking to.

David:
[43:18] I talked about that yet that was my favorite year.

Jason:
[43:20] Yeah yeah he just assumed it like a horse weigh.

David:
[43:23] Computer.

Jason:
[43:25] And then when he finds out he has to use them at the.
I do I’m serious though Fallout like you you mentioned the.
Speech interface to the phones and you know that you are and you start to see that here and I definitely see more of that here than I used to in the in the pizza configuration.

David:
[43:41] What’s our primary Computing device as of right now.

Jason:
[43:45] Go to Asia and it’s noticeable to me how more frequent it is and so that’s like one of the my curiosity’s is like,
man I see people in Shanghai like constantly talking in their phones in here it’s a little bit like I would argue it’s more natural to talk to,
an Alexa. Then it is to talk to a Google Android.

David:
[44:06] It depends man like if I got to go pick my teen up and I see them all waiting they’re all.

Jason:
[44:15] Talking on there okay.

David:
[44:16] They’re all on the devices right purses like if I’m hanging out at work or something like that so it’s,
I think a lot of that. Related it could be cultural by here you were talking about there too but it all goes down to learn to behavior and so you can’t get to any of that voice, stuff without foil learned behavior,
Comfort levels things like that.

Jason:
[44:39] Part of me in it does just hypothesis I’m wondering if China is just a little earlier adopter a voice because,
keyboard input of the simple Chinese is a little more painful than than English and so they’ve gone to voice sooner but in the long run.

David:
[44:58] It’s painful for everybody it’s so low bandwidth I have this problem where my brain,
I think it’s way faster than I can type and I used to like be down on myself I was like I’m just a really horrible writer but I’m good at having conversation right,
and I don’t mean that in an egocentric way to I do I mean that,
as I don’t need to make fun of myself I have a comfort level it’s natural and so then I started doing I have Office 365 and they one of the new releases they have,
dictation and I’ve been using that in my work. And I just.
Tons of it’s it looks like I’m writing 15 pages but all’s I did was talk for an hour because it’s finally there and that I met an author he used to,
he was one of those the co-creators of the onion it was at the digital Summit I gave in gosh now it sounds like I’m done driving I’ll just go but I was impressed by who he was,
and that he had the same problem and he wrote this whole book and he said to me he was like Dave just he should he basically did it on Siri on his phone he had this app on his phone and he wrote the whole book by talking to it and so,
voice,
your keyboard and typing and mouse and all that it’s so low down with voice is higher bandwidth when we get to spot we’re going to be a little better.

Jason:
[46:24] So that that’s actually good pivot to our last question cuz we’re coming out on time.
The folks jump in the time machine and go to the show 5 years from now and catch you know what we’re all talking about like we do things in a surprise than the most like what’s going to be,
the most surprising thing is is it is there going to be an Alexa that plugs in or brain or what you know.

David:
[46:46] I know gosh I have to I always go way out for me.

Jason:
[46:51] Okay even go further yeah I’m good with that.

David:
[46:53] Well I think the way that you can predict the future is to go way out and then you’ve got to pull it back because everything’s done in Milestone so if I was going to say 5 years.
I think what we’ll start to see is that.
The human isn’t the major driver like technology today is very what I would call a veteran,
I have to initiate something as a human being I’m looking for something as a human being I’ve turned something I push a button I’ve done all of those things.
I think within five years there going to be a eyes that know us well enough.
That it becomes a way to amplify ourselves and what I mean by that is.

[47:37] When is has been proven right is that you have to have a conversation about a topic in order to learn how you feel about that topic know to defend your position into
this is why you know in groups that you can come up with better ideas because of that process but if I have an AI that I can have a conversation with rise me up like the Star Trek Holodeck,
right you can go back and talk with Einstein and Newton and things like that that’s real when we get to that point,
that wooden locks in human potential is huge because my biggest problem is like,
my OneNote man is like 10,000 different entries right and I’m searching and it’s all these thoughts I’ve had and I Journal a lot and I think about things a lot but I’m like,
I just wish my brain could access that better and I think that’s where we’re going to head is there’s going to be a digital self of me it’s going to understand that.
And is going to be able to interject on things like I’m working on an idea and it’s like actually Dave five years ago you had a similar idea and by the way you were feeling this way around the time cuz I’ve also found in journaling that I go through,
very cyclical emotions based on other things which I wasn’t attending self-awareness is very very key right and.

[48:51] Not to get existential or anything like that but I think that’s what AI is going to allow everybody to get more self-aware who they are and the type of questions they answer and everything else is just
barfing opinions of everybody else and not listening right and it also allows I think it’s.
If we go out more than 5 years it allows Legacy imagine if a hundred years from now you know my,
great great great in a kids could talk to me and that’s the reason why I podcast so much as I know there’s going to be the ability for an AI to go through,
how I respond in conversation in my thoughts and my experiences there already is some of those kind of experimental Services you can say and just be able to have a conversation with me you know and that’s going to tie us together,
you’re feeling the same way that my great-great-great done the same stuff I do you know and so I think that is with all of this is going to be able to,
invoice I think voices the beginning of it it’s I like that’s why I like this a conversation in folks on human beings cuz I think voice is,
start I think we can we can understand a little bit and we can speak a little bit but we still can’t see we still don’t know feelings,
and if there’s so many other things touch there’s so many other things we as human beings just inherently are great at ability to detect emotion in face,
I think when we go out 20-30 years that that stuff will also come into play more does that mean right.

Jason:
[50:21] Visual Commerce you.

David:
[50:22] You got it dude and yeah and then you got to be careful The Uncanny Valley and things like that with people game freak which to human.

Jason:
[50:33] I told you I hope that none should I come to pass and that’s going to be a great place to leave it cuz I have burn through are a lot of time as always,
questions we can get you on the show feel free to drop us a note on Facebook and we’ll continue the conversation there if you enjoy the show we sure would love it if you jump on iTunes and give us that five star review,
David and listeners want to connect with you or or learn more about what you’re up to what’s the like are you.

David:
[50:54] About what you’re up to what my vanity and my vanity URL is just the Dave Dev so the Dave dtv.com and that’s my Twitter LinkedIn email podcast everything.

Jason:
[51:07] Awesome if you’re driving don’t write that down I will put it in the show notes and you can you can click on it when you get to your destination David really appreciated talking you thanks very much for taking the time.

David:
[51:17] Thank you for having me on.

Jason:
[51:18] Until next time happy commercing.

Mar 1, 2019

EP164 - News live from ICSC OAC 

http://jasonandscot.com

Jason & Scot gave a presentation at the International Council of Shopping Centers Open Air Centers show in Austin Texas and got together afterward to record a news update.

  • Amazon Project Zero - New brand protection program
  • Walmart Earnings.  Same store sales up 4.2%, E-Com for the quarter up 43% (up 40% for the fiscal year), guidance for next year is that e-com will grow 35%.  Profitability of e-commerce continues to be a challenge for Walmart, and they expect that to continue.   Walmart stores offering "Online Grocery Pickup" (OGP)_ grew from 800 to 2100 stores this year, and is expected to grow to 3100 next year.
  • JCPenneys Earnings. Revenue down 8.4%, same store sales down -4% (vs. 4.3% expected).  They announced the closure of 18 stores, and said to expect more in subsequent years).
  • L Brands Earnings - Victoria's Secret same store sales down 7%, will close 53 stores.
  • FedEx launched a new delivery robot, SameDay Bot
  • Stamps.com dropped it's exclusive deal with USPS, a possible precursor to an Amazon partnership (or acquisition).
  • Target launched Target Plus, a new invite only marketplace to expand Targets online assortment.
  • Marketplace software vendor Mirikl announced a new $70M fund raise, reflecting investor confidence in the marketplace model.

Jason will be at ShopTalk in Las Vegas next week and will moderate two panels:

MONDAY, MARCH 4, 2019 TRACK 4, SESSION 4: 2:50PM - 3:30PM

TOPIC: Selling on Marketplaces

  • John Evons, VP, Global Direct-to-Consumer, KEEN
  • Bridget Davies, VP, Revenue & Seller Growth EBay
  • Jordan Bass, Head of eCommerce, The Wonderful Company

TUESDAY, MARCH 5, 2019 TRACK 2, SESSION 5: 3:35PM - 4:15PM

TOPIC: Creating a Single View of the Customer

  • Charlie Cole, Chief Ecommerce Officer, Samsonite
  • Steve Miller, SVP, Marketing & eCommerce, JOANN Stores
  • Greg Fancher, SVP & Chief Information Officer, Express

Jason and Scot will be giving a joint presentation (and recording a live show) from ChannelAdvisor Connect in Austin on April 8th and 9th.

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

Episode 164 of the Jason & Scot show was recorded on Thursday, February 28th, 2019.

Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer and Scot Wingo, CEO of GetSpiffy and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

New beta feature - Google Automated Transcription of the show:

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this is episode 164 being recorded on Thursday February 28th 2019 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host,
Scot Wingo.

Scot:
[0:40] Alright alright alright hey Jason welcome back Jason Scott show listeners
we are joining you live live live in the same room which rarely happens and we are here in Austin Texas at the icsc OAC conference.

Jason:
[0:57] That is a mouthful very impressive specially with Matthew McConaughey standing right behind you.

Scot:
[1:02] Yeah yes sir this is a conference that will you put her on and I have all it I'll let you introduce the conference.

Jason:
[1:09] So I think icsc is a Trade Organization for shopping centers and this particular event is about the,
open-air centers which is like,
a strip malls and power centers and lifestyle outdoor malls so it's a bunch of real estate people from retail companies and a bunch of.
Individual property owners that own these these properties that host them all Z's my senses this category Mall,
tends to be less aggregated in the big Regional malls where you name the three big mall operator.

Scot:
[1:46] Yeah I guess so it's a sold-out show about 500 folks here and fair
yeah it's pretty interesting we were here doing a talk I don't want to say too much I think we're going to try to turn it into kind of a visual
but video presentation so we're going to try a new form out with that but we were asked to come give kind of a live version of the show and we talked about you were always the folks to get to get in front of a bunch of retailers and Tom they're going out of business if so that was exciting.

Jason:
[2:14] Yeah I put a bunch of them on a slide that said you don't want to be here.

Scot:
[2:18] And then I saw some people storm out so I think Mission achieved we think we just killed.

Jason:
[2:24] One way or another.

Scot:
[2:26] I wish we have a lot of one and dones here with a Jason and Scott show Roadshow.

Jason:
[2:35] Exactly we are the ultimate one-hit-wonder but I had fun chatting with you and in a rare occurrence we budgeted an hour for the presentation and took exactly an hour.

Scot:
[2:45] Yeah yeah if we could just be as good on the podcast that would be amazing but we we nailed it.

Jason:
[2:51] I like to think when we go long we're just making our audience more.

Scot:
[2:55] Yeah we're giving them more content for their their dollar.

Jason:
[2:57] No I mean they have to stay on the exercise bike longer.

Scot:
[2:59] Truth absolute yes do not get off the the cycle will work time constraint here cuz I've got to hop on a plane next week you or in Las Vegas that shoptalk I'm super envious this is I'm going to miss this year shoptalk unfortunately.

Jason:
[3:11] It will not be a true shop talk without you to be my my co-pilot but I am looking for to go of course it's been a,
Erasure the last couple years it's sold out this year it's at the Venetian I want to say that more than 10,000 people last year so expect it'll be.
A big shindig and I'm moderating to panel so I'm doing a panel on Monday in the afternoon at like 2:50 on selling on Marketplace has.

Scot:
[3:40] What that's my topic.

Jason:
[3:41] I feel like this would have been your panel has you gone but they're trying to channel,
You by inviting me and so I can have the halo effect but we have a couple sellers that are.
The telling marketplaces so we have keen is on on the ship which is a great Footwear brand from,
from my old Hometown Portland Oregon and then Jordan bass I don't know what this guy did wrong in life but this is will be,
the second time he's been on a panel that I moderated and Jordan Reed's e-commerce at the wonderful company so I always like to.
Wonderful company owns a Fiji Water so I like to spend.
30 40 minutes talking about the Fiji Water girl with him and then I like to get into the details about how they're able to Shell the pistachios and just sell the the unshelled pistachios are the shelled pistachio.

Scot:
[4:31] Can you have you been on your panel to.

Jason:
[4:33] I do incident in addition that you sellers are we have Bridget Davies who is the VP of Revenue and so our growth at eBay so we'll get to hear from from eBay's perspective about how Brands and should be thinking of amusing.
Using Marketplace.

Scot:
[4:48] Cool and then decide for marketplaces what are you talking about.

Jason:
[4:51] Yep sit in on Tuesday I have a panel called creating a single view of the customer so talking about.
Kind of aggravating Gator dated to get that 360 degree view of the customer and how you do personalization and data capture and in all those kinds of things and so we have.
Three retailers on on the show we have a.
Charlie, who has been on the podcast so I vaguely remember that show because I think we did it in the middle of a party and there may have been some drinking.

Scot:
[5:22] There was some inviting I remember Charlie is pretty outspoken so I think he'll ask me a fun panel I'm going to call I'm going to call it now.

Jason:
[5:29] Yeah I think so too and Charlie runs e-commerce at Samsonite which is of course Samsonite but also to me and and i e bags,
incident we've got Steve Miller's that's VP of marketing and e-commerce at Jo-Ann stores in so that you know they have an interesting perspective on,
on a digital in End customer capture so that that'll be interesting to talk about and then,
we have a Greg fanshare who's the the CIO at Express and express as one of the most interesting,
long-running customer Affinity programs in the apparel space so he'll be an interesting perspective as well.

Scot:
[6:07] Free call and then we are back together here in Austin actually April 8th tonight we're going to do another live version of the show for a channel advisor connect so we should start thinking about doing the sides when you get back from Vegas.

Jason:
[6:19] Do you think I will Channel advisor just pay for us to keep this room at the Fairmont so I can just leave my stuff here.

Scot:
[6:24] Probably not this is a this is a pretty fancy I don't there is a Residence Inn I'm so maybe maybe they'll store your bags over there.

Jason:
[6:31] Oscar.

Scot:
[6:33] Cool well it wouldn't be a Jason Scott show without some
Amazon news new your margin is there opportunity,
quotes of the day Amazon announced a new program for Brands I wanted to kick this one over to you Jason cuz I wanted to get your perspective on it
tell us about Amazon Project zero.

Jason:
[7:03] Finally I get to be the one to do some Amazon news I feel like that's always your thing.

Scot:
[7:07] Since you're taking my panels I'll give you the whole Amazon news thing too but I'm going to talk about digital fact tags going for it.

Jason:
[7:17] Project it was kind of interesting so this is a new program that Amazon just announced this week and it's a,
program by invite only for select Brands and it apparently gives them these brands of the ability to flag and take down a counterfeit listings.
And so.
Without any intervention from Amazon or any appeal process a brand that's in the program would have a self-service tool where they could.
Identify a counterfeit copy of their product and take it down so for example of Vera Bradley was mentioned as one of the.
The pilot customer so they they saw counterfeit handbags on the on the site they could take him down and that's the part.
In the short run that I'm most interested in and there's probably the most buzzed-about and there's some pros and cons to this this program,
this is part of the bigger counterfeit program anti-counterfeit program they don't actually have a program.

[8:22] The weather trying to get Brands to serialize their product and literally like Prince a unique.
Serialize barcode on every product and so Amazon's offering that if you,
go to this expense when you manufacture your product to put this authentic Asian serial number on each product the Dell validate those serial numbers when they bring them into,
the Amazon fulfillment center echo system and so they'll the only allow products with valid serial numbers to come in so this is.
Kind of a systemic way the Amazons offering to help Brands keep only authentic products on the site but the reason that's not super interesting in the short run is for a brilliant benefit from that they have to be willing to print this.
Spinning a serial number on a package that you need freeze packages.
In incremental expense normally they just awesome print the package in huge bulk and then they have to put it on every single package in the channel so it wouldn't be just on the,
set of goods they're sending Amazon they have to print it on,
everything they sell at Walmart and Kroger and everywhere else and so I have not heard of any adoption for that other than small.

Scot:
[9:40] So I've been at this for over 20 years now and eBay has gone kind of around the horn on this a couple times where that does program called verified rights owners,
the song is a bureau and they they went through a phase where you can kind of like go and solve your room and then the brands way over reach to know they would just kind of go knock out any third-party seller that was selling stuff without any kind of
way of validating that it was not even talked to be counterfeit and then they had to kind of like to swing back and
I'm in the telecommunication to see if Brands Conover reach on the sand and it just because a third party is selling a Louis Vuitton bag doesn't mean it's kind of it
and you know you have to think it's a little kind of murky so it'll be interesting to see I do think,
my my easy prediction is going to be a lot of overreaching going on early on with this third-party sellers will go through an outrage phase
gmv will go down in these categories in Amazon will then kind of have to swing the pendulum back to some Middle Ground so we'll see how that happens for third-party sellers,
I do think I'll be a short-term negative for third-party sellers.

Jason:
[10:44] Yeah I mean I think there's a couple of ways to look at this somewhat cynical so.
Light at the moment most brands would say there's not enough tools to protect the brand on the site right and so there's a.

[10:58] A complaint process but it feels very slow and,
sort of automated and things take a long time to percolate and you don't necessarily ever see any action in a bit and an even to event Avail yourself of those limited tools you had to have a formal relationship with Amazon which in most cases meant you had to be selling products.

[11:16] Through Amazon and so you know some of the brands that most don't like the counterfeit stuff on Amazon have also made the decision not to sell on Amazon themselves and since they have no relationship with Amazon
Amazon doesn't make those tools available to them so some some people would say that some of these brand protection tools one of their their secondary purposes is to entice Brands to,
to participate on the platform and so I've heard a lot of people speculate that that's one of.
The main reasons that Nike for example participates on Amazon is to Avail themselves of the Amazon brand registry so this is more powerful tool presumably as far as we know you have to be in Amazon,
brands are selling on Amazon platform to use it so that's another enticement to some of those those holdouts and you know per your point,
brands are almost certainly going to over-reach lots of Brands don't like gray Market product even though that's perfectly legal to sell on the,
on the side or they don't like product that doesn't comply with Matt,
pause price policy even though they don't really have the right to take that down so pretty likely as they invite more people in the program people were over reach you and I were speculating a little bit.
Maybe Amazon even already knows that and doesn't care like there's a.

[12:34] A hypothesis would be then Amazon wants to improve some machine learning to improve the automated detection of these counterfeit things and said the first thing you need is a big data set,
listings that have been identified as counterfeit and so one would thing you do if your Amazon you hire a bunch of people.
Look at the listings do the research figure out which were fake and which ones weren't flag all the ones that are fake and then you eat all that data to a machine learning algorithm and eventually you have a really smart system to identify counterfeit and if you were Amazon and didn't want to pay all those,
to do that work you could sort of outsourced to the brain by temporarily giving them the tools to Flagstaff themselves,
knowing that they would eventually Miss use the tools and you have a great excuse to take the tools away from them but in the interim you have built a good dataset you could use to train a machine Learning System.

Scot:
[13:24] Another another signal is the product reviews so I've seen many product reviews especially in the health and beauty category it seems to be where I I see it most we're pretty significant number of reviews will say this is not really from,
Brand X it's is fake and then so you know that's another interesting signal so maybe if a brand comes in and then does Mark that and they'll get,
yep the machine learning could get smarter and no okay up books like these reviewers are right that this is a counterfeit or or if it's not taken down though they'll learn the opposite.

Jason:
[13:54] Yeah and if you're not a regular selling Amazon like you you'd be shocked how deep are this goes like the the fraudsters are super sophisticated now in the black hat tactics are really evil so for example,
they're not likely to write a bunch of negative reviews about your their competitive product they're actually more likely to write.
Positive reviews that they know Amazon will flag is fraudulent about their competitors products.
And figure takedowns and things that way knowing that Amazon's is very slow and not very good at responding to those complaints about accidental.

Scot:
[14:29] Cool so also in the news Walmart had some earnings so walk us through the highlights there.

Jason:
[14:35] Yet so I think it was overall a good quarter for Amazon their same-store sales for Walmart their same-store sales were up 4.2%.
Oh that's that's not a huge number but by retail standard that's a very good number again you know there's a lot of retailers the same start negative same-store sales,
so 4.2 is reasonably healthy across such a big number that they have and I'm more relevant to our listeners there econ was up 43% for the quarter.

[15:06] Cousin hit their 40%.
Increase for the year which was their guidance last year so they basically hit it exactly now that issued new guidance for next year and they're,
predicting 35% eCommerce growth so still a big number still bigger than Amazon certainly bigger than than that industry overall,
but but like many e-commerce sites their rate of growth is is probably decelerating and as we've talked about on the show,
a lot of Walmart's e-commerce growth is really tied to this grocery program they have right and so you know unlike traditional general merchandise e-commerce where you know you you put the listing up once available to everyone at Shops at walmart.com,
when you put eggs up for sale in a particular store,
does eggs are only available to Consumers that our shopping within a close Geographic proximity of that one store then so it's e-commerce sales it's it's it's listed as e-commerce but you almost have to think of it as same-store sales.

[16:09] You know that when they they add more stores there their growth seems really high but the reality is is because they went from a store that wasn't selling groceries online to a store that now is and so if you look at it through that lens,
Walmart is a little more than halfway through making grocery even available on all their store so they announced that they're at 2,100 stores have online grocery pickup right now,
they have 4,000 stores they said by next year.

[16:37] 3100 store so that's about the same amount of growth next year they had this year so if you were a investor or Speculator its it seems pretty safe.
They added a thousand swords of grocery this year and that drove this is big 40% growth number,
they're planning on adding another thousand stores next year that if they hit that stores.
Probably going to you know not be that impressive did they cheat 35% growth and they have one more year and them but what you be really worried about is how they calm.
Ecommerce sales after that final year when they don't have more more stores to open,
and then the other thing is interesting to me is they also announced that only 800 of the stores do they have home delivery and you guys are all heard me talk about I think curbside pickup a bigger deal than home obviously a lot of people do want home,
so the only 800 of the 4,000 stores do home and Walmart has used a variety of.
Internal and external vendors to do home delivery so they have this thing called spark delivery which is kind of using their own employees to deliver,
and they've done some mixed press on that it doesn't seem like it's a huge piece of their delivery Network they partnered with a lot of the third-party delivery firms.

[17:51] To do that delivery and that they're only at 800 stores they said they want to double that next year given that they're leveraging Partners you expect that means they're going to lean into their Partners even more.
About a week before their earnings deliv announced that they were actually stopping their Walmart partnership.
And it first you would assume oh my gosh Walmart my stove fire them for some reason but the the word on the street is that deliver actually turn to Walmart off,
because the.
Delivers using a gig workers and the workers were so dissatisfied with the deliveries they were getting from Walmart that they started refusing.
To get them and that the fundamental complaint is.
Hey you're doing worker you take in order to deliver groceries you go to the store the order is not ready you have to wait a long time you have a bunch of downtime.
As the deliv driver talk about it.
It's a bad experience for the delivery drivers and a lot of inefficiencies on Walmart's part and then on average the customers that are most ordering home delivery are the ones that are farthest away from the Walmart stores which are.

[19:01] If you're very far from Walmart store your super roll and it said expensive long delivery thing so it sounds like.
There's still some some optimization than improvements.
To get home delivery nails at Walmart but it seems like the curbside pickup is going quite smooth and then I guess the last big talking point is,
despite the fact that he Converses growing huge it's a significant contributor to that top-line growth it's not a contributor to profitability and in fact Walmart talks about having a loss on their entire e-commerce business and given that there,
Thomas make 10 billion dollars in an incremental capex expenditures between now and 2020 they've actually said you can expect.
Those losses to increase in potential accelerate in so.
They're talk about like a strategically one of the few things Walmart needs to make progress on that they haven't is.
Getting profitability on that e-commerce sales.

Scot:
[19:58] Girl has any Wall Street analyst, picked apart the the growth to see how much is incremental and how much just kind of moving from the offline to the online, part of The Ledger.

Jason:
[20:09] Not that I have seen and I like to be honest I haven't even seen that you would think at the very least people would start a back into a same-store sales,
number and I haven't seen that yet now you you get a lot more of the investor Communications than I do for some reason there's some.
People perceive that you're like smarter and more economically successful.

Scot:
[20:30] We'll get we'll get some of our interns on this for maybe a few drops of
also this morning JCPenney announce there are things I thought there's a couple interesting things there that the stock surged and I was like oh they must be out of trouble but really it turns out to be one of these less worse than books. So Revenue was only down 8.4% year-over-year I think there was concern out there
as we heard this kind of continuing drumbeat of the back end of Q4 was slow
we've had more bankruptcies we got Payless Shoes is kind of have they filed or their tottering on the brink of filing so a lot of people are really concerned about JCPenney so this ended up being kind of a new idea positive in that it wasn't as bad as people that kind of imagined,
same-store sales in 219 were only down 4% versus,
proceed 4.3 that's like at a point swing compared to Walmart which is pretty interesting Avenue CEO I won't even try to say her last name do you know how to say it Joel Soul Tallahassee while I will try Soul Town
and so she made two announcements that were interesting and there's there's this other weird thing that happens in retail now when you announced store closures or stock pops because there was like Yay work closing stores,
obviously you can't like enough the endgame there as is.

Jason:
[21:48] Add trendline doesn't doesn't go forever.

Scot:
[21:49] Yeah so she knows they're going to close 18 of the main stores and nine of their home and Furniture footprint
I and then she declined to give 2019 guidance and then said no pretty much telegraphed expect a lot more store closures so
you kind of said something to the effect of we're evaluating all the stores there's no sacred cows all that kind of new CEO stuff,
kind of an interesting whipsaw there is so so I see we had Ron Johnson and he left at 13th and there was a guy to co since then so she's like the third since Ron Johnson.

Jason:
[22:22] Yeah they had the original CEO come back after Ron Johnson and then they had and I'm I'm going to say the name wrong Marvin.

Scot:
[22:31] Marvin and I he was big on appliances were one of the first things that you'll did was yank all the appliance stuff out so you know it's interesting to watch these gyrations as he's trying to figure out what what they want to be when they grow up.

Jason:
[22:46] I didn't even know you were allowed to just take a pass on offering a guidance.

Scot:
[22:51] You can't have soy Amazon only gives 1/4 of guidance they don't give annual guidance and it's more of the trend these days not to offer.

Jason:
[23:00] Incident in rounding out this foreclosure news L Brands which is the parent company of Victoria's Secret and.
A bath one by.
Thank you very much I was desperate to say their competitors name.

Scot:
[23:20] You're the marketplace guy and now I'm the retail.

Jason:
[23:22] Exactly I love,
so they also had a tough quarter or same-store sales in Victoria Secret was down 7% then after closing 53 stores and of course they've been in the news lately for,
seemingly not being in touch with the their customers in the marketplace always being accused of that so obviously,
they they have a particular image that they try to sell their customers they don't necessarily have super inclusive sizing the a
like absolutely do not have super inclusive sizing of models selling their stuff,
and as there's been more backlash to that the the management team's response has been pretty like from my perspective.
They have a legitimate point for their brand they need to find a much more elegant way to measure message.

Scot:
[24:16] Yeah at some point you face an existential crisis in you change your mind on those things will be interesting to see if feel feels like they're up against that with 53.

Jason:
[24:23] Or your successors change change.

Scot:
[24:27] Absolutely.
Some interesting news in the Des kind of delivery category So Yesterday FedEx released a new robot delivery system this one is pretty cool,
a little background so Amazon. I think it was three weeks ago they announced that they're also testing a little robot delivery there's looks like a little Moon kind of a Rover because it's got six wheels I don't think that there
they can like scissor up or anything like that it just think it is a really good traction on a flat surface.

Jason:
[24:59] Pick one perfect neighborhood in in like a Seattle suburb that has a perfectly smooth sidewalks that I can go on.

Scot:
[25:04] Or on Mars so is there does your two options so craters and and a sidewalk in Seattle so out of Memphis FedEx is announced a new robot and its really cool it's called the same day and they partnered with the Segway folks to there's a
kind of famous scientist in Cayman and most people know him for Segway but he also before Segway
he took the same technology that is in Segway that allows you to use as gyroscopes things to create a balancing system
create a wheelchair this is been really huge for four people are disabled this wheelchair can go upstairs so you using the same technology for this robot and in the video you know they show it kind of numb going through some pretty
rough terrain and then it can kind of effectively climb up stairs so really cool video there a lot of press for them rarely do you have,
delivery on on things like the night shows but one of the one of the Jimmy is the Kimmel or one of the other guys they said they had it on there I'm so
really good PR for FedEx they're going to roll it out in Memphis and then quote-unquote other cities so they haven't announced those yet
did you have a pretty nice list of brands that are launching it with so Pizza Hut Target Lowe's and AutoZone and if so this is kind of this interesting the last mile delivery problem
using robots to do that other interesting thing about the robots that I saw was there using a lot of autonomous vehicle technology so these things are connected they have a little bit of a lidar camera kind of thing on it.

[26:31] I'm there. I dug into this pretty good and I couldn't get a lot of details on that so I can be interesting this to learn more about
what that looks like cuz I think there's some pretty meeting problems for these things you is there a human just driving this remote from a central location or is it actually autonomous there hasn't been that I saw a lot of detail on that aspect of it.

Jason:
[26:52] Yeah that'll be interesting when I know we had a lot of attitude yes this year's just even a side effect of a lot of these lidars is they,
they're really bad for camera so you can imagine ironically the the FedEx robot taking out all the the ring doorbell.

Scot:
[27:13] Yeah and another something about lidar as you can shine laser pointers I didn't confuse it.
I'm taking meds and someone trying to steal a package by confusing the FedEx robot with a light iron so interesting to see what what happens from these things
I bet you know seems infinitely safer than drones in the lot easier to test these out then you haven't had that pee involved in Lacosta,
also in Shipping News a couple of quick ones
stamps.com is interesting so everyone knows kind of the front end stamps.com but the biggest chunk of stamps.com is they went acquired all the shipping companies that are out there shipstation ship works.

Jason:
[27:52] And by shipping companies you mean software vendors that help people ship stuff.

Scot:
[27:56] Yeah for colic smbs and like eBay sellers in Amazon sellers stamps went on this kind of acquisition spree in is accumulated a lot of the large package shippers using the stamps.com software
then they have this connection into the USPS just called in Deca they had an exclusive relationship the USPS and they would effectively get
sales commissions or I don't know the right terminology there
did eventually get a revenue Sheriff's whenever you would buy you $3 for an overnight kind of a delivery from from the USPS if you miss one of the many stamps platforms they would make like a nickel or something like that
the shipping so many products that ended up being a really big.

[28:39] Part of the revenue will they announce the week ago they were ending this exclusivity Arrangement will USPS and you know the market freaked out but was really interesting is reading the tea leaves on that the CEO of essentially sad you know there's.

[28:54] So much going on Amazon and set the bar at 11 so we need to have much higher service levels that we offer and then there's a fair amount of speculation that
this is an interesting if you were going to go do a deal with so so a couple of things you have together if Amazon we're going to
you know open up their shipping Network for anyone to use it like a FedEx UPS,
that's one if in the second half if you wanted to do a deal with them
then this is the first step of what you would do if there's a lot of speculation that stamps.com is going to be a front-end into more of a Amazon Logistics kind of solution
and you know that that's going to be pretty fascinating.

[29:39] Sidebar I've been I'm going to road trip so I don't usually do a lot of road driving I file a lot like you do
and I have been blown away by the number of Amazon Prime trucks so I went on a three-hour drive from Raleigh to Washington DC and I literally saw 20 Amazon
trucks Emmys on the road it's just like startling how much Amazon Logistics is going on out there then in our area I'm sure in Chicago we see the prime trucks I don't get anything from FedEx or UPS to my house anymore from Amazon that's all direct Amazon so they've definitely kind of started trimming out certain zip codes that must have high Prime density
and are doing deliveries through
that that smile van program where they have this 1099 networks they built up so big moves happening under the under the surface in the world of of delivery.

Jason:
[30:25] Yeah I believe so you won't see the bands as much in Chicago because Chicago was an early Market where they build out a.
A network of actual Amazon W2 delivery people and so they're there full-time Amazon employees but they don't use the mark Vance so the majority of my packages get delivered by an Amazon employee,
one of the easy ways to tell by the way is if you go in till like the mobile app and you look at your orders when Amazon delivers a package they take a photo.
That UPS or FedEx won't you if you have a photo as proof of delivery than you know it Amazon for some pride delivered it.
The Vans are mostly reserved for those there's third-party companies.
That that are franchisees of Amazon Fulfillment of you will end in Chicago we have a blend of flex drivers and.
Amazon W-2 employee so we don't have as many of the franchisee.

Scot:
[31:24] And then the last hit bit and this is back into the world of marketplaces there's a company out of France called Miracle m i r a k l and just want to send them a shout out they just announced 70 million dollar round and what they do is they go primarily to retailers but they also work with some malls in a lot of other
other places where you can have a Marketplace so think of it as kind of a Marketplace in a box of so you can kind of say hey
let's say I don't know hey JC Penney you want to add a Marketplace here's the software and all the components you need to integrate that in with your existing shopping cart functionality
full disclosure their partner of Channel visor so we're already pre-integrated with him so we can go to bring a bunch of celery along with the software
and then the last thing I actually forgot to put in the show notes is,
Target at least that they have a Marketplace so I saw a thing on cnbc's it looks like targets doing some Marketplace stuff which is interesting so these marketplaces are a kind of
I feel gratified talked about him for a very long time and we could only talk about even Amazon but now we have.
Copious marketplaces and talk about with obviously Walmart it's a big part of what they're doing and it's interesting to see not only Miracle raise a pretty substantial round of funding to keep spreading the marketplace fire and now we have.

Jason:
[32:46] So it is interesting to me and almost feels like a a new wave of marketplaces so you obviously you have the businesses that are fundamentally marketplaces I gave an Amazon there their they're.
In the past have been some retailers that leaned in the marketplaces so you know Staples talked a lot about it and I still think run one although you don't hear them talk about as much.

Scot:
[33:09] Actually close to them.

Jason:
[33:11] And of course the best by briefly ran one and closed it down and so for a while there was a whole Market places are great but not.
Every retailer can earn the traffic to make the marketplace work.
Now for your point we're seeing I mean Walmart's is leaning heavily in the marketplace is this new Target initiative Albertsons is an interesting,
tackling marketplaces from a fresh and frozen perspective which will be unique.

Scot:
[33:40] Yeah Urban Outfitter has one.

Jason:
[33:42] And then for your point like Miracle being able to raise money means that there's investors that that think that that's a,
a trend that we're going to continue to see as well so it'll be interesting to see how it plays out I almost wish I had founded some company that made money helping people sell on Marketplace.

Scot:
[34:00] You're a chief strategy retail Commerce digital officer you don't have to worry about mundane things like.

Jason:
[34:07] No no no but keep doing a good job you may eventually earn another initial in your title of your.

Scot:
[34:11] I keep working on it sorry.

Jason:
[34:12] It's important to have goals and that we are going to have to leave it there because,
it has happened again we've used up all the allotted time for this
a special Scott has to get to the airport short edition of the Jason and Scott show so if you have any questions or comments about the show jump on Facebook and leave them there let us know how much you prefer this much shorter version of the guests,
and as always if you enjoyed it would love to get that five star review on iTunes.

Scot:
[34:43] Thanks for joining us everyone and remember...

Jason:
[34:46] Until next time happy commercing.

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