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

Join hosts Jason “Retailgeek” Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Founder and Executive Chairman of Channel Advisor, as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.
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Now displaying: June, 2019
Jun 28, 2019

EP179 - Edge Ascential VP Chris Perry 

Chris Perry is the Vice President of Global Executive Education for Edge by Ascential.  

Topics covered:

  • Digitally Native Brands
  • Brands Going Direct
  • Crazy things CGP executives say
  • Amazon

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

Episode 179 of the Jason & Scot show was recorded on Monday, June 17, 2019

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 is episode 179 being recorded on Monday June 17th
2019 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scot Wingo.

Scot:
[0:39] Hey Jason and welcome back Jason Scott show listeners listeners in this episode we have a real special treat for you,
they're all special treats but this is a special special treat I'll explain to the short story
for a while I ran had the dubious honor of running a full day Amazon seminar at internet retailer their seminar at their conferences called IRC
and a few years ago that we're always looking for folks to get this and fortunately at televisor we have this ability to see what our customers are doing so we had this customer Caldwell pet
and this is very competitive pet category and they were just absolutely destroying the competition on Amazon so we dug into what was going on there and found that
architects of that strategy and success was called Chris. So we scheduled at all called to talk to him and talk about so we can get internet retailer and we're blown away by his ideas and thoughts about,
consumer and add know how to succeed on Amazon etcetera.

[1:41] He he gave a talk there and that was a Smash Hit and then I like to think maybe this had a little something to do it but then he was pretty rapidly there after recruited by Kellogg's those are
does that is not the business school but the cereal lego my eggo folks and did a great send there and now he is with Edge by ascential,
his role includes evangelizing.

Chris:
[2:10] Thank you so much it's an honor to be here.

Jason:
[2:13] Hey Chris we're thrilled to have you and you know as usual I like to to correct Scott's introduction I do feel like there are a bunch of people that work at Kellogg the Gathering NBA from the Kellogg School.

Chris:
[2:23] I'm sure there's a Kellogg squared group that has doubled up there I was not one of them but I was excited to be at the one.

[2:33] Pretty much took up about 50% of my pantry so.

Jason:
[2:36] The more delicious one.

Chris:
[2:39] You gain if you do gain the Freshman 15 when you start working.

Jason:
[2:43] Yeah yeah we'll have to explain that because I hear the culture may have shifted a little bit that the free snacks might not be flowing as much as they want it but.

Chris:
[2:52] I think there's nothing they were trying to help us with their waistline but they still had the Kellogg's Cafe that had like an endless cereal and it was just an easy for me it was always easy cuz I don't normally eat a ton of breakfast when I got the office it was such a,
such a such a treat but I could see if you were there all day long in the in the main headquarters that could get a little unruly on your eye.
On your way to climb so.

Jason:
[3:18] I I get it and Scott and I are big proponents of selecting your your career choices based on their snacks so.

Chris:
[3:25] Exactly.

Jason:
[3:27] We're totally sympatico and that's usually how we like to start the show is to actually get a little bit of a background about the Guess Who Could you tell us what you did before Scott quote on quote discovered you.

Chris:
[3:40] And that was that was the.
Climax in my career right there so since then I've fallen quite far down to edge by so I'm just getting up.
But bite my Journeys been kind of an interesting one after,
my MBA program was I had the awesome opportunity to join Reckitt benckiser or RB is there now called I'm going to have them for a while,
RB is a very unique culture honestly one
it's it's it's very it's a very tough environment but I kind of treat like the Marines in there not cut throat against each other their Cutthroat against competition externally
and so I mean that has no oil pressure and a pace but not everybody can have,
but it but for those who can it really teaches you the ropes and they're very lean,
you get a lot of autonomy and you get to take ownership of things that you would necessarily get to and some of the the larger more bureaucratic,
cpg organizations that so I really lucked out.
With that experience and ultimately was I first started out in Brandon really thought you were coming out of my NBA.

[4:52] Brand management is my specialization year than I thought that's what I was going to do it there were very clear tracks and this is right is obviously digital was becoming a Hot Topic not that it wasn't already present for the Hot Topic,
it marketing and soda,
net-net I've been asking how do I take a rotation and digital or something again that's kind of going where the puck is going for the consumer and there weren't any things at the time and,
and in ultimately this special project kind of came up and I was
laugh when I think that it was called the special project like it would end one day and it was called E-Town which was obviously what e-commerce was and in so we were the whole company was essentially a ask for volunteers,
at a town hall and when we ultimately when I looked around and she would raise their hand there like three of them that it actually volunteered as tribute in true Hunger Games fashion,
I'm for the special project and so it was,
and I can tell you to this day I can I can name the people I won't do it on the show but I can name the people who pulled me aside and said that I had ruined my career and I would never get back in the brain,
I would never become a senior leader because of this specialization I've gone to Niche this wasn't going to ever turn out.

[6:08] And it's so funny because most of those people have either already shifted e-commerce or asked me at some point later having forgotten what they said to me.

[6:19] Ask me how they could break into e-commerce until I say that humbly because I was so we don't know where the future is going to go we just have to go with us and talk to you later,
I never look back and then honestly wreck it was such a wonderful environment for testing and learning because they literally would point at
the future and say go get it here is some resources and you got to go fail and learn and then optimizing and succeed and so
kind of call that original group of about 20 of us that openly that's three built into,
the racket Mafia cuz that was the original group that got to really learn and hone their e-commerce skills and literally we've cascaded and then thrown to the,
before Winden I'll leave ye Commerce across so many different cpgs and solution provider so it's it's it's so it's so cool to see all the tabs,
really that just led me ultimately to a new opportunity wellpet we're obviously Scott you discovered me and then and then,
actually I took a very short stint before Kellogg's at Planet retail RNG which is one of the companies that became Edge and I kind of pause that's after when Kellogg's do you want one of those too-good-to-be-true opportunities and then to Kellogg's and then,
ultimately I was asked to come back which I was an honor to come back to what became Edge by ascential.

[7:42] Which is the combination of clavis Insight one click retail brandview and plant retail RNG into one company on last August and and the rest is history and so I might just have been very blessed in my career I mean everything happens for a reason,
I'm not going to tell you it was all sunshine and rainbows but it was it it's been an amazing learning opportunity and I and I really do feel personally and professionally the e-commerce was an accelerator for me,
but really got gave me the opportunity to do what I feel called to do,
as a career and I don't want to sound corny but I really do feel like leading change was something I was,
I am a mini of us including you were meant to do and I think we're doing it all of our own unique ways.

Jason:
[8:28] Awesome and I think you mentioned me off the air that all those e-commerce naysayers are now the leadership team at chewy is that.

Chris:
[8:37] Chewy was a very is and was while I was working with him a very formidable.
Retailer partner but also competitor in the marketplace I mean when you think about it that they got ahead of Amazon in one of the leading categories before Amazon and I only say,
I'm sure Jeff Bezos has a drone outside my house watching its moment as I say this but we got ahead of of Amazon before the eye of the smile of Mordor as I like to call it.
Saw them in and they are leaving in Texas which is and have a really really unique value proposition I me when I drive down our,
Street here in Boston of the street I see the chewy box in a lot of people's doorsteps and then they're going to recycling and so he's really made their Mark and my hats are off them and they were tough Partners II,
they were the human version of Amazon is I I kind of would refer to it as well pet but liquid comes with a lot of emotion but but versus automation but it was a.
My hats off to them for getting to where they are today.

Jason:
[9:41] Yeah yeah even more impressive I feel like they the captured more market share not because the smile of Saruman wasn't looking at that category early I feel like,
Amazon through Quincy was in pet super early and yet she was still able to come in then.
And that do that so definitely impressive you you reference Edge ascential and it's essentially a rollup of a number of,
data Insight tools for e-commerce if I have that right can you tell us a little bit about what your your current role there is.

Chris:
[10:16] Yeah I know and it's oh yes we we we rolled up for companies to essentially try to create what most practitioners myself included,
I would say we were suffering from in the marketplaces that they're there was never a lack of different solution providers but you kind of had to.
Hackensack everyone together on the internal side and there weren't a lot of players who had all the capabilities brought together Sunday we're not we're not.
The full full service provider on every service in and in offering available but we have a lot of the winning brands that brought the solutions together and also have not only just the day that an Insight side of the advisory dedication side and that's where,
that's where my role really kind of flourishes I have.

[11:03] As a practitioner I had the opportunity to practice e-commerce and help others in e-commerce from a from a Consulting standpoint but also,
I've made it a point I'm to go to a ton of different events over my career to date both for learning but also for networking and a little bit of retail therapy,
I'm as we are facing challenges in the space and that kind of gave me a a certain.
Perspective on what CD better about the education available in the market and so one of my major responsibilities is needing our executive education programs which include,
are share groups in Oregon, share groups in North America and Europe are University programs are online learning and as well as our what would I,
I think my favorite is Ari hackathons e-commerce stomachs and focus on Amazon and or Walmart or digital shelf or other retailers globally so,
honestly I think if I had to equate my job does a nerdy analogy I'd say,
I'm at this point I've left the war front but like Captain America I'm going to sell war bonds back at home so that I can arm our soldiers on on the front line,
with with weapons that will help them win the win the fight in an e-commerce driven world.

[12:25] It is definitely a nice fit cuz my mom my wife or teacher is my father's is a CEO of a company and very inspiring leader and I think that was always called upon of Empower people to become better at what.

Scot:
[12:37] Very cool and you got a D credit for working in a Captain America Sacha Avengers reference so.

Chris:
[12:42] I'm trying I'm trying I have a little check.

Scot:
[12:46] Jason Scott Bingo we have to make the hardest square is making fun of Jason so I will get there.
Let's start a conversation the top there you've done a lot of really good thinking and execution and,
the trend of Brands going direct to Consumer ecology to see and then sometimes inside of their digital native vertical Brandt's we have like the old school folks like the Kellogg's Etc
I really trying to figure it out and then you have somebody smokes or kind of born and bred on the internet at a super high level 30 thousand foot,
where do you think we are in that that cycle and you use whatever analogy you want to baseball or Avengers.

Chris:
[13:31] Movies yes.

[13:34] Don't know yet you know what's funny I mean.
DDC will be brought here cuz to be honest your point it digitally need a vertical brands or just digitally native Brands kind of sick.
Underneath one layer under need to see an arguably what even goes back a little further d2c is kind of sits under Challenger Brant right because technically.
Adidas the brand challenge the assumptions of how one has to go to market and that has become kind of commonplace now among DC brand that's not the part that you're challenging anymore but,
it was to go to market in a way that it wasn't their traditional brick-and-mortar selling into,
selling into a planogram model and in so you know I'd any Challenger is a nice umbrella term for this but but obviously.
From a digital lens I think in all fairness in an e-commerce years DTC is is is rather.
It is rather old I mean it's it's not new anymore it is maturing,
I'm into a new stage or new stages I would say those kind of dough pulling back a little bit looking at things relatively like it if it's still in a rather early adoption saying so you know,
yeah that the Dollar Shave Club Unilever acquisition I like I kind of look at it as,
Saddleback innovator I'm the iPhone yeah I'm going to be the first one to an iPhone and I sleep outside the store even though we're still in the early phase we're not everybody has d2c or is fully.

[15:04] You're mining the value of what do to see could be at a macro level but I do think you don't number of Articles out recently that I thought we were,
you're quite insightful around me or just the fact that you are the barriers to entry are still low for e-commerce players know to go to market digitally but the cost of customer acquisition,
the share of attention in in the means to get that with all the other people trying to capture their share of voice,
investment funding availability and also the prerequisites and requirements to get those,
on this funds from investors is becoming more competitive and either when you think about DTC Brands going through.
Like a Marketplace platform like Amazon to get to Market Amazon isn't just letting any old Cellar in the old Bender launch without a number of.
Formalities in and policies and processes that I help pay for my room and board and books,
am I selling books in in my college days on Amazon and on eBay's half.com with I could be a seller at that.

[16:15] I would have been doing it all over the years ahead I'm not stopped on my own just cuz I would have been one of those piddly sellers out of my garage and maybe a formal style.
Samsung filters that are being applied that make it a little harder for a g2c brand to go to go to market but I do think there's actually several factors that are kind of.

[16:35] Shifty that letter keeping d2c an option in something that will continue to expand so you know.
Just like I got to listen to mount the state just to stay linear in my thinking but I think the nature of digital in the reality of kind of finding a minimum viable audience doesn't actually have to be that big to get you off the ground,
maybe this is tree funding but no just to get something going enables a lot of new brands start.
Based on the need state or a consumer problem or a desire I'm the marketplace model in and of itself has a lot of power in ultimately enabling,
Champion Brands and retailers to in sellers to go to market I mean especially look globally,
the C2C Marketplace is huge in Marketplace China,
we're getting an individual has the ability to be selling directly to another individual are they easily like to eBay eBay seems with Wayne the little bit.
In in the US but it's huge in other markets that that model so I think traditional retailers are seeking new undifferentiated an exclusive offerings. Asleep driving demand again look at a Target,
really bringing using digitally native brand influencer Drive what they carry in store so so going D2 seed has a lot of potential benefits even though the definition might Morris little bit consumers are always going to be looking for.

[18:01] New experiences and experience exclusive use of Brands going kind of.
Leveraging pop ups in Flagship stores in partnering to create experiences and solve new problems are going to capture attention actually think we can talk to this little bit if you have some thoughts cuz I love to hear it.
What's interesting is.
I will see and ebb and flow happening here so e-commerce was the way to go to market when you couldn't get into brick-and-mortar but as e-commerce continues to grow and real estate.
Independent landlords are ultimately looking to fill space and create.
You're the need for that physical real estate to be maximized it may ultimately kind of pendulum swing the other way where Brands actually can use,
physical retail to drive DC sense of capturing attention and breaking through as it'll be kind of interesting to see the physical Marketplace.

[19:01] Resurge as experience has become more important but against everyone's looking for gross everyone's looking for differentiation everyone's looking for a reason to capture demand and I think it's always going to open up.
Add or 4D to see whether it's digital or physical or both.
The energy to enter the scene but I think there's still early in the stage because ultimately you don't need a lot to get going.
As long as you're willing to be in it for a long time.

Jason:
[19:32] So like,
clearly for one of the things that has emerged as the barriers to entry for these Challenger brands are our lower costs or lowers you you sort of highlighted there but it does feel like we've evolved like it like.
45 years ago you can be a challenger brand and you could slap up an e-commerce site and
that was going to be a competitive Advantage versus Dean Cummins but didn't know anything about e-commerce or slap some listings up on on Amazon or Alibaba and you could do customer acquisition on,
on Facebook and you know again that incumbents we're not likely to be digitally Savvy it feels like.
The incumbents have.
Now develop digital skills like you you know I yours your stint at Kellogg feels like an example of an incumbent it was hiring digital specialist,
to build up those skills what are the show in the sort of evolved Market if you're a new Challenger bringing launching today what weather the the sort of big challenges you have to overcome to be successful.

Chris:
[20:39] That's it that's a great question Hut in enter point I think that IQ and the appetite is increasing across-the-board whether you're the incumbent or the,
the past Challenger or the new Challenger I think the the challenges you know Jen are.
Yes the cost of Entry is low but the,
but it still to truly get scale quickly which everyone wants those success stories you're this quick no overnight success stories those are harder to come by again lotto tickets aren't bought every night,
that that that win but I think I would say from a.

[21:18] When I think of the challenges that some of these brands have I think it's he gets more of the investment dollars which began as more and more of these Brands emerge and have.
Similar or equal propositions it's it's obviously how do you stand out how do you how do you capture the attention of the investors you get money that you need to kind of build sale to go through really need to make sure you have a plan.
Yogurts with an oral icycle that ultimately get you the returns me know it as a start-up you're going to probably lose money up front but how do you do have a logical.

[21:51] Reasonable path to sustainability in and what is that and what is that taken in again I think I think even investors to be honest are wising up and it's not just oh my gosh this looks like it's going to be the next.
Biggest thing since sliced bread on it it's like we're now they know some criteria that we got checking against I think the challenges are getting the scale of resources investment.
Where are these Challengers often still have a significant.
Advantage over the incumbents is agility and I say this in the sense that and in generally also a there closer to the founder story,
we're in a night maybe it's not Sounder but its Founders or it's the people who found the pain point and try to solve it it's there's all these things that haven't been solved by the incumbent,
and sometimes these are like 10 points against the consumer didn't even know like against the way Steve Jobs but it said your customers don't know what they want to show it,
they don't always know that that team Point really mattered until they were given an option.

[22:53] But it's the way they order or the way you're the way it is fulfilled in the product itself with experience that follows you know,
and I think these these Challenger Brands often have designed.
They're offering and how they're going to get it to you for the consumer so Julie was customer consumer first but then they have the ability to get irate that on a much quicker timeline because that is their business model where is.
Combat if I'm selling one of Kellogg's brands are well pets.
Online it was designed for Amazon or for g2c I've got to go through a lot more hoops and months of.
Change management in transition if I can sell it in ultimately just to watch a small what looks to be a very small change my product titles or something I can change digitally fit actually.
Inherently change the product that takes me.
Anywhere from 6 to 12 months minimum versus a challenge and it might be able to flip a change around in weeks near depending on the change.
I think you're definitely or challenges for the Challenger no pun intended but I think there's I think they actually still have the benefit even if it.
It's harder to get the money to stale quickly cuz they actually have the solution which is the substance over over slick presentation so to speak.

Scot:
[24:18] So look what I say you're a brand that's been around for a while and you're just dipping your toe the number one thing I always hear is channel conflict with butcher you having kind of I'm sure you've overcome this one several times what's your what's your take on that.

Chris:
[24:33] Social conflict should be part of that initial discussion and I actually.
If I take one step back so what was really interesting to me and again I'm by no means I'm not.
D-ind Aldi Aldi to see expert I'm just a nerd you asked a lot of questions and usually L talks people which which sometimes is good when you're negotiating with Amazon.
What would I say to a lot of people.
Read about Soto again I joke sometimes and I say this with humility but I joke a lot of people will say I read something about d2c we should launch it right away how do we do that we can just slap it on her brand what's right and no no no.
Yes we could go we shouldn't and yes there's some Logistics and Technical.
Geotechnical factors and some legality need to think about and retailer record those are all the operational.
Models and processes you need to file what you launch D and operate DC and those do matter once you decide certain questions that end in but you had the right answer these first why are we doing.

[25:40] That could be a number of reasons I'm doing this for market research I'm doing this to be closer to my consumer I'm doing this for data I'm doing this for capability development I'm doing this because I can't get this product to Market any other way,
Adidas C model or the Digital model makes more sense testing and learning and there's a number of good reasons to do D to C,
baby multiple reasons why it's doing it because you read an article about it or because your boss told you so outside of just that you should do that for the sake of your job,
is it the right reason right there it's the why no start with Why by Simon sinek is his very first.
Very important First Step II is what can we and will be launched as a value proposition that is both differentiated.

[26:26] Superior to the status quo.
An ultimately viable for our business and Bible means a lot of things right and relevant strategic actually solve the consumer problem is sustainable scalable.
We have to answer that first because anyone can sell their product online which then becomes a potential Channel conflicts your point so what was happening a lot of times is the question immediately went to.
Should we sell online yes okay.
Won't that be a channel conflict will yes because they haven't come up with the value proposition that actually is differentiated from how we sell currently online with the other retailers right there and that's where the pricing a product online.

[27:11] At the same or competitive or lower prices I'm competing with my with my partners and likely undercutting them likely starting a price erosion War.
Again but if I thought through what can I be selling this different right when I think of like you know you're picking on Brands but they do a good job in a luxury I think there's a really great job they obviously sell K-Cups in the Keurig machines.
Across all of retail brick and mortar and online but they have a community online a very large substantial meaningful need to see operation that caters to the special loyalists audience and they got to sleep.
Walgreens mini packs any flavors that sings with them until there's a reason to be there.
And it doesn't immediately can split with all the other places in there not being competitive undercutting price and channel.
With with their core offering but they can do something unique in test before they watch you in Mass retail with new Innovations I think it really just goes back to.

[28:15] Do I have a value proposition again that's different that's better and that is by.
That sounds really simple it's not simple but but you can bet your ideas to ensure that they don't cause Channel.

Jason:
[28:29] Fair enough the I want to dive a little bit more into the psyche of those cpg execs and the reason I'm asking you this is because I feel like you do,
I posted some really funny memes cpg exact say the craziest things.

[28:50] You did not put those until after you left Kellogg.

Chris:
[28:53] I like I didn't intend to be fair that the nice thing is.
They're not all from Kellogg's made they were actually kind of compiled from peer feedback across the board in again.
As a disclaimer just because I think it's important the people I've worked for yo senior and executive leadership at all the companies I've worked for Kellogg's wellpet.
Record obviously Edge and Planet retail prior to Edge they are all extremely smart in most cases they're smarter than I'll ever be.
What is interesting is that when you represent something different,
and honestly e-commerce could you to be mad libs and you can replace it with insert change here,
there will be a time where something happens in the marketplace,
for us where we go all that'll never work and that's actually the next e-commerce right so there's going to be a day where we have to be humble enough to know that they'll be a nerd named Chris Perry junior will make fun of Chris Perry senior because he said something.
Just as silly as some of these but what's funny is that we've all been fighting the good fight these leaders of change this community in this movement that we are and we've all been facing kind of the same common.

[30:05] Nice sayings if you will come in a lot of that is just because the model A brick-and-mortar and traditional brand has an incentive,
all of these organizations to Pivot their thinking and behavior and so they're not stupid people they're not they they're actually extremely wise and smart people it's just that this.
This is the first time this changed let's be honest most of them have been operating within the mature.
You're the CasCal stage the brick-and-mortar retail so they've mastered that they are masters of that it's just this is that small disruptor that hasn't,
only tipped everything on its on its,
on its head but will when it's just to get some of the ones again in everyone who's been in the space can appreciate this yo just somebody's I just pulled a couple II put 30 out of the 30 most common,
darndest things that cpg exact same but you know I got one related I just read
this is a cpg exact speak number 19 I just read an article about d2c and it's impressive but we should just add that to our brand site right,
number three.
Hey Chris I think we need a strategy first and that's just after Chris has presented the strategy to them.
Just because you don't understand the strategy being presented to you doesn't mean you need a strategy you know number 16 do you want to double down in e-commerce what can you get me for 50K.

[31:33] That sounds like a real double down to me you know you'll be happy to know we added we finally out of the e-commerce team the end of the 2019 plan agenda you have about 30 minutes to present at 5:30.
Oh I'm sure after 9 hours of discussing the past will be ready to focus on the future right you know I mean honestly.
The best ones ever were and honestly some people said no way you haven't been out since I've been asked multiple times in my career,
and I know others and actually said they had it as well Chris I can't seem to connect to Wi-Fi can you help me,
no no that's it I just thought that was fun and then the best one of all was our CEO would like to talk to top with Jeff Bezos can you set this up.
Yeah let me just text him honestly dessert painful in the moment funny.
In solidarity with our community.
And they're not meant to make fun of anyone person cuz we will all be guilty of we probably all said some of these things to something different we didn't.
That we didn't understand or accept but my goal is not to make fun in and and slam these people it is to raise awareness in a comical way of things that hopefully we can.

[32:44] LeapFrog right no knowledge gaps we can LeapFrog so that we can accelerate the change and win,
In-N-Out honestly that the feedback I've never gotten this much feedback from anything I posted that you tell me something about the continents there before that I need to do better,
but with people really related to this really resonated with them and so if you haven't had a chance to check it out to get it it's just a little ebook I put together.
Different relations and I'm sure you'll relate to all the things that have been said so.

Scot:
[33:11] Yeah yeah I really enjoyed that it wouldn't be a Jason Scott show if we didn't talk a little bit about Amazon and we kind of what kind of nibble around the edges and when introduced you have talked about how
when you're at wellpet you you're really out there,
crushing the category were some of the strategies that that use then or that you see now that you know someone's new be at a challenger brand or a well-established brand to
having success on Amazon.

Chris:
[33:40] Now that's great in annual is itsfunneh it in retrospect it's not that revolutionary thinking but it but it is but it but it works so I think that's an excellent actually kind of funny to just it just is a.
Preface to this is I found it.

[33:58] We always go back to fundamentals and in the fundamentals really matter and then we'll talk a little bit to this but like,
at the end of the day I could do I can drive millions and millions of dollars of an age of Maisie demand-generation to acquire customers to a page that has no product in stock.
And then I don't convert right so so at the end of the day like the core operational supply chain Marketing sales fundamentals all matter online and they matter even more than ever before because,
the real time right in once I sell my product into the shelf on a planogram I've got 6-12 months depending on the retailer,
just sit there and so I mean obviously it's the in-stock still matters but I don't have to worry about my packaging changing or the UPC chillogy necessarily,
you outside of brand teams going up to they always do when someone new comes in and wants to change everything but,
but by the way I approached it and I was considered the Jeff Bezos has a flywheel model is Unstoppable flywheel that you drew on the back of the napkin.

[35:03] Arguably we at least need our own version of a flywheel that we would put on PowerPoint.
It's just a frame how we want to think of it and that's really kind of this came out of Wreck-It on this was thinking that came out of bracket and out and I'll give credit to.
San Diego trt who is now the SVP of ions,
he was our fearless leader at Wreck-It over e-commerce in a number of other digital Shopper initiatives and he kind of coined the bill Drive earn.

[35:36] Freezing fruit for our strategy and then I kind of put the flywheel visual together to kind of bring it bring it to life and so together.

[35:45] Together we form Captain Planet but with with the broader team but I think it was that idea flywheel thinking
because it's an Infinity Wii U no sound on the left side you got build in or the foundation right you got to build the number things internally capabilities,
the content that. The portfolio and intended to get to build all of it you got to get the right resource sponsorship,
education,
on the right measurement capabilities or at least to get started and then you ultimately go from build into the right side of the of the infinity a bright as you swoop up in the drive which is all of your marketing and your demand-generation your promotion,
subscription programs like subscribe and save that you would be in again that would create momentum and then is that is that.
Infinity loops with swings back up ultimately going back towards build what you're actually creating is a is a dual cycle that pumps itself right there.
Ideas to get the kind of Perpetual Motion right where my I'm disproportionately earning from the building in the in the driving that I'm then I'm delivery.

[36:55] And what I love about that visual is it in send you a text that you're never actually done.
So if I create amazing content and get my products live and I'm driving to version something is going to change as I'm selling more and Rising that requires me to change my content yet right I'm never really done my contacts.

[37:15] A lot of people like to think they may check content in a complete yes for like a day,
and then you need to be thinking about how you're going to refresh that so your bills include everything from assortment right at your supply chain in stock in your your your availability your SEO.
Search engine optimized portion of your content where you where that role is being served but also the enhanced content and images in a plus ages but really,
it's thinking about I need to show up high in search so I actually get considered but once I'm in it,
did I actually talk to the human being looking at the page even in 3 seconds and and that's actually not like a lot of people gain go to content and I have the key words in my in my in my page but they don't go,
why put the key word which is the feature but I didn't talk about the benefit that was really why they were buying.

[38:13] Right and it's little things like that obviously really matter. Just making sure you're selling on the white platforms right so you want to amazon.com,
really has been it is the majority of sales as they kind of try to figure out what's fresh Prime now and Pantry are ultimately going to look like whereas,
you know I'm like a Walmart obviously ogp which is online grocery pick-up is UPS in emerging
opportunity in one do you want to make sure that you're also winning on not just the.com.

[38:47] And that's kind of the bill bucket the drive is again all the promotions right there power coupons Deals Deals of the day,
I am your AMS search no paid search on the display no advertising.

[39:02] I'm both on-site and off-site right in and earning is all the things you earn right to share the growth.
The sales that the additional reviews the captaincy you might gain a new opportunities that come to you first to your winnings I think it's a way of approaching at the face of how you approach the Indian model,
it kind of feels overwhelming cuz you never get to say you're done but it needs that you never stopped working and that's how those calendar Brands think and so I'm not I haven't had.
The honor of being a part of a digitally native brand but I've had a,
I've been able to be intrapreneurial and it work if it proved itself that record proved itself that wellpet and when the Kellogg's Team all I was there was pivoting in that direction we're actually seeing the same results as well even though we were part of a much bigger.

Scot:
[39:49] Colts let Serrano people love both high-level and we are strategic stuff and Tackle 120
nothing really good job getting people to review your products on Amazon which is that social proof there stated that shows what you get something like 7 reviews of product takes off any any
tips or tricks for folks listening on on how to kind of get reviews going.

Chris:
[40:14] Reviews are tricky only because Amazon I would say such restrictions I'm fairly so I mean we don't want steak reviews right but I mean that's that's been a real hot topic.
Over the last couple last year plus but I mean it's always been an issue but I think as they started to crack down.
On counterfeit and bake reviews obviously just making sure that their site maintain stuff you're the number one search engine for products kind of authenticity and Trust,
I think we're one little tip with reviews cuz I think your points you need to have a certain number of reviews in this varies between god scene,
21 up to like 40 to 50 or kind of just those gut-check like you you don't feel like they're enough people who can be staking you out who could have it wasn't just Chris Perry's family that filled out the reviews,
has a really large extended set of cousins ultimately it's it's.

[41:08] What you want to do a couple things that reviews one ultimately you're doing all the right things telling you will obviously generate enough sales at the normal percent of.
Reviews that would come through for most products will ultimately come through for you,
there are some different tactics if you're like a three-piece seller where you actually send the box in the package through I know there's some three pieces that put in little cards or follow up with their Shoppers to encourage of you so there are some opportunities,
but just looking at it from 1 p.m. 3 p sample.

[41:39] If you have a great product people openly going to review it and but what I think is important though is to Spur that flywheel to spin faster to get more people to convert Morse of the day,
experience your product and then review it more,
it's using the reviews to inform your content and I know that sounds really basic but people don't do that so and I can give you it like this is kind of a funny zample but I was in the market for a pair of gym shorts,
several months ago and to be sure I haven't used them yet so I'm the wrong person to be the spokesperson for the brand but what was interesting was,
that the reviews and the Q&A really revealed some some say some confusion points about the product that the product.
Wasn't answering even though they asked said really decent content for all the other features of the product,
what was in and it was kind of funny that I would say I spent a long time buying shorts just sounds funny but but I didn't have I gone to Kohl's it would have taken me like 5 minutes to buy there and it would have been all subconscious quick things I made the decision on I would have walked out,
because I was looking reviews the way I normally do on Amazon for things that should have been low involvement it became very high involvement for no reason it was because of content didn't tell me.
What one of the issues was how are there pockets.

[43:00] How deep are the pockets will I lose things from the pockets to some people are telling me that the pockets were big enough to hold.
Two to three your tennis balls without losing them some said they lost their keys I'm trying to understand like how many keychains did you have,
summer saying that they that they like why why are these 80s shorts falling but no above and he's one 80s shorts but why are they why KD shorts and falling above the knee or other people are saying that they're so bad you they come way below
obviously that's probably an issue of pipes of the people for the reviews weren't speaking. So it was in there were a number of other issues of whether they received through and whether you should go commando
honestly all the issues that weren't being addressed by the conscience if that product he didn't actually.
Had only tens of reviews had wanted to get to a hundred or whatever was.
Competitive consideration number right for for their category they could have driven more conversions we should have got more sales would be at more reviews inherently without having,
talk to me about the future that everyone was asking about and so I think that that's.
That's a tactical I would taste like you to be very unique to every product like till size for vitamins and Medicine.

[44:17] What's show me how big it is don't really don't don't nnn-no and I know this sounds silly but like he was real tactical don't put a pill next to a penny that's gross I'm not going to eat it.
It is size it is size compared to Bill I come on like I don't I don't I don't want to swallow that.
Light sensor like Mucinex is part of Wreck-It job of having like a hand a beautiful clean hand hold until they give you a very good sense of how big,
that like I was a best-in-class of how tactic like the boy that was a question that was coming through that they probably have conscience or.
Yeah because normally at XXL if you would have been able to see the pill in actual size on the package.
And it wasn't coming through digitally so I can go nerdy in this all day long as I love I love the content side and reviews side of things which again seems cliche now cuz everyone knows to do it.
And so I think that's a huge opportunity to drive conversion which then ultimately get you.
To review my new reviews to drive more sales to get more reviews.

Jason:
[45:25] Yeah create your own flywheel and by the way I feel like the hand is a good tool for scale but I feel like comparing it to a skittles would actually be best.

Chris:
[45:35] What would actually did that that's funny you said it cuz I actually that's very astute point cuz I was in what if you had a hand holding like an Eminem or your point of Skittles I went Eminem I'm a chocolate guy and then and then you had to tell me.

Jason:
[45:47] We have a lot of westerners named Jeff from Seattle so that's why I.

Chris:
[45:58] But it just takes away the gross Ness of a common items found on the streets of New York on so I think that's,
no not to me but I'm just just Urban streets.

Jason:
[46:11] Yeah I know you brought up an interesting point though so there's a lot of things that we traditionally like.
Would have made a purchase decision VR subconscious,
like often largely based just on on brand recognition that we now like because there's so much more data available we turn into this so I can,
much more considered purchase and there's actually a professor at Stanford that writes about this he calls it absolute value in essentially his premise is,
that when there's not very much information where it's hard to judge the quality of product that we use brand name as a surrogate for quality,
but when objective,
information is available about a product as it often is online now the brand name actually is much less important because.
Shoppers have easy direct access to all the real attributes of the product so when you know ratings and reviews being a,
Marquee example when you can read a bunch of ratings and reviews that they are products good or bad.

[47:15] The brand reputation isn't as important and the reason I bring that up is because that sort of ties perfectly to one of the big evolution,
in the Amazon Echo System you know where it where it increasingly saying Amazon watching their own Brands and
serve going head-to-head with the traditional and coming Brands is that a new fear that like you get from from the clients and Executives that you're working with is like what what sort of strategy should,
don't have against Amazon private label.

Chris:
[47:49] That's a great question I'm I think so private label has always been around obviously in retail and II as a,
your practitioner in the space do support private label cuz I do think it's important as a retailer strategy,
not to put all your eggs in one basket or you know a few baskets nearby category it help to profitability I mean to give you a unique offering I need to be honest like my wife and I,
from brick-and-mortar standpoint always shop Target before we had kids and became more and more.
UE commercialized I guess but honestly I loved I've always loved targets
open up Brandon all their private label Brands investor with a high-quality again the brand Equity Park good bad or indifferent isn't always tied with me.
Your private label bits but they are valuable I'm Brands and and doodoo outfit our home but I do think that the challenge is.

[48:47] I think this is the part where you obviously politically no from from the government standpoint I was a lot of issues have been raised recently not just about your Amazon or anyone retailer but I just generally DC.
Mega Omega organizations that have these ecosystems do they need to be broken up are they dirty too much power and I mean that.
Subjected to a lot of different people but I think the scary part for a bran.
If I were a brand today as I've been recently the challenge with an Amazon or a retailer as such.
With private label is that it's not that private label.
Why did you stew sat next to your product on shelf it's that it sits in front of your product,
and so I think that's the scary part is that it's the way the digital shelf works there are only so many top search results there are only so there's only so much above the fold one,
and as a lot of data shown people don't really scroll and so winning the top box your top top search results being,
above fold really does matter both from a paid & organic standpoint and so when a retailer of whoever that is.

[50:04] Is launching and expanding their private label and private brand with all the cards in hand and is putting essentially the proverbial product in front of yours I mean that would be like going to a.
A mass retailer in against sitting at the back of shelf with all the private label in front so you can really see him,
but I think that's that's where it's scary because now the choice is gone but then again we're so used to the digital shelf morphine in real time
it's not that my grandma doesn't matter anymore than she won't seek it out but knowing that so many searches start unbranded as well.
That that means it's so many searches will defect to what.
Again like a Google and Amazon is telling me is the most relevant search result in that case and I'm going to dine a likely choose at it again think about it you can't be voted president.
If you're not on the ballot and or you don't get enough right in right so it's hard to be a riding so as long as you're on the ballot you you have a chance.
And so I think that's the challenges when the private label private Brands kind of automatically get on the ballot and might be bumped up a little bit they have disproportionate.
Game to win versus the brands who don't have all those.
Merchandising capabilities may not be able to see you again you don't have all the parts you know what the cards are and so it is playing he'll poker without.

[51:27] Without all the way without a full hand of cards and I think that's that's what scares me that I seen a lot of our data the day that you from Ed date I've seen is shown that you're obviously,
why the proliferation of brands from Amazon specifically is quite large and number it's not,
most of the dollars have been coming through an Amazon Basics and and.
I ate some of their core the other original brand is not all of their proliferation brand for the same as their testing and learning Real Time by category,
and just announcing that they have a product in a category usually causes some sort of Market impact which may be what their objective is so I think that's the scary part is just not having.

[52:08] Not having a lot of control if you will but that puts on his back on the Brand's I mean we have to do we have to create demand and then seemed to me.

Jason:
[52:17] That that makes no sense I feel like the poker metaphor is a little bit of a sore subject because there's this this rumor that Scott runs a big e-commerce poker game and I keep trying to get a bite and it keeps pretending like he doesn't have a game.

Chris:
[52:31] Why haven't been invited either.

Scot:
[52:33] There's no game
cool private label is a Hot Topic and another one that we're seeing kind of topical in the news is the delivery were so it's you have Amazon just recently kind of ratcheted up
Prime to one day Walmart is good people putting stuff in your refrigerator wearing body cams what do you think the delivery Warriors go as us as a cpg guy.

Chris:
[52:56] That's a great question I to some of this is a little.
I would say I'm looking at my crystal ball and try to forecast for the future will go without having the DeLorean and being able to go there myself but I.
What's what's funny is I'm excited to see for a number reason I'm excited to see a lot of the grocery and mass retailers expanding their fulfillment options either through partnership or their own capabilities against switching flag,
you're Walmart and Target and Kroger and all these different retailers Regional national park with instacart or shipt.

[53:35] Target acquisition so I'm excited that everyone's expanding and to be honest what I would have seen in CPT book firsthand and through our clients and partners is that the clicking flecked expansion is what's triggering,
executive leadership in a lot of these companies to visit their thinking and I only need that right so we need a bridge of behavior both for,
cpg brand to act on the change but also for consumers to kind of take one step away right so I may not there may have been a lot of various the Y as a shopper I didn't buy online.
Especially groceries but but,
the pickup option is like one baby step of comfort right well I do I do kind of hate the hassle of going in the store wouldn't be cool if on my way home I could pick it up right so that's all,
what's interesting is kind of whether they mean to or not everyone's up in the game in the focus on ultimately figuring out how to make delivery.

[54:37] Work at scale and then we'll have to figure out the sustainability of it and that's why all these cool models are popping up.
Ultimately get us toward the future state of iterating making everyone Foster Gauntlet in and it's moving the needle faster towards something that ultimately.
It is long-term what's going to happen I mean let's be honest there will be a desire for retail.
Engagement right to go and experience something there will be physical Outlets whether their pickup were actual stores at the store is not dead on there will be showrooms there will be stores with sinners in the different ways.

[55:14] Newer harmonize retail is it being called will will come to light but at the end of the day and I'm I'm being silly but is.
When you save me the shopping time was the commute time really the part I wanted to cherish know it wasn't I actually really,
the bridge is like oh I've seen you save me the shopping time why don't you and in an ultimately is all of these players figure out how to,
bring us in the memberships cut the cost to be competitive and obviously get a Competitive Edge versus their players all the while trying to make this sustainable,
the bear is going to keep lowering it and obviously ultimately I think deliveries where the wind is going to happen so.

[55:58] It is exciting to see this more than anything was in fridge and I'll and I'll pause after this just to get your thoughts,
Walmart patented 2 years ago this concept of an in Home Consignment base pantry.
Which I actually think this in fridge delivery gets his very very close to which is kind of interested so I can have like a Peapod deliver it to my door or to my counter.
While I'm home Oregon or shipped I could have Walmart in these test markets but ultimately rolled out come when I'm not home and put it away from me.
I could also then have a Walmart or whoever the next player who throws the gauntlet.
Manage my inventory for me so there's the last mile solved and infrastructures I just have someone driving.
Check on all the homes are not sin or complications of patients here but why wouldn't I just have the person,
service that comes and checks and manages obviously with a i driven based on what I'm consuming and what I'm not and managing my my my fridge in my pantry for me and in replenishing it real time.
Relatively Rich I'm on a weekly or every other daily basis right and two months that trust has been built up this to become.
This is how I don't have to worry about delivering anymore I'm just I'm just sending a person at scale around neighborhoods to manage people's products you know in NC.

[57:20] I don't know how quickly that's going to come about but Walmart has that the patent they have.
I'm sorry testiness they have the scale and I was your day are doing this in order leading in the space big Amazon's The Targets in the world at looking at this as well so this is what's exciting to me is like so many new kind of models,
this delivery worst pushing us towards because the solve the cost of delivery.
What if I just have the product already sitting there and it's not really mine until I buy it so.

[57:53] It's kind of interesting. I think about these things just I'm sure you guys.
Take five little rationed out from that so I would love to pick your brain on another.

Jason:
[58:07] No no no it's it's interesting and you got bonus points for working a back to the future reference into your answer.

Chris:
[58:13] I got the DeLorean sticker on my laptop at 11.

Jason:
[58:16] It's a little sad for me because I do lots of decks and I always put a picture of a DeLorean in there when I when I'm talking about the future and then the millennial designers in my company always replace the door and would like a hot tub.

[58:31] Apparently.

Chris:
[58:32] I would like that was at Westwood status with when you say hot tub and I didn't think I was old until now on my mind went to when the moment's right Cialis but that was where you at the two tubs but that either way.

Jason:
[58:45] Well I'm not going to delve into why that's where your mind went.
Has a good point to move on.
You talk a little bit about sort of your review for you know that the retail formats that survive and it is interesting in particular I feel like an essential but it has a.
The tool sets feel like to have a.
A significant focus on marketplaces and you look globally and it's like it seems like the marketplaces are winning everywhere it's you know obviously Amazon 50% of e-commerce
in the US and and you know more than 50% of that is a Marketplace alibaba's 100% Marketplace Mercado Libre is the biggest
Ecommerce Adventure in Latin America also Marketplace Walmart and Target had both sort of shifted to a Marketplace model,
is Concerta curious.
Is some flavor of a Marketplace the the eventual in point for all these things is that is that basically what we're left with is everyone's a Marketplace,
or it or do you think some of that the other business models can survive.

Chris:
[59:59] That's a great question and then again I think there's a lot there's a lot to come so I mean again knowing exactly where.
Everything will end up is it hard to get to Peg but I think the fact that marketplaces are as large as they are both in North America but also,
it is especially from a scale perspective in many other markets that may be developing but obviously are like Trump from fire.
AR North America Market multiple times over from an e-commerce standpoint and from a growth sampling I do take marketplaces ultimately kind of play to this.
Can I use this word a little bit Loosely because we know it's not fully democratize but it's kind of when we think of like information it was kind of.
Democratize to a point via a Google in the sense that the most relevant wind right that the most relevant and most trafficked in most.
Value added content would win and I know that's your that hasn't asked her cuz I'm so companies owned these but there are other agendas you'll good bad or indifferent better include a bit that Marketplace model does really ultimately allow.

[1:01:08] Product you know the consumer to vote up with the best product is and helps his aggregate all those choices into what we're really searching for,
so you take Marketplace is going to have a major dominant role in the future of of retail I don't necessarily believe that,
that all retailers as they are today are going to disappear that direct-to-consumer can't live on their own,
but but again kind of in the same way that we looked at no fairies even prior to being bought by edgewell personal care a lot of its sales in recent times has been driven by its in-store present Target,
write Antonio again that goes to the whole kind of discussion around what is DTC really mean when a lot of these are getting sales from their own stores are from Partnerships and I think at the end of the day it's.
Directions to Meijer brand they have a role for its direct-to-consumer citrate might be its most loyal Shoppers were part of a stand group you get to test the products to get to you.
A part of the market research process but they also sell to a digital omni-channel physical retailer.
For a different year for a different reason right there there's a reason at the end of the day.
Channel customer strategy you know what channel the customer strategy for where you're going to sell and why and and and how that's going to be different or better from.

[1:02:35] From the other places that you that you offer your proposition and so you bring up an interesting point in this is something I I I just I doubt it down it is interesting it is kind of like reminds me like the dash.
You bought a dash button cuz it seems convenient that when you ran out of Tide you might want some more detergent that pointed at some point.
Would you really have 30 - buttons around your house maybe not like you're like,
all the choices were great but would you really if you really wanted that convenient to me is when you just want one button oh wait I have one it's my phone or it's my voice right I can just say it out loud and it would do it for me.

[1:03:14] So it's funny cuz we kind of ebb and flow between like The Liberation and fragmentation and then consolidation right feel like.
How many subscriptions to be to see sites could I really have before I need an app that's like the instacart of subscriptions right I mean that's the business opportunity right there.
I am not saying you can win with everyone but what if I had an app to manage all my subscriptions.
So they don't have to only subscribe on one platform I can subscribe through an aggregator that and it just all of my subscriptions I think there's going to be.
There's going to be an ebb and flow but but Marketplace is ultimately allowed at aggregation opportunity again the democratized,
choice is lifted to the consumer based on what they really want I'm what they think they want so they're going to still be need for Discovery Discovery experience sweater.
Global national local lerna pop up and I think those are going to still do the experiences are becoming more important products nowadays with the millennial and future generations and so,
what you did is more important than what you have so it kind of became switch from the house Haves and Have Nots that I have done and haven't done which.

Jason:
[1:04:28] What are we just have a photo of having done whether they did.

Chris:
[1:04:30] Exactly exactly,
Edge forecast for the foreseeable future that marketplaces will be be primary driver is e-commerce globally and I think that they just ultimately provide a route to market for.
Quote-unquote proverbial d2c brand.

Jason:
[1:04:51] That makes sense and that is it like it's funny because you eat
like that the category that's already like a lot more mature for subscriptions is digital content right like it's,
Your Entertainment and we've already seen the subscription aggregation services that apple and Amazon want have launched like a already trying to solve that problem of subscription
fragmentation so I could see that with a,
a lot more Goods in the future because that's going to be a great place to leave it because it happened again we have wasted a perfectly good hour of our,
is the Oaks had a burning question or have some feedback about any of the topics we covered tonight though they're welcome to hit us up on Twitter or leave us a note on our Facebook page and we'll be happy to get back to you.

Scot:
[1:05:42] Chris we really appreciate you taking time to share your your wisdom with us one last question if folks want to find more about your your writings and thoughts online working together.

Chris:
[1:05:54] I am most active on LinkedIn and I have all my contact information publicly available so spam me or write me I would love to hear from you and again down Jason I'm just so honored to be a part of,
I'm your efforts here I've been a longtime fan and so tickled to be on it so.

Jason:
[1:06:12] What we are happy to have you and we'll make sure we get the LinkedIn URL in the show note so you don't have to write it down while while driving or exercising but until next time happy commercing.

Jun 20, 2019

EP178 - Chewy IPO and Listener Questions Part 2 

Recap of Chewy IPO (Chewy S1)

Listener Questions Part 2:

Q5: Nick Barrett Would be really interested to hear your guys thoughts on how an established e-commerce store should expand into new product categories. Is it a good idea to launch new niche websites through Shopify to do this, or is it better to keep focus within a single e-commerce site and expand within that?

Q6 Rebecca Saunders Have you seen any recent data on the costs of customer acquisition online via the various channels, and how these have changed over time? I hear a lot anecdotally but haven’t managed to access any reliable data. Thanks in advance! Love the show btw (all the way from rainy London).

Q7 Amit Agarwal Have you ever done some research on e-commerce subscriptions such as amazon subscribe and save or autoship? Also, what is the industry trends for bark box, hello fresh and other bundle subscriptions?

Q8: Parker Block 

Hey Scot, What do you see as likely business implications of rising appetite for anti-trust action (see FTC/DOJ announcement , Lina Khan joining Congress staff, etc ) on platforms which monetize  consumer data ?

Q9: Baxter Overman

How do you put consumers at ease with in-home delivery services? (i.e. Walmart grocery). Wouldn’t drop-off when the customer is home for certain items (or lockers) be easier to sell?

Q10 Aakash Gupta

What’s your favorite app that you’ve downloaded in the last few months?

Q11 Twitter: Natalie Dillon mentioned us as one of her top podcasts – thanks Natalie!

Q12 Ted: Mixed use retail entertainment?

Q 13 Michelle Grant

 Thoughts on pricing strategy in an omnichannel world where price transparency is high and filled with bots to find the lowest price

Q15 Melissa Burdick

The advertising race to the wallet – We’ve seen some big news lately: Target in talks to buy Triad, Walmart who is bringing advertising in house and just made a key hire Suresh as their CTO….where is this going for ads?  Is it going to be a war for brands wallet? Is everyone going to take a page from the Amazon playbook, bring ads in house, and move to a self-service performance advertising, PPC world?

Where is the $ coming/going to come from?  In the chart below, it looks like Amazon is taking from Google.  (I asked a big CPG this question and I asked where is this coming from – or are you just getting more $$?  Their answer – more $$).

How should brands prepare?

Q16 Melissa Burdick

Is Amazon going to do to walgreens/bartells/CVS what they did to the bookstore (kill the bookstore to build a bookstore) with the acquisition of pill pack + private label (aspirin, etc) and enable the ability to sell mass CPG profitably?

Q17 Melissa Burdick

Can Scot please update his Amazon Scape – how has it changed?

Q18 Melissa Burdick

When is Spiffy coming to Seattle?

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Episode 178 of the Jason & Scot show was recorded on Tuesday, June 18th, 2019.

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 is episode 178 being recorded on Tuesday June 18th 2019 I’m your host Jason retailgeek Goldberg and as usual I’m here to host Scott Wingo.

Scot:
[0:38] He Jason and welcome back Jason Scott your listeners well we if you listen to good ol episode 177 we had so many listener questions we could not get to the mall.
So this is kind of a episode 2 or continuation of that episode before we jump into a star questions though
we a while ago on a new show about 30 days ago now we talked about the chewy S1
and since then she has gone Publix we wanted to give you a quick update on what’s going on with you once you take us to the Jason.

Jason:
[1:14] So they did their IP aware According to some Tuesday it was Friday do I have that right.
And you’ll tell me if this is good or not I think it is
the day they had announced a rainy a price range for the offering at like 19 and 21 bucks and they actually came out at $22.
That’s a little higher than the range
they have a lot of good activity and they closed closed event on Friday it was at 35 bucks which is like 80%.
So
That seems like a pretty successful offering at least compared with like all the the Uber news or the with news.

Scot:
[2:07] This is the only been one to one IPO process and you know what would they tell you you’re so far. Knock on wood so what they what they tell you is that the Brain Trust at Goldman Sachs these kind of place
is you want to go to one school of thought and this is not with the bankers agree with so you have to kind of
navigate your way through all this obviously you got a fox and how so she was here once thought is you price your I get the maximum because that’s what’s best for the company
the bankers would tell you to look your building long-term shareholder relationships so you want to give these shareholders that take a risk in your company a little bit of a benefit so you price a little bit lower than kind of where you can look at Newburgh lift they both would be kind of
what’s the bankers would say kind of broken IPOs where they traded below their IPO price
therefore now if you’re someone that participate in IPO you feel sheepish because you came in it
what was a $20 now it’s trading at 18 where is this true IPO performed a lot better in a bottle the bankers would recommend
I said if you want to come to clear range up there can a price above that range slightly and then have kind of a good pop and then stay there and then come out with your results and then kind of beet raisin your off the races did you could do.

[3:30] Secondary offerings happy happy shareholders by wear stockings
all kinds of good things happen at kind of tend to think this is the way to do it and they did really well.

Jason:
[3:43] Yeah now a couple of things that make it particularly interesting in the the sort of Commerce retail world so folks may remember.
Chewy was acquired by PetSmart a couple years ago and it was a big deal at the time I was over three billion dollar.
Acquisition.
And so a incident PetSmart is now spinning off chewy as a separate public company and so I Like You by.
And read my notes correctly that that close kind of values the company at that north of 4 billion dollars.
Weather so acquire company for 3 billion ticket public at 14 billion sounds like.
Pretty exciting acquisition for acquisition and transaction for PetSmart do I have that right.

Scot:
[4:42] I guess yeah they’re kind of Phoenix it’s almost like a private Equity, think it’s unusual for a company to do what they did cuz usually you fold it in you.
You get rid of the brand overtime you make it your eCommerce brand so so young to the degree they have integrated it you could argue it
Kris Russell because you know now I’m Siri
chewy could be acquired maybe I do think that they sell and over half so I think they can control that but let’s say they do a secondary in overtime their ownership get step know maybe they need to sell some swimming in debts and then let’s say doomsday scenario
Amazon acquires chewy and your PetSmart that’s what’s running your e-commerce site then you can kind of have a you know
really bad day for someone at PetSmart to listen to see what happens with that integration now that you have these kind of.
The amoeba is being pulled apart here and and how does that work for PetSmart.

Jason:
[5:42] Yeah so that’s kind of what I was going was like from a pure Financial standpoint if we look at it as a banker like it’s it’s hard not to see this as a win but but for your point.

[5:55] PetSmart was not a particularly digitally Savvy brick and mortar retailer prior to this acquisition so I can the time part of this acquisition was to bring more digital competency to PetSmart and once pain
the PetSmart team arrived PetSmart like really abdicated digital responsibility to that team so like as far as I understand it.
There are fewer.
Digital people at PetSmart today than there were before the acquisition so they’ve they’ve essentially made themselves extra dependent on chewy and it’s now not clear.
What.

[6:36] Responsibility going forward she will have for PetSmart digital footprint like you can imagine they have a deal to run petsmart.com.
I haven’t explicitly seen that but that that seems like a logical assumption but you know what happens with all the.
The start of omni-channel things and you know when PetSmart wants to launch new services or they want to like Market the Veterinary Service veterinarian services that she doesn’t sell but PetSmart does through their stores.
Like they’re certainly isn’t like a really strong digital team at PetSmart to be solving the.
The start of Digital customer experiences for PetSmart so it it it does it feels to me like it definitely create some risk.
For PetSmart and I’ll be interesting whether they they have like.
Chewy braintrust walked up some how or whether they’re going to try to rebuild their own their own capability there I guess I just it’s an interesting.

[7:36] I think to follow so I found that interesting and then my assumption is that the kind of felt like they had to do it because.
The the one interesting thing about the chewy idea that we haven’t mentioned is that that chewy is losing money,
and like despite some like phenomenal hockey stick.
Customer acquisition growth and sales growth and they have over three years they went from under a billion dollars to 3.5 billion dollars on sales they still haven’t found their way to profitability so your PetSmart you own this
fast-growing money-losing venture.
And you used a lot of debt to buy them so like.
That they’re not helping you pay down the debt you used to buy them because they’re losing money by doing that idea o u stand up a bunch of cash in my understanding is the whole IPO like.
Like tried to raise about a billion dollars and 900 million of that went straight to death from the PetSmart acquisition so for your point like it sounds like going public makes it easier to do subsequent raises. So maybe that.
The way to bring more operating cash.
Chewy but like there’s not a billion dollars in the bank as a result of this IPO that you can have spend on marketing that they didn’t have last year.

[8:58] It’s all very interesting is going to be interesting to watch watch how it all plays out and then I guess the other thing is fun for me and you cover this on a previous show a little bit but like.
In the process of going public May disclose a bunch of details that we don’t normally get to see and so I know there’s some interesting metrics that came out.
They they do a really good cohort analysis of a evaluate.
How sticky their customers are from each year that they acquire them and how valuable those customers are in so they have a like in their filings they have a nice what we call a wedding cake kind of showing.
Each of those previous years cohorts.
Growing in value over time and have some really favorable long-term metrics our customer retention is amazing a big chunk of their customers are on
subscriptions are longer-term customers are continuing to spend more and so like.
In general they’re having to spend a lot of money to acquire each new customer but the the lifetime value of those customers like is a significant multiple of that customer acquisition cost,
so it just spend together inside peek at a pretty big size e-commerce business.

Scot:
[10:14] Yeah you know the history of e-commerce is littered with companies that they do all this math off of cackle TV and they’re using kind of known LTV,
acquire new customers off that no nail TV and then at some point you get through your lines cut across and that LTD of that new customer surprisingly goes down over time because the early days you’re you’re
bring in these these early adopters their Advocates they stick around and then the Slater customers you acquire
you know maybe they’re just sampling and that kind of thing so it’ll be interesting to see.
At the same time Irwin size applying data science and machine learning all his new technologies to try to fight all this in the sea.
How to do another big thing when you go public as you have to decide.
Which of these metrics are going to publish Schnitzer it’s pretty tricky thing cuz you kind of you know you kind of have to think well metric out there instructions
down that’s bad so you can you can actually have a much different and you should have different
kind of TV is you put out this one versus on your quarterly so will cover the first quarterly and no be interesting to see if they if they continue with a really transparent Buick faculty because that’s one they had some really good date on them.

Jason:
[11:31] Yeah it’ll be fun to see.

Scot:
[11:33] Cool swell I’m springing this on you but did you have a chance to look at the big Facebook crypto announcement today Libra new crypto-currency.

Jason:
[11:45] Yeah you should have spring stuff on me cuz you know I did all day so I just rushed to the hotel room to get to chat with you so tell us about.

Scot:
[11:57] Well I’ll just point point listeners to it the immediate reaction from Regulators was oh heck no so the other side quotes from the EU and
both parties in the US saying we’re not really sure we trust Facebook with this so that that’s kind of I’m still adjusting it and it looks like they had a big team here
the guy that got from PayPal but they put on chats Dave music.
He’s leading this so it’s a big pretty big initiative at Facebook it’s what’s called a constant.
Constant coin so it it’s kind of going to an individual value versus versus the US dollar does versus floating around the reason the white paper it looks like it’s going.
It’s going after being a payment mechanism, like miles and that kind of thing for people.
Within the Facebook Network they do have several people that have signed on to this kind of governing body eBay was announced today is also looking at it location being that the company Side dance this governing body
will ultimately takes this currency
along with the u.s. dollar other payments down the road so it just feels like it’s the payment thing to watch to see how it goes.

Jason:
[13:23] So do you think the the Winklevoss twins will be all in in this will be the Zuckerberg Winklevoss reunions.

Scot:
[13:29] That direction was an article where they have had something to do with it I know that’s compliment you can find them.

[13:45] I think that they were asked to apine on it because they they have put a lot of stuff into the crypto thing.

Jason:
[13:53] I don’t know what we’ll see how it all plays out like superficially.
I I simultaneously and surprise and admire Facebook’s ability to sort of ignore their currents.
Situation and launching new products so I do I do feel like.
Visa V the other big technology giants like Facebook is it the biggest sort of trust deficit of all of them and yet they continue to launch products that like.
At the core require like this really strong level of consumer trust for adoption so
launching portal and putting like on microphone and camera and everyone’s living room and the launching of cryptocurrencies likes that there’s some hotspot
doing those kind of launches when it it it feels like you’re you’re not exactly killing it in terms of earning your user stress.

Scot:
[14:44] Okay one of our one of our many interns just look this up and they actually it so Facebook had talked to the Zuckerberg they have an exchange called Gemini and they’re not sure they’re to work together but the Winklevoss folks said
you know it’s time to let bygones be bygones and waste will probably be Frenemies so if you’re very Millennial wait till dresses.

Jason:
[15:07] Let’s jump into listener questions.

[15:19] Questionnaire questionnaire questionnaire questions.

Scot:
[15:24] Yes sir we are so we covered for last time so I can start out here with number 5 this was from Nick Barrett and it came through Facebook
I believe Nick is from Australia or New Zealand so I don’t know if that puts it in context but there you go
I think he works for this company called Mighty ape which is kind of like
GameStop it’s like an FYE
but an American kind of context to hear your guys thoughts and I’ll and established e-commerce store could expand in a new product categories
is it a good idea to launch new Niche websites to Shopify to do this or is it better to keep Focus within a single e-commerce site and expand with a nut
I’ll take a stab at this kind of depends so I’ll use a
I use a metaphor here of orbits right so so at the at the at the center of this orbit is your existing customer in your existing e-commerce experience I think customers will.
Pretty easily let you go one or two orbits out you start to go three or four orbits out
then you really need to start thinking about that customers buying experience and the messaging it doesn’t make sense to have it
going to tie it to something on a closer orbit to what you’re doing today so use example it looks like a Mighty Eighth the selling games Collectibles those kinds of things so.

[16:50] You know another example of a store like yours is ThinkGeek here in the US and you’ll think he did a really good job of starting with your muesli.

[17:00] Kind of collectible stuff and then bringing in
toys stand life-size figures and then they going deep into categories so then in the store are they and the lion to have a pretty,
deep Star Wars category a Harry Potter category Etc and then online and license the brands and then there’s there’s actually
extra deep in this category So within the Star Wars world.
They did, cleverly came up with a sleeping bag that looks like a tan tan and so they they kind of got so deep into this vertical they’re actually kind of able to come up with their own products around that.
But you wouldn’t go in there expecting to find a non geechie pizza oven or something strange like that so so you know.

[17:49] Two to the same argument if if you guys wanted to add kind of your you know you’re on private label Collectibles I’ll keep that in the main side
what say you wanted to get into something totally
out of what you’re doing today like I don’t know Sporting Goods or hammocks or something like that then I do think you know having another e-commerce site is the way to do it
you know what.
Yeah what you didn’t necessarily but all all kind of kind of keep replying to thread is how do you find what to add in this is where it’s really interesting set a channel advisor we have 3000 customers
and the overwhelming majority of them are Supernatural and it’s always fascinating to me to find out how they.
Figure out what products to sell a lot of them spend a lot of time date of money so don’t go through comments feedback on products they look at no search results that’s a cool place on your own website to go find things you’re what are people searching for on your website and not fighting
that’s really interesting kind of area to learn a lot about consumer Behavior a lot of them use tools like camelcamelcamel this one called
jungle Scout and then there you can go look at Amazon’s data my favorite example it won’t surprise listeners is a Star Wars example so these guys are our customer and they like.

[19:10] Like kind of a GameStop in FYE Etc solo Star Wars stuff and they’re trying to look for new products they had a license with Lucas sounds do what do they had the image of Han Solo Carbonite that they put on almost everything they did a phone case
but it started poking around and using some his tools they win the Star Wars category of Amazon
Founders All these people looking for Star Wars beach towels
yo when you’re out in your bathing suits on the beach you’re always so obviously want to Star Wars down so they came out with Han Solo in carbonite on a beach towel you are really big one so it looks like it’s on the beach cuz she’s there.
And that became a top selling product on Amazon very quickly and they should develop that product by looking at null search results in finding those little
imbalances between supply and demand that people are looking for a date
use that create a product extension anchor so ankers electronics company in there is.
Picture in China or Taiwan they started mining the Amazon feedback and people would buy.

[20:23] Chargers and accessories and Illinois say one glad this has two USB ports but I have 6 devices looking at you Jason and you know I really wish you had a
a charge faster and be it had reports.
I think a lot of the anchor kind of lease early products were developed off skimming and parsing and really understanding the Amazon product feedback and then saying alright this product at 3 stars why can we develop a product.
Our own just got five stars in address to Consumers.

Jason:
[20:58] Yeah and I mostly agree a side note on anchor like I literally have to have anchor products delivered to a email stop because my wife has banned me from buying Morty.
Totally has my number.
And one piece of bad news for you Scott I don’t know if you’re aware of this but I think was purchased by GameStop and effective July 2nd they’re shutting it down.

Scot:
[21:23] Oh man I didn’t know that.

Jason:
[21:25] Yeah so it’s not going to be a a section of a GameStop versus a separate site so.

Scot:
[21:32] Mulligan artist closes stores.

Jason:
[21:35] I don’t know maybe per your point and M4 Next original question again GameStops hoping to.
Aggregate that traffic from their side and Think Geek and do more effective cross-selling because they.
Basically I agree with your answer but I would almost come to it from the opposite and I would just say,
it’s extremely hard there very few businesses that can be very profitable by selling a single item in a car
and there are very few businesses that can be profitable by only selling an item once to a customer and so in general you’re looking for businesses where you have multiple products for the customer put in in your reason for the test
come back and shot from you multiple times and so to me that means.
Looking at your existing existing customer base as you suggested and finding adjacent products that might also appeal to those those customers.
In the early days of e-commerce there was this artificial thing.
SEO from Google search engine optimization bring much favored keyword stuffing in the URL and so you saw a lot of.

[22:48] Individual sites that were selling one item in the name that URL after the item they were selling and that him for a while that that could be very effective Google’s
dramatically depreciated the the effect of keywords in the URL so you know it now makes more sense to aggregate as much traffic you as you can on a single URL and sell a bunch of stuff
but what I would suggest is having a lot of different content for that different stuff in different landing pages for that different stuff so for your point you’re selling
Video Star Wars video games over here at Star Wars beach towels over there you might have separate landing pages for those two and you might have separate like digital marketing campaigns for those two
so it kind of feels like a separate site in that sense but once you get there and get that beach towel I can I can try to cross sell you the video games and try to make you up a bigger more valuable.
Does I guess that’s that’s the way I would think of.

Scot:
[23:43] Yeah it’s kind of fun fact two big companies were created off that crazed were you just putting one product on a domain name hayneedle and Wayfair Wayfair had like
coffee tables kitchen tables
dining chairs that all these Furniture things and you go to dining chairs if you like just dining chairs slice of the things they ended up ruling all that stuff up both of them did and and getting rid of that strategy one.
Question number 6 is from Rebecca Saunders have you seen any recent data on the cost of customer acquisition so this is a question which we just kind of chewy online via the various channels and how these are changed over time
I hear a lot and it totally but haven’t managed to access any reliable data thanks in advance love the show by the way all the way from rainy London.

Jason:
[24:34] Well thanks for the question Rebecca on answering from rainy Seattle today good night my SAT answer is.
Generally know why there are people that publish short of some industry data on customer acquisition that I would submit to you that it’s almost completely useless because.
The variance depending on the specific industry in the specific customer circumstances are so great that looking at these.
Averages are are somewhat meaningless and so you know you both have like.
Companies that are selling individual packs of Band-Aids you know for $3 online and guess what your customer acquisition cost has to be extremely low when you’re selling a $3 item with free shipping.
And you have customer selling $10,000 diamond rings and.
Not surprisingly that the customer acquisition cost can be much higher for that if you’re a company that’s already doing billions of dollars in sales right you.
To get meaningful growth you have to reach a really broad audience and that tends to be more expensive per user for customer acquisition if you’re a small startup.
You can very cost-effectively acquire some really valuable customer so your customer acquisition ends up being a lot lower so.

[26:03] As much as I’d love to point you in a particular resource and say hey just check out these numbers.
I guess I really don’t feel like other companies numbers are in less than a direct competitor of yours somehow are likely to be that useful to you
I will tell you you know what I was digging into that chewy S1 a little bit and for example in
2017 chewy added about 3.7 million new customers in the matted 3.8 million new customers in 2018
but that’s 2017 customers they spent about 60 bucks a customer to acquire around and for this 2018 customers they spent $101 a customer.
So there are not a lot of businesses that are much smaller in scale than chewy that could afford that kind of.
Customer acquisition cost but if you look at Chuy’s lifetime value and the dispenza previous cohorts if these new cohorts Behavior chewy the way the previous ones that has a Scott sort of alluded to earlier
then like even spending $100 a customer could be.
A tapered an investment like a it’s a risky one so so we’re going to have to wait and see but I would definitely not look at Chuy’s numbers and go oh gosh for my business I should spend a hundred bucks a customer because it works.

Scot:
[27:22] Yeah and dumb ass gets in dead to your point the reason it’s hard to compare your business when Elsa’s you’re not only are you different categories
you know Supernatural businesses where they essentially say
look if I can spend a dollar and make 3 I will I will consider it almost cogs and I will have an unlimited budget.
Other people kind of say you’re the kind of come from an advertising View and they took people to come from marketplaces they tend to have that cogs kind of totality cuz they’re looking at it as a percentage of sales people that come at it from the ADI to SeaWorld
they’re looking at a return on ad spend
the inverse of a Crepes and they’ll say look I’m going to have a budget and demands that budget to a 4X or whatever it is returned my dad stood socially
really part of its Theology and and and some of it is other times I’ve seen really big companies for the CEO says I want to be number one to strollers
and then you say well that’s insanely.
Expensive in your money I want to be number one in strollers and.

[28:37] It doesn’t matter cuz when the boss looks at strollers and your shoulders not there you’re going to get fired so you don’t really care what he’s done or you know they are building a Brandt and they don’t really care about a transactional
kind of a Roi on on the stent there so it’s a hard hard to nail down.
And it does kind of depend in my experience where people come from if they come from that ad world of that Marketplace Road.

[29:06] What’s your view on return on that seventies.

Jason:
[29:10] Yeah I mean I tend to be sort of green eyeshade out of about it I I like to have a pretty short return on ad spend to make the investment the.
Because frankly like
the more expensive the customer is to acquire the least likely the customer is to be very loyal so in general I like those customers I can earn organically and cultivate a lot more than the customers that I have to go out
and by so like you know for sure Mary meters
suggestion I’d way rather have some sort of freemium model what I have customers coming to me and find the use my product
for free on a limited basis and then turn them into paid customers and and sort of do growth hacking
then spend a fortune buying a customer and trying to monetize those that being said I work for a giant ad company and that’s mostly what we.
What we do.

[30:13] Spend a bunch of money to to acquire customers and it absolutely can work.
It’s not again it it’s somewhat related to your risk profile and.
And comfort level I will say the one thing one nice thing about being a small company a lot of my clients are very large and and they have to acquire huge audiences and.
The markets that have huge audiences that have inventory or
tend to be pretty efficient so it’s really hard to get a good deal but one of the nice things about being a small company is
you can play in a lot of small customer acquisition formats where the market isn’t very efficient yet and you can.
I often get outside return so no being a in early player on Instagram
when people weren’t advertising on Instagram was a great way to make money or being a you know a really excellent executor on Pinterest
or even like fractional television versus heading to buy Super Bowl spots or different things like that like there are definitely ways to sort of piecemeal together audiences to get an outside return as long as you can get by with a
a relatively modest audience size but you know as soon as you get into having a choir or million new customers a year to hit your numbers.
You’re you’re pretty much stuck thing the market rate for customer acquisition.

Scot:
[31:42] Yeah where it where I’ve seen small businesses get upside down on this is day they take care of an Amazon eBay way of looking at things the applied to Google and they kind of think all right eye
I just spent 20% took Wireless customer and then what they don’t realize is the next time that customer comes to they’re going to probably come through Google so
now and then now you had another drink song that one in so I know what you’re saying is if you think you’re acquiring a customer for a hundred Google and you’re getting a $300 kind of LTD with them they’re heading Google twice more and you’re paying another couple hundred bucks.
Upside down you really look like to have to get especially with the CPC stuff and and you have to be real careful with with how your measure know that.

[32:28] Question number 7 this is from a bit Agarwal have you ever done some research on e-commerce subscription such as Amazon subscribe and save our auto-ship also what is industry trends for BarkBox hellofresh and other subscriptions.

Jason:
[32:42] Great question I’ll be curious what Scott’s answer is because I’m always looking for better data in this category than I have in general I would say like there is not a lot of traffic data
it’s it’s the usual story like they’re these.
Third-party data aggregators that do things that customer surveys and things to try to give us some data or there’s the universe Creek receipt scrapers
like 1010data or slice a rocket and they can give us some insight into like.
Amazon subscribe and save is performing versus individual products but.
Those are like directional it best I haven’t seen awesome data there there’s one of the reasons that you yes one was kind of fun Chuy’s and I ever get with their trade name is for their subscription program.

[33:38] 67% of all Chuy’s Revenue comes from the subscription program in as we talked about in one of the previous answers you know the real key to to profitability in an e-commerce business is about.
Repeat purchases and customer retention and like there’s no better flavor of customer retention then auto-ship and so like.
I’m a big fan of the tactic I haven’t always had the best third-party data to validate that tactic.
The second half of your question I will I will say,
yeah you asked about some of the the well-known subscription offers out there like BarkBox and hellofresh.

[34:21] There’s a general sense.
It’s been hard to scale those subscription services and that customer retention hasn’t been awesome and so there’s this phenomenon called subscription fatigue and
in general the subscription Services tend to have a lot of churn so they don’t
maintain all of last year’s subscriptions and a bunch of new ones and so there’s kind of a dirty little secret amongst the.
The companies we tend to think of as subscription companies that are successful and that dirty little secret is most of them have an offering that’s not subscription-based that’s on the man ordering.
And the bulk of the revenue tends to come from that on demand order so you know Stitch fix the bulk of their revenue is from.
Young people that are ordering a fixes on demand rather than have a a a recurring a box coming all the time and in the.

[35:22] My understanding is the BarkBox and Dollar Shave Club and Harry’s have all had like three big turn on their subscription list I think when the hair is got a choir that came to light that 80% of Harry’s Revenue was from there.
Their retail deals are people walking in at Target and buying Harry’s Razors rather than being on the the the subscription program so
I would say like
subscriptions are really valuable thing to try to achieve and there definitely is evidence that Amazon’s program is really potent seems like chewy has a really potent program
but you know you probably need to be careful about assuming it’s easy or that you’ll have great great customer retention from doing.

Scot:
[36:05] Yeah. I think that spot on a couple editions it it seems to work well in anything that’s replenishable I do think it’s kind of jumped the shark like I I see
tons of News subscription programs for coffee and beer and wine just feels like we’re probably
Pastor the subscription craze.
If you’re interested in the topic that you know again one of the nerdy things I recommend is when companies go public and they file that S1.

[36:36] That that is like a gold mine of data and it’s if you’re interested in these topics if you can find a company that has Nest one out there it’s really a good read because you’re
you’re dealing with these companies that have managed a business cycle were talking about up to the point where it’s at a pretty good scale so so so they’re kind of on Generation 8 thinking and
yeah that’s the guy you got started on Generation 1 thinking right live red and really enjoyed Stitch fix I would say you know there is a lot of negative cinnamon around Stitch fix
prove the critics pretty wrong with the success they’ve had
there is one is a really really good read and then when I when you read an s-1.

[37:22] It’s kind of like a poop sandwich so so you know the where the bread is the poop in the good stuff’s on inside you have kind of dig in and find it
the the part you want to read on this one and Skip all the way to Management’s discussion and and they’re in the Stitch fix one it’s a textbook on how
they think about their cohorts and and how they fight this Trends Jason’s talking about how do you know
how do you make the algorithm better and how do you also scale it with with computers instead of just people so I recommend that
a good Counterpoint is Blue Apron went public and has not been successful so in a reading their ass one it’s really interesting because you know.

[38:08] It’s not as strong and it’s not as clear that they’re actually
getting in front of the sky turn problems so that’s a good one and then if you’re interested in the food deliveries area GrubHub is public and I find their public stuff to be very interesting as well.
A good reading it going back to this one in either Coeur d’Alene updates her are
so it’s hopefully that gives you something to chew on a it is hard to find a lot of like the previous couple folks asked about CAC LTV out there I like reading a case of a prospective cuz it really.
Gives you an idea of how these teams are thinking about things and and I learned like a thousand things from repossessed one so I think that’s one of the best areas to go research the subscription program if you’re interested.

Jason:
[38:59] Yep and it just occurred to me there’s one other point we kind of touched on
I’m the last person to call episode that I’ll just reiterate there’s certain segments that are much more mature and subscriptions and so that’s Professional Services
and digital subscriptions Regza think Netflix Amazon Prime
you know subscriptions to publishing companies Wall Street Journal newspaper all those sorts of things and if you look at how those industry of olives a couple of interesting things have happened.
These
aggregators have emerged because customers have subscription fatigue and their subscriptions are fragmented everywhere and it’s really annoying so you now have Amazon with a service where you do all your media subscriptions through them and they give you a single dashboard to turn on and off subscriptions and control them.

[39:54] Apple just wants to be similar offering
the financial institutions have noticed that people locking all the subscriptions they spend a fortune and they don’t tend to use a lot of the subscription so every budgeting tool out there like mint like a big feature that they offer is identifying all these recurring.
Cost and continue to turn off all the ones that you probably aren’t using and I think that’s now a national television campaign for.
Wells Fargo is they have a feature in their mobile app called control tower which is all about helping people like turn off the.

[40:29] The dearth of subscriptions they signed up for not getting value from so like give you.

[40:36] Use that as sort of a time machine and you let you know it’s it’s probably unlikely in the future you want a copy subscription with one vendor and
a water filter subscription with another vendor and you know and have all these things coming on different schedules and on different payment periods and you know it.
To me that’s one of my Amazon subscribe and save the big advantages is there started the de facto everything subscription aggregator for physical Goods.

Scot:
[41:04] How many active subscriptions do you have Jason.

Jason:
[41:08] So I’ll be honest I am not the biggest personal fan of that there is huge convenience but I do find that I waste a lot of money when I do their subscriptions and stuff tends to pile up so I’m not a huge fan
my my wife does a lot of our household management and she’s way more organized than me so she uses a bunch and I I couldn’t tell you how many she has.

Scot:
[41:31] Is that work that has like around 20 and he has an Amazon credit card and it says so they’ve gotten every kind of replenishable thing in their house that like kids
can I come from Amazon if he’s done some calculus on it and it’s like the optimal savings for a little leverage on the on the Amazon Prime card.

Jason:
[41:50] Side note taking a deeper dive in this answer than we intended to but the today most of these subscriptions and most Auto replenishment is what I call explicit like you go and sign up for something and you have to ask for it and pull it.
And it starts coming until you get around and turning it off but I do think the future for a lot of this
physical goods are implicit replenishment where.
If if you do most of your spending on Amazon or you do most of your purchases on Walmart like they they just get enough.
Data about your habits you proactively.
Send you the stuff when you need it without you even having to ask and both Walmart and Amazon have had various packet patents on this this idea of
predictive shipping in that it does seem to me that like combination of big data and artificial intelligence in this face that like their there’s going to be in near future when
a lot more of this purchasing is autonomous and the reason that’s interesting to me is.
You know when you never have to think about ordering toilet paper again or buying toilet paper because your your house just always has the right amount for the paper what do all the physical stores that today have an entire aisle of the grocery store dedicated to toilet paper do that space
so it’s like there’s an interesting challenge for brick-and-mortar retailers in the future as Auto replenishment gets more dominant.

Scot:
[43:16] All right question to break comes from Parker block he always throws curve balls we appreciate that Parker this one came from LinkedIn hey Jason Scott what do you see as likely business implications of rising a Type 4 antitrust action
on platforms which monetize consumer data.
I think she’s just a little bit in the last episode but a lot of the platform’s especially ones with user-generated content like Facebook Twitter Google search YouTube they rely on the section of law code section 230
which essentially makes thumb the same as a utility like like a phone line if you if you say something on the phone line
that could be sheet Suites or something like that you know it’s not AT&T job to monitor that
so say since we say we are not a newspaper where I your you have liability around what is it libel in
was written once.

[44:20] Slander libel and slander you can be sued if you say the wrong thing she actually very careful with what you say that’s why they have fact-checkers they say look this is just a platform we’re just kind of here
I am so happens but as they increasingly are kind of changing and and.
People offer what they say it is interesting to see
should they still be within section 230 so that’s one interesting area another one is Noah senior up get really aggressive with these do not follow laws gdpr and
you know all these kinds of things I I do think there’s going to be increasing appetite I’m not hugely political and.
The times I had to kind of watch that stuff you always shake your head like when Zuckerberg was in front of Congress and they had like no idea you know the problem is our Representatives have no idea how this stuff works so slow.
Do anything that I just I’m not optimistic that it makes any sense what I shall do so I have to see.
The other thing I will say is there’s a lot of people Scott Galloway is really big on this on kind of breaking up Amazon and it a lot of people kind of gunning for Amazon it’s not really in the spirit of your question which surround customer day.

[45:38] I’m sure Jason has deeper thoughts on that everything about Amazon is a monopoly there has to be someone the consumer being hurt you know usually have Rising prices when you have a monopoly with like the power company or something
Amazon is lowered prices so and you know if you look at it.
Their ownership of retail it’s very small e-commerce store at 50% so yeah that’s pretty big but you know you have Walmart
got to swing an atom if if you if you took antitrust action at Amazon you know most certainly have to Walmart because Walmart has such a big share of
much bigger share of offline and I feel like Amazon’s probably be okay and I think
Facebook Google Twitter are prime or in the crosshairs because of the section 230 stuff and then the fact he’s ad models are built off of tracking across internet I think they going to have double risk there that will be nurse to watch.

Jason:
[46:33] Yep this is the way I sort of think of it there’s a couple categories of Regulation like they’re there are business models that various government entities.

[46:46] Might want to influence by writing new laws and so that’s what all this privacy stuff is right like they’re you know you’re up isn’t trying to
in for some some fifty-year-old privacy law.
Against Google and Facebook they wrote a new I called gdpr specifically to change the behavior about how companies collect consumer data and use it the.
You know there’s lots of new laws that get proposed for you know regulating energy companies and and how they influence the Earth and all these various things so a lot of these companies have risk
that that dries, countries will pass new laws so you’re up obviously passed a Big Lot in the gdpr that as meaningful impact on how
I’m we all do data collection for people and personalization
there is a proposed law in California called the California consumer privacy act on which is very similar to gdpr and that goes into effect,
you know it it’s sort of difficult to
treat customers in California wildly different than the rest of the United States in California such a big Market that it could potentially have the effect of having companies serving us consumers behaving very similar to companies that are serving.

[48:07] European consumers because they they just won’t want to risk getting Sideways from the the CCPA so.
I do think that the biggest impact of those kinds of regulations is companies chains self moderating the their behaviors to not make it a necessity for a legislator to pass these laws and it’s.

[48:29] In a legislative bodies aren’t super efficient it’s really hard.
That’s why I was frankly and so you know you wouldn’t you wouldn’t have big expectation that like the US Congress is going to you know suddenly the House and Senate are going to agree on a bunch of stuff and pass a bunch of new new regulation and so it’s it’s more that they’re going to
threaten regulation in that causes companies to like somewhat moderate their behavior.
It is absolutely true that Europe is more aggressive than this right in regulation right now and so like it’s more likely that you that European regulation affects us companies then.
Then you know that we’re going to see a huge wave of new u.s. regulation so that’s my long-winded answer on writing new laws and then purr.
Scott’s point in the case of companies that whose primary business model is selling stuff that consumers there are t.
Is regulation in prokaryotes that’s called the antitrust laws at the Sherman Act and so it’s it’s a less about Congress writing a new law that would have some negative impact on Amazon and more about how
the US antitrust laws affect Amazon in first God’s point but the laws are.
Like arguably someone outdated you both have to be in Monopoly and despite how big amazon is there really not.

[49:53] The majority of very many markets right like they might be that the largest Bookseller in the u.s. I’m so so digital books could be a potential Market.
If you could get a court to agree that e-commerce is a market separate from
retail then you know you could argue that they’re up for ality even then there be arguments that they really aren’t cuz even though we say they’re 50% of e-commerce that doesn’t include some.
Some huge businesses like marketplaces and pouring and all these other things the
and in the second prompt per Scott’s point is once you’re a monopolist you you have to do behavior that
negatively affects consumers in an amp us antitrust law
that behavior is you have to raise prices and so you can’t just make the argument that oh my gosh Amazon’s reducing choice and that is fundamentally bad for consumers
in Europe they have antitrust laws like that and so it’s it’s frankly at the moment a lot more likely that.
European Regulators like impact how Amazon can grow as they get as big in Europe as they are here than it is that us antitrust law is going to be very effective against Amazon because they just don’t look like a
a monopolist and then they they don’t sort of trigger any of the hot atoms of of the Sherman Antitrust Act.

Scot:
[51:19] Alrighty number 9 this comes from Baxter Overman how do you put super cities within Home Delivery Services IE Walmart grocery wouldn’t drop off when the consumer is home for certain items are lockers be easier to sell.

Jason:
[51:36] Yeah it was so one service that just got an ounce in the last couple weeks.
Involved in last couple weeks is this Walmart delivered a fridge door and that’s kind of what I think of when you asked this question and so that the principle here is hey you order milk from Walmart you don’t want that like sitting on the curb for 8 hours while you’re at work.
It’s a Walmart has this offering where we’re like using an electronic lock they have permission to go in your house they go in your kitchen and they have employees that are trained.
Put away your groceries for you including putting the perishables in the fridge in the.
This was a big deal they made it their shareholders meeting a couple weeks ago and they had a video of Mark Lori doing the first delivery and
when they first proposed this service like a year ago
the idea was that they would install cameras in the customer’s home in the customer would be able to monitor the delivery guy on the camera
this year what the evolution is the delivery guys wear a body Cam and so you can watch everything the delivery guys doing while he’s in your house so they had Mark Lori wearing a body body cam.

[52:44] Delivering groceries to Consumers house and I do think some of those tactics like the body can can help.
Instill trust like I do think there’s a major trust issue here like I don’t think the Walmart service is going to be a.
A huge mainstream service I think there’s some niches where it might appeal to but I always chuckle because.
In this Walmart video I’d be intent is seeing marks wearing a body cam so you can trust him so you have nothing to worry about and in my head I’m thinking Mark what is worth like two billion dollars the one guy that’s not likely to steal any of my students.

[53:23] He probably didn’t need a camera at like there’s probably nothing in my house that he wants that he doesn’t already have so that that’s my my sarcastic answer.

Scot:
[53:33] If you hard boil a nurse problem-solve.

Jason:
[53:36] Yeah yeah so when it’s the.

Scot:
[53:38] Not enough of them.

Jason:
[53:39] Exactly I buy Cuban would do some deliveries.
Like trust is the big impediment here in in you so you see lots of interim step so I Amazon has this very robust program called Amazon key and it both.
As a version where guys can open the Smart Lock and put stuff just inside your door they put stuff inside your door as opposed to all the way in your kitchen
so there it’s slightly less invasive and so maybe you press them more but the I’ve been told that the big version of chi that’s really popular is customers aren’t willing to give
give Amazon delivery drivers access to their home
but they’re willing to give them access to the garage so in a lot more customers have an electronic garage door opener and then have an electronic lock on the front door so there’s a lots of places where the Amazon delivery guy can deliver the packages inside your garage
and that’s easier to have trust in there’s also a business-to-business component to key where Amazon installs the Lockers in.

[54:42] Commercial buildings and obviously you have a lot more trust giving giving a delivery guy access to your secure Lobby than you do your individual house so
I feel like they’re all these different tiers of trust but the one thing I would say is
overtime as the services get more popular and more people use them and have good experiences There’s an opportunity for trust to grow and so when.
Uber and Lyft first launch trust was a huge impediment I’m I going to get in some random strangers car today we all
no lots of other people that successfully use Uber and so it seems less scary and and you know even more so with Airbnb as we have more people in our networks that.
Regular use Airbnb and have good outcomes it feels safer to me and so in the same way if Walmart is able to find.
A decent-sized niche that’s willing to do this refrigerator delivery service and I have to get out.
He’ll probably share that experience with their neighbors and friends and you could see the service grow and get more trustworthy over.

Scot:
[55:49] Yes I don’t have a beautiful answer.
Number 10 also from LinkedIn this Crumbs from Akash Gupta and what’s your favorite app that you downloaded in the last few months.
Jason.

Jason:
[56:10] So my can’t rain answers I don’t like apps that there’s all kinds of data that we
like apps have huge abandonment rate and so for most clients I’m actually advocating they build really good mobile websites that replace the functionality of a nap and that’s using a technology called Progressive web app so that’s my sort of boring work answer
in my personal life the app that I recently downloaded that I had no idea existed that’s been really useful for me is it’s actually a plug-in for the mobile browsers so it’s a plug-in called screenshots
and essentially What it lets me do is when I’m on a mobile web page
it lets me take a screenshot of the entire webpage not just the the part that’s visible above the full and so it for work a lot I need.
Screenshots of an entire entire page and sewed this was a new fine for me that I tend to be using a lot but.
I’m not that can be pretty itchy.

Scot:
[57:12] It’s good I would say at at spiffy we use this thing called geckoboard and they just updated their app.
And up so gives me all my kpi is in one what kind of screen which is nice.

Jason:
[57:29] What’s the app for the Star Wars experience in Disney if you like that should be our favorite app.

Scot:
[57:36] Play Galaxy’s Edge I don’t I don’t know if it’s a blister not you so I didn’t download the Amazon go Store app.
Okay this is just a comment over on Twitter Natalie Dylan and she is at Maverick witch
you like this Jason that’s the VC firm started by Howard Schultz founder of Starbucks to invest in consumer-oriented companies
she mentioned just as one of her top podcast that was a typo at first but I’m pretty sure she actually meant us so wow I was speechless.

Jason:
[58:11] That’s very cool Natalie if you’re listening I’d like to think that I have some partially funded your child’s college education so thank you very much for that.

Scot:
[58:20] Did the Starbucks usage.

Jason:
[58:22] Exactly.

Scot:
[58:22] I think we’re now Pisco effectively at this question number 12 this comes from our friend Ted down in Austin he said make sure Jason talks about mixed-use retail entertainment I don’t know what that is but I’m glad you get to answer.

Jason:
[58:38] Yeah I mean.
In general like in the 1960s when the mall was first invented the the appeal of the mall was there a bunch of sores aggregated that you all wanted to get
get tune so you know we built a big building and surrounded it with a giant parking lot and and put a bunch of stores together in overtime
we added things to that mall that made it even the game
customers another reason to go and spend more time there so for those indoor malls that was things like ice rinks and movie theaters in food courts and as.

[59:16] That the collection of the stores has become less and less appealing and it’s been less and less valuable that drive traffic just buy
this assortment of stores
a lot of these venues have had to get more persuasive with the non-retail things that they put them all so you know the food courts have have
often been replaced or augmented with more significant fine dining and today like a mixed-use small almost certainly means like in addition to shopping and entertainment
that there’s probably a residential component to and so you know you can live in an apartment building
that’s like upstairs from the stores or adjacent to the stores and like I would argue even
Hudson yard is a classic example of a mix you space there’s both a significant residential component of these various condo Towers
that are adjacent to it like and there’s these entertainment features in it like the Skydeck in the
that the stairway installation is named I’m forgetting at the moment and so in general.

[1:00:28] New successful shopping destinations 10 to have the this this multi-use component and
let’s focus on shopping meme only reason that you’d go visit at so I assume that’s what that’s talking about.
You won’t see many new balls built that aren’t like very focused on the the other traffic generation activities on the other revenue streams besides.

Scot:
[1:00:53] That’s not sorry.

Jason:
[1:00:55] Well but we haven’t what’s the name of the.

Scot:
[1:00:57] The Vessel.

Jason:
[1:00:58] That’s all thank you.

Scot:
[1:00:59] Yes take a walk in the vessel okay alright Michelle Grant has a twofer one is should Amazon be worried about broken up I feel like we asked and answered that one did you want to comment on that.

Jason:
[1:01:14] I think we covered it pretty well right based on current US antitrust I think Amazon has very little risk like they I think
potentially digital books could be in area where you can see some enforcement or like I might have said like Amazon web services is it greater risk
lucky I feel I can Google and Microsoft have made enough action lately that that you know that that probably isn’t immediate in Amazon where to get as big in Europe as they are in the US it would be more interesting question.
But I like I’m defending companies in the US I think Amazon has a lot less to worry about from regulation then does a Facebook or do.

Scot:
[1:01:57] Cool and then this is clearly in your wheelhouse cuz it’s got the O word
you’re Jason what are your thoughts on pricing strategy in an omni-channel world where price transparency is high and filled with Bots to find the lowest price.

Jason:
[1:02:15] Yeah so there is a bunch of controversy about pricing right now like lots of omni-channel retailers don’t have Universal pricing so they might have a different price in every store
the online price might be different than the store price you know a complicated retailer like Walmart there could be five prices for every item there to be a store price there to be a ship to home price
there could be a ship-to-store price there could be a pickup in-store price and online grocery pick-up price
and you know Walmart slogan is is everyday low prices
well if they’re 5 prices for everything spoiler alert for them are not alone.

[1:03:02] Inside you know most retailers today like have these fragmented pricing models and I believe that
trust is such a big deal moving forward and there’s so much information and transparency available as a result of digital in the web that I feel like it’s inevitable that all retailers are going to get forced.
To adopt a much more transparent pricing model which generally means so much more Universal pricing model so you’re not going to get away with.
Having a different price in the stores then you do online and hoping the customer just doesn’t catch you so in general will see more Universal pricing.
But you probably at the same time will see that price change a lot more based on
Real World Market circumstances and so you’ll see a lot more Dynamic pricing
but it won’t be secret prices that are changing without you knowing it like I think retarded you know tend to be transparent about that and into me the best example today is
is Amazon they have a super Dynamic pricing model that changes all the time but if you put something in your cart and the price goes down they don’t just take that extra margin they tell you.
And they lower the price of the item in your cart and when you you don’t go to their stores they now have digital prices and all the store so they can show you the same price online that they have in the store so I
you know it’s.

[1:04:27] It’s very difficult for retailers to make changes like this and break down silos so we’re not going to see it happen overnight but I think we’re we’re already starting to see retail shift in that direction so to me the future is.
Universal transparent Dynamic pricing.

Scot:
[1:04:42] All right most sybaritic had a whole bunch of questions I’m going to lightning around a couple of them when is spiffy coming to Seattle.
Stay tuned Ken Scott please update is Amazon scape and how has it changed unfortunately there is an inverse correlation between my time to work on the Amazon scape and your first questions to come to Seattle so
position where I don’t have a ton of time to work on that it’s changed a lot so I think Amazon’s probably launched.
It’s been a year old I would say two programs a month 24 to 30 programs since I did that so like the Amazon Prime wardrobe isn’t on there
4-star store is not on there there’s a lot not on there one day delivery yes those are not on there.

Jason:
[1:05:39] Scot I have no cars in Seattle so between those two I’m going to vote for the Amazon scape.

Scot:
[1:05:44] Maybe maybe I’ll find an internship this one of our many interns can help with this this should be an interesting one is Amazon going to do to Walgreens drug stores what they did to the bookstore with the axis of pill pack and private label
enable the ability to sell Massey pg-propyl probably you think there’s one for the drug source.

Jason:
[1:06:11] I think it is I mean they’re going for everything so it is a market like that they made some Investments and they’ve already like I think had some material effects on valuations for the national companies.

[1:06:25] I’m not sure like I mean there’s that Jeff has a equip that I kind of like and agree with Amazon denim put book stores out of business the internet put book stores out of business
and I think the same made partly be true for retail pharmacies
like I’m sure Amazon’s going to take a go after and take a chunk of the pharmacy business and that will be derogatory to traditional pharmacies but the bigger deal is
we’re shifting from picking up prescriptions in store to having prescriptions delivered to our home so increasingly the old wanting majority of all the prescriptions we take
R tronic,
Africana conditions and returning things and the insurance companies are basically mandating that we all get shipped these bigger quantities of those prescriptions at home so as a smaller percentage of prescriptions get picked up in-store there’s less traffic in those doors
the only reason people go to the stores his prescriptions they’re not good retailers if they don’t have prescriptions and so like I feel like that friends that macro-trends.
Is really going to dramatically affect the retail pharmacy space now most of the retail pharmacies have already pivoted they own insurance companies and mail-order prescription services so that seems like where they’re putting their big bats
well I’m sure Amazon will have some success in Pharmacy in and probably some Innovative products.

[1:07:55] I’m not sure that’s why I’m wearing they’re going to capture.
Huge market share super fast because there is a bunch of Regulation and Power in the hands of individual insurance companies that that
you know are some institutional impediments that make it a harder Market to dominate them say books was not saying they won’t get there but it would take long.

Scot:
[1:08:19] Yep Mike my take on that is when I go to a drugstore I stand in line and there’s usually.
More helpers than customers but there’s only one person to check out the
person five people in front of me has a thousand questions and it takes me an hour to get something but she took me 5 minutes so I feel like there’s a huge customer service
kind of customer experience got there that the
Amazon could definitely fill in in his going to go at it because it’s very clearly something that they can make a huge Improvement.
This is a good one Jason how we doing on time.

Jason:
[1:09:02] I think we are coming up to the end.

Scot:
[1:09:06] Listen to all your questions about sitting on a big one can you talk about the advertising race to grab the wallet we seen some big news lately Target in talks to buy Triad Walmart Spring advertising and house and made a key hire there where is everything going for ads
is it going to be a war for brand the brands wallet is here we’re going to take a page from Amazon Playbook ring ads in house and move to self service
and a bottle and then kind of.
Correlated that she has a chart sheet fluted from Business Insider that that shows kind of percent of us had spent by platform and it looks just going to ask him where
Amazon’s growing their ad business you know he gets over 100% year-over-year still where’s it coming from is it an incremental or is it coming out of,
Google’s haydar Facebook excetra since you’re chief strategy digital retail add officer I will let you jump in on that with Jason.

Jason:
[1:10:08] Quick disclaimer ads are nowhere in my title so I’m going to be expecting a raise when they had that one.

[1:10:19] So the starting point here is that it’s very difficult to run a profitable e-commerce business and so most most omni-channel retailers that sell stuff online
are we looking for every opportunity they can to improve their economics and as Amazon has demonstrated.
Ad Revenue to monetize the traffic and eyeballs on that website is a a significant opportunity
to to improve the monetization of the site so like obviously Amazon’s had a bunch of success you know
Walmart is at a program for a long time is it is Melissa alluded to the certifier their vendor and brought that function and house.
Sort of double down on it and we’re seeing them make a more concerted effort to to pull more.
More advertising on on walmart.com and there’s now a rumor that the target will buy the vendor that that’s at Walmart fired.
And use them as an in-house entity for for Target advertising so none of those things are surprisingly I’ll make sense all these sites one of monetize their there traffic is as much as they can.
The one thing I will say here that is.
I sometimes think that retail ads are a little overblown and.

[1:11:48] Like I think there’s some self-limiting things so when.
Amazon has way more e-commerce traction than anyone else and there is a big site like.
They’re legitimately getting people to spend money on ads that they weren’t spending before.

[1:12:06] Because they all these Brands want visibility on this new Amazon plan form but as all retailers.
Get serious about this and they all start collecting ad Revenue what what temp to happen is this is mostly a zero sum game
brands have been spending money for 450 years on Shopper marketing inside of Walmart stores and Target stores in
the budgets For Those ads are a percentage of the sales of their product from the Target and Walmart sell so
you know you know you’re going to sell $119 of razor blades at Walmart and you reserve 3% of that or in-store Co-op.
That you can spend with Walmart on ads inside the Walmart store so when.

[1:12:51] All of the digital eyeballs are on one side and it’s not Walmart you might spend some extra dollars on Amazon site but when all the sites are getting traffic.
What you trying to do is you just say alright the
the 3% I was spending in stores I’m going to shift that to online and so while that might look good for the monitor the website monetization unit at Walmart.
Is actually a zero-sum game for Walmart they were getting 3% of razor blade sales as advertising Revenue before and they’re getting it again.
And is as more retailers have better advertising platforms like they’re all going to get their fair share of those dollars and even that the chart the Melissa shared like I look at most of these charts that sort of.
Are surveys of how people are spending their.
Their ad dollars in my experience is that there’s no one person at any brand that knows where they spend all their money so I have tons of clients wear
multiple entities at that client all bid on the same keywords on Google and drive each other up.
And so I can assure you of you surveyed any of those stakeholders and said what’s your total spend on Google.

[1:14:02] They actually don’t know they only know what their silos and is on Google.
Until you talk to a given person in one place then he either didn’t spend much on Amazon last year and he’s spending more this year and so it looks like a big ad.
But if you really look at it comprehensively across the whole organization.
It doesn’t feel like people are taking dollars they used to spend on a Super Bowl commercial and instead investing that on Walmart or Target so.
I think that the the ads on these sites are here to stay but to a certain extent it’s a zero-sum game and we’re just seeing Shopper marketing dollars shift from in-store to online.
And you know in the early days Amazon you know probably got a disproportionate amount of those dollars but on a go-forward basis.
They’re 50% of e-commerce they’ll probably get 50% of the the digital ad budgets from digital retail ad budgets from from these various abrantes up.
I like I think it might normalize at we’ll see.

Scot:
[1:15:07] Well I think that’s going to wrap it for a list of questions we really appreciate everyone donating your questions it’s always a challenge to try to answer everything and hopefully we got to yours.

Jason:
[1:15:21] Absolutely and certainly if you disagree with any of our answers or are you missing anything with Scott and I both want to learn so please leave us a note on Facebook or Twitter and will continue the dialogue there and then till next time. Happy commercing.

Jun 17, 2019

EP177 - Internet Trends 2019 and Listener Questions Part 1

A recap of Code Conference and Mary Meekers Internet Trends 2019 Presentation, as well as Part 1 of Listener Questions.

Recap of the Code Conference in AZ.

Recap of Mary Meeker "Internet Trends 2019" from Code Conference

Listener Questions Part 1:

Q1: Perry Solomon What do you project the effect of the FedEx contract termination to be, this especially applies to 3P merchants using FedEx for SFP?

Q2: Danny Sheridan If a brand is ready to partner with an Amazon channel-consultant, how do they tend to find each other? Is the industry growing or shrinking from your point of view?

Q3: Ben Kates How will the CDP change in the next 3 years? How does personalization continue to evolve? Thanks for all of your time and energy into the show. -Ben from CompassRed in Philadelphia

Q4: Jamie Dooley Hey Jason & Scot! Have you heard any news or updates around Amazon Singularity? (combination of Amazon Vendor Central & Seller Central). I’ve heard the project’s rumored codename is “Hybrexit”....?

Tune in next time for listener questions part 2!

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

Episode 177 of the Jason & Scot show was recorded on Friday, June 14th, 2019.

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 is episode 177 being recorded on Friday June 14th 2019 I'm your host Jason retailgeek Goldberg and I'm here with your co-host Scott Wingo.

Scot:
[0:39] Hey Jason and welcome back Jason Scott show listeners.
Jason Simpson good ol episode 176 we have both been on the road so tonight we are going to mix it up a little bit and we're going to do
we talked about some road trips
at one of our favorite events every year is Mary Meeker Mega Jack of Internet Internet Trends drop so we have some thoughts on that.
And then we put out a call for listener questions and the response was overwhelming so we're going to try to chip away at those in this episode and then save some for a future episode,
I took it off you are fresh off the plane from code recode how was that show.

Jason:
[1:21] Said I was fun so this is a show that's put on by coat recoat it's their big event called code it it's always been in California for the first year
they moved it to Arizona and they moved it a little later in the year so that's unfortunate cuz you end up with.
110 degree weather in Phoenix but I was excited to go because in the past they had some amazing guess they've had.
Live interviews with Jeff Bezos and Elon Musk and it's the event every year where Mary Meeker delivers her state of the internet presentation so I.
I eagerly consumed it every year but this was going to be my first chance to watch her actually deliver a lot.
And so it was it was a good show I would say slightly unlucky every year has sort of a theme to the contents.
I'm and several other things have been very call Mercy oriented in this team to me was slightly less Commerce oriented there's alot going on.
With a big media companies in the Basin arguments about a d regular regulation and content moderation and said the.
The conference been a bunch of time focused on that which is interesting to me but maybe slightly less relevant than some of the.
The previous year so with that one caveat I still found it to be an entertaining and informative show.

[2:46] And so it's it's like really put on by Kara swisher and one of the things that makes it work so well she's got this problem at work and she gets a lot of a list.
I speakers that come and get interviewed and most of them get interviewed by one of the the
Rico journalist in the United State in these famous iconic red chairs so things kicked off this year with the
Susan wojcicki who's the president of YouTube and YouTube had just just had a big internet kerfuffle over some
new rules they had around content moderation and so so she got kind of grilled on on their moderation policy and it made a ton of news because she
she was not a super eloquence defender of their policy and so you know you could you could
it was painful to watch you could feel that she was nervous and she was struggling to answer some of the journalist questions and some of the audience questions and I feel like there was some
criticism of her in the news Recaps of that interview so so very newsworthy not super focused on on Commerce.

[4:02] The next one to me was kind of interesting was Matt levatich who's the CEO at Harley Davidson and I was kind of excited for you,
this was apparently already well-known but I didn't know this that a major Initiative for Harley is Harley is making a huge investment in electric vehicles.

Scot:
[4:23] Yeah Yeah Yeahs their problems Millennials hate motorcycles and no young people buy and ride motorcycles so I've been there their theory is electrics going to solve that I guess we'll see.

Jason:
[4:36] Yeah so he brought out like a mini version of one of their sort of electric bikes and half of his conversation was you know tough questions about Chinese tariffs and obviously he's been up personal Target
President Trump and said it was all those dialogues but half of it was this whole like.

[4:56] Man it is an electric bicycle in brand for Harley and like you know when you think of the store brand elements of Harley like it's you know it is the the.
The specific noise of the Choppers and all these things and now you've got this the silent I can so is interesting to hear mad talk about how.
How does he felt this business would be additive and not disruptive to the brand and you know he tried to fix the fact that like.
Hey you don't get the signature sound of a Harley but for the first time you can actually hear.
Nature and have a conversation with someone while you're while you're out on the ride and and stuff like that so it was it was an interesting try somebody you I'd say that the jury seemed out.
The next interesting interview they had a couple of folks from Facebook they had Adam Missouri Oahu.

[5:53] Is that new CEO of Instagram he is a.
Run a bunch of big businesses at Facebook and took over Instagram when the founders left and then Andrew Boz Bosworth who's like owns the devices in the virtual reality.
Practicing Facebook you know again they they were getting Grill the lot on.
Regulation and potential antitrust actions but intermix in their Adam was talking a lot about.
The future Instagram being Commerce and he didn't get into a lot of specific examples but we have seen them
Instagram aggressively rollout New Commerce beecher's pretty regularly and he gave the strong impression that they're not done and there's more to come there.

[6:44] Pause did not reveal a lot on the device side obviously there their they're still very bullish on all the VR stuff they didn't launch this like in home.
Video chat system called the Facebook portal and I was quite serious did you know here they would claim some.
Market penetration success with that product and they they they refuse to talk about how well it had sold which made me skeptical that it is sold very well cuz obviously there's a lot of people.
The thing Facebook has a fundamental trust problem and people probably want to buy a camera on a recorder to put in the living room from Facebook.

[7:24] And I didn't necessarily do anything to dispel that that perception.
So then they had a couple folks on from Twitter Kayvon and massacring all these names I'm sure.

[7:39] Tackletour who is in charge of product at Twitter and then Vijaya cattle who's the chief legal counsel for Twitter and again,
you know Twitter has gotten slightly less heat than some of the others but they were really getting grilled on their moderation policy and so most of the dialogue was,
dominated by Vijaya and I I would say.
At the very least she seemed like a much more polished post spokeswoman for what their position is she held their own against the questions really well we didn't get a lot of.
Super interesting things about the direction Twitter is going in from a product standpoint the one thing that cave on you know Express that he was excited for the future of Twitter's functionality
is really exploring more.
Discovery by topics instead of by people so you know he obviously on Twitter the primary methodology as you follow people and have.
You know when your your feet is developed based on the people you follow you know there is a rudimentary hashtag system that is harder to follow specific topics and so it sounds like they have some some features in the word works too.
To sort of Bubble Up topics more on Twitter in and help you follow them.

[9:00] Andy jassy who runs the AWS business for Amazon he was certainly interesting again you know he was mostly answering questions about why they shouldn't nawas off.
And I'm not sure he had a super credible argument for why they should you can get all kinds of the base by about that why they should or shouldn't but.
Is it was interesting like talking like you know she got to ask a lot about the.
The evolution of competitors most notably Microsoft and and Google and it was interesting to hear this huge six-year head star.
He talked about when they were first launching the product how they were even they felt like there in Seattle.
At the very least Microsoft would quickly respond after they lost a service and so they were super eager to keep the service on a secret until this person wants so that they would have a little bit of a head start on Microsoft.
And he's like never in my wildest dreams did we think we get the market.
And have the markets are cells for 6 years before Microsoft came back with a product and it reminded me of this.
Famous Warren Buffett quote that Jeff Bezos probably isn't the guy you want to give a six-year Head Start 2.
But yeah so he was saying as a result of that like he he feels like AWS has two fundamental advantages over their competitors in the market you feels like they have.

[10:28] Many more services than any of the other platforms and so they're there are more comprehensive and he feels like.
Obviously they have a much bigger market share than any other competitors and he feels like that market share fans lights to scale which translates to lower-cost so he feels like they have a fundamental cost advantage over over Google and Microsoft
that was kind of interesting in some ways the headline interview of the whole thing was Stacey Abrams who ran for just.
Just last Governor tutorial race in Atlanta not super relevant to our.
Our listeners I don't think but they had a conversation with her and then Mary Meeker did come out she's changed companies I think she used to be with Kleiner Perkins if I'm remembering right
he's now with the new Venture Capital company called Bond but I was happy to say that the.
The state of the internet report you know it seems like.
It has strong continuity and didn't really lose anyting 333 slides we'll talk about it in a second so and she delivers it in 40 minutes so.
It's a.
Super fasting and she keeps highlighting the fact the reports meant to be read not presented it so it was fun to hear her deliver it for the first time I think there's some interesting things that you and I both pulled out of that.

[11:53] This is getting super long head that David Solomon in the CEO of Goldman Sachs of the thing I was interested in
with him is he has this credit card partnership with apple and we haven't done a ton of details about it yet but he said that a lot of Goldman Sachs and Apple employees are currently.
Getting the credit card in the beta and that they're they're super excited and they feel like like the.

[12:16] Credit card has a lot of Utilities in a minute he's that customers like that.
Previous credit cards haven't had so I'll be eager to learn more about that the next speaker was by my by far my favorite.
Of the show and probably the most people though the least impressive speaker it was this entrepreneur named Richard Browning who's with a company called gravity.
And Richard and his buddies decided that they wanted to build their own jet patch and so he should really cool sort of making a video of by Kim out on the farm.
With this first mini jet engine that he strapped to his arm and and.
Yeah trying to figure out if it could with him off the ground and you any shows this evolution of putting more Jets on his body and you know.
Falling in wiping out spectacularly in all these sorts of things but the culmination of all this is he has built a jetpack that essentially lets a.
A person fly for like 20 minutes and it's it's a very Iron Man ask and so he he's talking about it and showing the video and the monetization model for this is really it's kind of a novelty entertainment thing like.

[13:27] You might go to a race and watch people race the jetpacks around a course over a lake.
I think is a model but what was super cool is after his speech we had a coffee break we all step outside and 110 degree heat and Richard flies in in the Jets we all got the.
Got to see him flying around live like only a few feet from us and it was totally woods yet and I'm pretty cool, as I.

[13:54] Sort of a technology geek standpoint that was definitely the coolest thing at the shop until then just a couple more to wrap it up.

[14:04] Cindy Holland who's ahead of original content in Netflix.
I see we you know we both are fans of a bunch of the content not super content irrelevant but was super irrelevant is Cindy's previous experience in Netflix is she was with Cosmo.
That one of the original e-commerce grocery delivery company so I thought that was a funny background.
And then our friend Scott Galloway you know who does a podcast with Kara Swisher he came out and did his.

[14:37] Presentation images always well-received he's a really good presenter.
Yeah the inside baseball thing is he writes this great content every year for a show in Europe called dld which is in January and so he did this.
Content in January and was kind of recap of the 2018 predictions in is and what is 2019 predictions are and they're both some.
Some clever insightful stuff in there and some funny silly stuff in there but you know if I work if you're an Insider and you've seen it a bunch of times he did the exact same content and it seems kind of weird.

[15:11] Three making 2019 predictions and recapping your 2018 predictions in July so that was maybe a little goofy
and then the last two things Ed Williams who's the CEO of medium was on he's also one of the founder of Twitter
again not super relevant to us but he said interesting personality that had some thoughtful things to say and then one bit of news that I was sent that very relevant to our listeners
yes to the show and a journalist that covers our industry Jason Delray for who's the Commerce.
Reporter it at recode announced that he would be releasing a new podcast this year it's a series called The Land of the Giants
and idea is each season they're going to cover one of the things companies so Facebook Amazon Netflix Google in the first season is Amazon so he's the host
it's a narrative podcast with a bunch of live interviews with people talking about Amazon and going to be 8 episodes is going to release in
in July so obviously
the podcast that you need to be listening to first and foremost is the one you're listening to but that would be you know another good one to check out and I got the hearing Advance preview it sounded pretty cool.
So that's my super long-winded recap of the code Commerce this year.

Scot:
[16:34] Free cool. Did you know Susan was this key couple fun facts her garage is where Google has started did you know that.

Jason:
[16:43] I did not I knew she was one of the early Google Earth.

Scot:
[16:47] Yeah and her sister married to Sergey Brin
and then they divorced after they're no longer together but but she the sister was married to Serge a for a while and then her sister is the CEO and founder of 23andMe.
Substitute Berry Google entangled entrepreneurial women.

Jason:
[17:10] I feel like you are the perfect host for the People magazine segment on on the Jason Scott show now I love it.

Scot:
[17:16] Yeah and they were last seen dating and I'm just going.
And then I seem like so it's kind of fun to watch these shows from Twitter and then hear you.
You don't seem I was kind of getting over Twitter was you know.
Monopolies break these guys up politicians are coming for them it was definitely kind of you know
so so I know Kara is talked a lot about that Galloway has been since he released the for whatever that's called he's been really big on it seemed like that was the ultimate theme and it's always funny to me like.
The tech people seem like so shocked by all that they don't really have it. Answers how could you not know that was coming.

Jason:
[17:59] Prepare now that's why I like the YouTube one was a little better than a liner like giving her seniority and roll like.
You just would have expected her to be totally buttoned-up and nailed it in
and I I need to send a complimentary way she up she just felt more like a real person who is like struggling with it and just kind of admitting that like.
But we don't have it all figured out and we're we're pissing people off and we feel bad about it but you know.
They they definitely held her feet to the fire and that that was absolutely the big takeaway like not even so much should we split them all up and should we regulate them that the biggest takeaway is they all have a Content moderation problem,
and nobody's figured out how to do content moderation at scale.

Scot:
[18:41] Yeah they're all worried they're so there's a section of the law that protects them from being Publishers they're all worried the more concentration to do the more they're really kind of doing it at Oriole and then will they still be able to live under that sexual
indemnifies I'm from all these issues.

Jason:
[18:59] Scot out the former guest sucharita mulpuru who's beat that drum regularly on Twitter.

Scot:
[19:04] Oh yeah absolutely.

Jason:
[19:05] So when other note there should have been putting on forever if their Marquee event
they have now on some smaller, more specific events they they have like a dinner at a lot of the shop talk events and you and I have attended a bunch of those and then they have a stand-alone Commerce conference which is,
a two-day conference in New York and that's coming up again this September so it may be an event have on your radar.

Scot:
[19:30] Brickell
cool while you were enjoying the quote dry heat a phoenix I was in your canoes beautiful whether there it was not a hundred Ten Degrees that was good and then I got to knock something off the bucket list I got to go to my first Amazon go store
I feel like the universe has been trying to keep me out of there because last time you and I were in Chicago we tried to run by and it just closed like 2 minutes before I got there.

Jason:
[19:57] Yes I'm excited to hear I know you've obviously thought and talked a lot about it though but I'm excited to hear what what your impressions were from actually being in one.

Scot:
[20:05] So it's kind of think it was in North Carolina it would be really exciting so we don't have a convenience store like that.
But when it's in New York and it's next to kind of the Pratt and the dean and DeLuca and those kind of places it's not as
kind of outstanding job Shadows selection and food called yet at 8 those doors are better not be able to do the,
just walk in and out just walk out technology thing
I was a little surprised I was expecting that I could watch the app and put stuff in a bag and watch it kind of go into my cart there's none of that real-time kind of stuff in fact I was surprised I don't know if it's normal or not but it took about.
8 hours for my check out to complete now it's starting to get concerned like I feel like maybe I ended up in humans.

Jason:
[20:56] That's interesting.

Scot:
[20:57] I did go with my daughter and she was like she shopped in there as she wasn't really expecting anything and she was like handing me a bunch of stuff.

Jason:
[21:06] And then separately from you or did you scan both again on on your.

[21:17] Sure that that is a challenging use case for them as groups of Shoppers by the way.

Scot:
[21:23] Yes I feel like we did something that cannot regret but oh and then she was like putting stuff up and back in a workout
Anixter was a purpose for in a really good.
It was funny it was very crowded and then there's a lot of confusion about how it kind of worked like especially if you needed like forks and knives and stuff like that is kind of hard to find but people figured it out.

Jason:
[21:54] Yeah yeah I mean I would argue like this so I got a chance to go in the beta before it was open to the public and I would have said that
I swear in the beta it felt like everything got updated in the app in real-time but since the store is it open to the public you do get a receipt.
After you leave the store and in general I would say it's kind of in that 10 to 15 minutes at 4 so your experience to me is an outlier but the but you definitely don't have the real time thing and but there was you went to the newest.
Yo that just opened in New York but I got you were there that we could open I think which is the second one in New York and there's a super important new amenity in that store I want to hear about.

Scot:
[22:34] Yes sadly I went to the old one,
it was an interesting part of town I hadn't Sandlot time it is kind of way downtown called Brookfield Place which was a lot like you know you have a lot of the
DMV East or is all that kind of iPad once I was interesting is all I Cuts in your nose and say.

Jason:
[22:55] We actually mention that in the Hudson yard episode of you with Intuit.

Scot:
[22:58] Oh yeah I remember it well.
But yes just right after I left the open the second Amazon go store again the universe kind of sticking out its tongue at me
and that one has espresso and coffee drinks so now I have a valid excuse to try to go to that I'm excited to see.
Is it's going to be a robot or a person or how that's going to work now compares to our favorite Starbucks.

Jason:
[23:22] Yeah I have a New York trip I think the first week in July so I'll be I'll definitely make a chant a point of testing out there there espresso service.

Scot:
[23:32] Cook's Chiloquin went back to gossier I've discovered when you have teenage girls they love to go to RCA so it's kind of funny the dads all still sitting there, looking each other like what's going on
we're all in there for like 2 hours as the ladies try out all the different colors and flavors and skates and stuff so.

Jason:
[23:50] They do kind of comfortable man chairs did you find a man chair.

Scot:
[23:53] I did yes yeah it was good it just got fun to watch just got to like a vibrant energy to it this really cool if I would definitely recommend it to listen to check that out.
And then as per my co-host recommendation went to this really need a place called showfields this is a lot like they done it to it when he's come Marketplace stores
down that phone that had a lot of fun interactive things so you can like jump on this pile of pillows to try them out and had a slide to go between floors that we enjoyed
I just want to find it it felt like.
Anika namakkal to me you know so so this is this is New York City real estate and there's, like four things on each floor of a very big building that
and the space wasn't like there wasn't a lot of
crowded space air felt like a lot of retail space for not a lot of stuff so I'm not sure how that model is going to work long-term so it'll be interesting to see how that plays out.

Jason:
[24:47] Yeah I totally one side note on Amazon go there was that there's an interesting article that came out this weekend I'm embarrassed to say I can't remember who wrote it so I'll find a Lincoln put in the show notes but it was kind of talking about the early on Bezos City.
I bet he would only do physical retail if you could come up with an interesting concept and then this article goes on for critique a lot of the the Amazon retail Concepts as not being very interesting so you know talks about life.
The bookstore in the the four-star store.
Being early generic and then it called out Amazon go is the one novel concept and what.
There's things you could debate for and against that argument but the dialogue on Twitter about the article was a lot of people pointing out that if Amazon go maybe the.
The least interesting of all of them because it you know it is a basic convenience store or you know.
A grab-and-go sandwich store and it's it's Marquee feature is.
That you don't have to pay when you leave so there's less labor in the store but then everyone on Twitter points out that
like there's way more people working in that store then work at any 7-Eleven or or oboe Pawn in the country so like they had the technology they haven't actually got that jumps down in the store.

Scot:
[26:05] Yeah I think it's a work-in-progress I think they'll get there.

Jason:
[26:09] Yeah I in Arizona at the Fashion Show Place Mall I did stumble across a new Amazon retail concept there is the one and only ring store in in the mall.

Scot:
[26:22] Did that predate that position has a ton of a vestigial tail.

Jason:
[26:26] It does not it does pretty look like it was built like by that business unit and not by Amazon that's a perfectly nice store
but it doesn't leverage any of the same fixtures or or four common elements from the other stores it looks like it was built by the ring team and apparently they used to have a pop up.
And they migrated to the Sprint store but yeah I just find it interesting there's probably not that many doorbell stores in in the world and so this this may be the only one.

Scot:
[26:53] Pickle and then I feel like you and I both had fomo because the show that ended up being better than where we were was remarks and this is Jeff Bezos is held this kind of
private robots kind of a thing talking about space and things like that now they've opened it up where did you get to see some of the activities.

Jason:
[27:17] I did and so they do have that they still have this like super exclusive show that like it is invite only but then Remar what is an attempt to take the content from that super exclusive show and make it available to a broader audience
I'm in because it's called Mars I erroneously assumed it was predominantly focused on space but Mars is an acronym.
And I think it's like machine learning artificial intelligence and Robotics.
I probably at that wrong but that work into it seem like there's a lot of super interesting content and I've talked to a couple folks that attended
and I definitely regret not having worked it into my schedule did you see me key takeaways that excited you.

Scot:
[28:02] There seems really cool demos and just forward-thinking things that's where that's where they announce Robert Downey jr. announce that he's going to save the planet so that's good.

Jason:
[28:15] Finally thank goodness.

Scot:
[28:16] Skip to leave it up to Tony Stark.

Jason:
[28:22] And bassist was there and the end doors and content himself as well.

Scot:
[28:30] Yeah the only all the unfortunate all the Press is about some someone kind of got close to him by a protester got like within two feet of him on stage and I think that free tarot now
that's all it seemed to just going to take over the whole conference app that one episode.

Jason:
[28:49] Yeah yeah I feel like there had been a couple political things earlier where someone came on stage in the like none of the politicians have good security but a tree Mars they apparently had excellent security got wrapped up in exited very quickly.

Scot:
[29:04] Yeah they're like white on rice of that dude.

Jason:
[29:06] Exactly so way way easier to grab a bite from a presidential candidate than the world richest man.

Scot:
[29:12] How to make sense.
Cool so we have both waited through the 333 page Mary Meeker internet Trends deck
I'll go to a couple highlights so I always enjoy the back and it it's kind of interesting just kind of get a feel for what beaker
is seemed pretty firm by the way is it's her starting the firm so she's like the principal now so she was kind of a general partner.
At the last tournament that this is her new firm that she started so.
It came on the scene I think she came out like a 3 billion dollar razor something pretty impressive so so she's got a lot of stuff behind her now
look up of my highlights so for listeners it's going to help you if you have the deck open right now so I'll wait for you hopefully you're not in your car cuz.
You didn't wreck so you can review this.

Jason:
[30:09] Or on the treadmill.

Scot:
[30:10] Yeah if you're on the treadmill with an iPad a spy doing sweetheart on your phone but you know it will put this in the show note so you can reference it later but you know the guy that
trying his first super in a company I kind of look at it is that lives mostly so you know all the stuff about you have people to plan on the Internet it's going down all that's not much there
I did like kind of presentation from slides 29 to 35 and it kind of starts out with the story of.
If your Castle TV if you're out there buying traffic is going to be challenging and this is we're seeing this with like the digital native brands for they can I get this hundred-dollar online.
Kind of sales rate in the de placa well it's because you just can't buy enough traffic that point to.
That's why many of them open stores and it talked about a much better than it kind of transitions into just some data and supporting evidence that
a better way to build a business nearby and traffic is Happy customers so I spend all day thinking about this so it was good to kind of see some of that data and I plan on using a lot of it and you know cuz I talk
internally about some of those things a long time listener Parker block pointed out on side 50 that
Jason Scott show is not on the top 10 podcasts at least I don't know I don't know where we dropped off their Jason that's kind of a bummer.

Jason:
[31:40] I think it's just the summer of all I'm sure we'll be back up by then.

Scot:
[31:43] Will be back next year.
And then I thought you would be excited on slide 51 they had some good data on the echo next at cirp cirp data seems to be
a little bit higher than we kind of think it's going to be but it showed that code doubling in the last 2 years I believe switches
Trinidad like around 50 million that goes out there
that was a larger number than I was expecting and then slide 53 again kind of in my wheelhouse with what I'm building right now there's 56 million consumers have in the on-demand economy so I thought that was good that's grown more than
2x in the last 2 years and then probably the newest new thing I saw him there a lot of this was just kind of
restating and representing a lot of data in a nursing new way because really good at telling stories
I've always learned a lot from her about the how to tie that together but there was this set of international companies and I have to admit all these for new to me so
it's in. So these where some of them are Chinese like the first couple like pee on duo duo.
Let's wind in pain and then that's kind of true the world there's one called rap beats Wikipedia Indonesia.

[33:02] This is interesting when called shop ESO hpe
all suspicious about that but I kind of made a mental note to go check that out that's out of Southeast Asia either one called Reliance jio so there's this really interesting new models out there in the globe you know kind
different ways to connect B2B buyers and sellers different ways for marketplaces to be born different ways for Content neumega apps that the kind of combine all kinds of stuff
and my last point is I always come a camel known as I go through exactly kind of companies tend to get like one mentioned in other ones will get 10.
And you called me curse favorites so her favorites as best I could tell from the stacker Spotify and zoom
so she spent a lot of time talking about those two companies and if she was going to talk about personalization she would talk about Spotify what you talked about happy customers best way to grow your business you know the zoom founder is kind of famous for saying all the other
conferencing software out there just pretty much stinks and we just focus relentlessly on making it fall us and getting rid of that having to download the little
you know I called will charge that you have to download if you're going to use GoToMeeting on those things those things never work.
Companies that she seemed to really enamored with right now is where the highlights at pick up.

Jason:
[34:27] Nice yeah so I think you had a lot of things that jumped out of me.
You like a Nuance on a happy customers one of the things she talked about is.
Effective customer acquisition strategies and she was really highlighting the freemium or trial
as the best path to customer acquisition and most cost-effective sustainable path and do I do know there's even a knock that like these companies to try to grow by like buying eyeballs on social media.
You know is that is a self-limiting strategy but these companies that are growing by like offering a.
A freemium model and then updating people to a paid service are really strong and so and Spotify were both.
Like Marty examples of companies that leverage that that freemium model for customer acquisition so she was,
she was strongly endorsing that business model a fun fact for wisner's Scott and I
time ago now moved from from Skype to zoom for our virtual voice recording this show so so we have a slide.
Little connection there but she made a funny joke there's also a section about how big gaming is getting and how fortnite continues to dominate in terms of minutes and.

[35:49] Another area she talked about Zoom was the growth of remote workers and so she postulated you know some future where we're all remote workers bending RR.
Are daytime hours in zoom in our nighttime hours in fortnite my Visa.

[36:04] The evolution of humanity which seems a little sad but I do like some fortnite so I'm okay with my new version of that I guess.
I thought that bad stuff is all interesting and if I were to try to.
Wrap up the the international mobile app sheet she highlighted like there were two big themes
in every geography delivery and same-day delivery is getting digitized a lot of these Services were around.
Getting packages and purchases to you same day and then in a lot of the digitally less mature markets like India is the emergence of a local super app
along the lines of what I think of is a WeChat in China so you know in a bunch of these markets they're not buying the the.
Android operating system that comes with the play store or iOS devices to come with.
With the Apple App Store and so instead of downloading all your apps from some
some service these super apps have emerged that have sort of like mini apps that plug in and that's essentially WeChat is in a way like a.
An operating system for these apps in China and that and she highlighted some other ones and other parts of Asia and India that I had never heard of it but you don't seem to be emerging falling that model which as she said it made perfect sense.

Scot:
[37:31] Yeah pretty cool so we definitely recommend you know I think if you're in this industry you need to have this guy on your laptop somewhere and I'm pretty good working knowledge of it because
you know. You never know what you're going to whip somebody stats out and say did you know that this many people are on the internet days of this much time and.
Are there some good Ecommerce stats on there nothing really are shaking so that's why we didn't really cover them but I think it's just really good to have a working knowledge of that deck because
it does it is foundational data that we need to find a job.
What was that it was kind of a slow news week so we're going to cover news next week and so we put out a call for listener questions and we got a resounding response so we've got,
20 questions to go through which we're not going to be able to do tonight but we're going to do for the next 20 minutes or so we're going to kind of see how many of these we can get through.
Light socket off the first question comes from Perry Solomon on Facebook
what do you predict the effect of the sex contract termination to be this especially applies it's repeat Merchants using FedEx for SFP?

Jason:
[38:43] And I should care be all these answers to make the show feel more authentic I didn't for you read or prepare for these questions at all so I take my answer to the green assault I don't then
so just to recap for listeners.

[39:00] Amazon delivers a lot of their own packages they pay the US Post Office to deliver a ton of packages they pay UPS to deliver,
like the third most packages and they pay FedEx for the smallest amount of their packages so FedEx is there smallest the smallest piece of their delivery Network.
And FedEx chose not to renew their contract with Amazon and so you know next year you won't be getting any FedEx packages,
from from Amazon delivery vehicle so.
The reason I suspect they did that is is I've talked about a lot on the show demand for package delivery is far outpacing capacity so FedEx isn't growing,
as fast as demand is growing so they have a constrained resource how many packages they can deliver and when they sell that capacity
the biggest consumer out there in Amazon Amazon has all the leverage and gets to negotiate a great rate and I I think
FedEx felt like hey
we we can sell the same capacity to other people in the e-commerce echo system and you don't frankly charge more and get more
and so I think it's it's really a matter of Amazon monetizing.

[40:17] Facebook FedEx they can to monetize their capability as a FedEx always points out there is
Amazon the small percentage of their overall business so it's like 1.3% of FedEx deliveries so this is not a disaster for FedEx.
That's a long-winded recap very specific question is hey if you're a three piece seller on Amazon and you were filled for filling packages via FedEx how does that affect you and you answers.
If if you are owning the Fulfillment yourself you can still use FedEx and it probably doesn't affect you because you were negotiating those rates with FedEx yourself you weren't leveraging some
negotiated rate from from FedEx so I suspect that exit still happy to fulfill those packages for you and things won't really change
if you are using FBA to deliver your packages.
Packages are no longer going to get delivered by by FedEx but that will mostly be or or that'll be a hundred percent be transparent to you.
And you know it sounds like you already a seller so you may be more familiar with this but in general it's pretty tough to make a living as a 3-piece on Amazon.
Without using a PA you got to be enough.
In a pregnancy category does not super competitive a success and so for most 3p sellers they're using FPA and therefore Amazon's picking the carrier or not you.

[41:46] Banisters.

Scot:
[41:48] Yes who won of the nuances and Perry's question is he talks about SFP so there's this this interesting middle program so so Jason you talk about your a third-party shipping yourself and then using prime
there's a middle program called SFP in this called seller fulfilled Prime and that's where you're essentially saying I will use my own fulfillment center
and I will live up to the prime promise as as part of that you do have to put all of your shipping's on out of your facility
on to Amazon's effectively within their Amazon relationships with the carrier's so that will affect the SFP people cuz you're not going to FedEx coming to pick those up anymore now,
inside of that same Persephone at Center you can you can also do Native shipments which you may be doing for other channels or your website or what not
and of course you're still free to use fax for those if you want to but if you do have certain thing doesn't it as a p that does you know will not be going through this mechanism the other nuances
you know there's two,
FedEx has a lot of international carrier carrying crossword trade stuff for Amazon that relationship is still in place and there's also a lot of ground stuff so ground is a program we all think of it is kind of like being 5 days
but you can actually go to day all out of ground within your kind of
missing Coast even into Midwest sometimes that so fed up that ground program where.

[43:17] It's almost within the prime promised for a lot of stuff so there is still a ground relationship
between facts and Amazon so I imagined Amazon will still use some of that for really short stuff where they don't have a you know this
their own delivery, Network going.

[43:35] So you know it is interesting that the bigger than you might think this really fast in here is you know this
as Amazon builds this out we I have long predicted Jason I think you're on board with this you have this Amazon Playbook is pretty well-known now you know so test it
it works test it figure out the model get the cost down scale it.
While you're dogfooding it and then the third page of play book which is what always blows people's mind is you develop the super-secret proprietary thing that's awesome now open it up and that's the part that
there's not really good physical analog four and usually blows like traditional retailers mines it it's equivalent of putting a Target in the corner of a Walmart right you would never do that in the real world
Amazon it just pastry The Playbook they just do it all the time.
There's so many quesadillas it's kind of obvious now so AWS is it was born this way FBA in the marketplace so those are three case studies so it's clear to me that if I filled out all this delivery
I open it up and I effectively compete directly with UPS and FedEx and by that what I mean is Jason could ship a package to me here in North Carolina.

[44:53] Amazon the Commerce company not involved at all and he could probably you know
I'm headed to an Amazon driver and say I would like to go to the store Carolina you'll go online printouts of postage and I'll be like $2 because
the package is going to ride along this huge infrastructure where all the fixed cost is already been implemented and if Jason was the FedEx that to me it would be
8 or $12 so I think the
carriers of finally woken up in like a boy this could be a pretty serious problem for us I need to focus on getting ready for that and shipping packages for Amazon,
does Harley how help me get there
what happens if you think UPS can get much worse position because well over the potatoes 10% I look in the back of a lot of UPS trucks.
And I have not looked at a UPS truck in the last year that doesn't have over half Amazon packages so let me just be me but you know a UPS is going to be in a really interesting
place when you're the death novel is hey UPS we don't need you anymore and we're competing with you that that's going to be a really tough day when that happens.

Jason:
[46:01] No no no great point and you've been being a dumb for a while I think this is the year of it
like that.
Players have kind of become public like both Amazon listed shipping as a business they compete in in in their their financial reporting and and I think in there,
shareholder meetings I know FedEx and UPS had to acknowledge potential competition from
UPS sort of affirming what you said sign out and look in the back of the UPS trucks one thing that gets a lot of people is FedEx and UPS built their business to deliver packages to other businesses
so they're optimized for business-to-business and they they they're much will.

[46:45] Weaker at delivering to residential addresses a couple reasons that interesting is Amazon's built its infrastructure to deliver to residential addresses so it it
it can have some significant competitive advantages there and so if they offer their own service like you can imagine that the place will be strongest as in.
Residential address delivery there's also huge opportunities and challenges in e-commerce in Reverse Logistics and returning packages and doing real time trials and all these things and you could imagine
that Amazon owning their own delivery vehicles and infrastructure they could have some unique offering there that we've never seen
UPS or FedEx try try to offer is actually quite a pain to get a UPS or FedEx driver to your residence to
pick up a package that you decided you didn't want but I suspect that might have something to do with the the skewed packages in the back of the truck sure looking and if you're looking at a truck in a residential neighborhood it probably does have a lot more.
Amazon packages but if you were working and you know big big high-rise office building you probably see a lot of FedEx trucks that are delivering fewer Amazon.

Scot:
[47:59] Question 2 also comes from Facebook in this is from longtime listener Danny Sheridan if a brand is ready to partner with an Amazon Channel consultant how do they tend to find each other is industry growing or shrinking from your point of view.

Jason:
[48:15] Interesting so I feel like it's a it's a little bifurcated there's a lot of folks that.
Are relatively small businesses that are trying to sell in Amazon and you know at some stage in their gross they might need some help in severe looking for.
Pretty small providers are folks that can cost-effectively help you know like often a six-figure business potentially not even a 7-figure business so there's a lot of independent contractors that are focused on.
On helping me the long tail of 3p sellers increasingly Amazon an important distribution channel for the really big players and so you see.
A lot of the the agencies like my own frankly bulking up their Amazon capabilities to help their big clients like the Procter & Gamble's in unilever's and Smuckers of the world.

[49:08] Have a better presence on Amazon so I think you're seeing both I think you're saying.
Big consultancies in agencies adding dedicated Amazon practices that are targeted at those Enterprise clients and they're saying.
An increase in the Consultants that help the long tail and in terms of how they find them.
I think there's a couple ways there there are some good Consultants that are on the speaking circuit and that you know do a lot of offer a lot of free content on how to sell in Amazon and
they get their name out and get down that way
a number of them have written books so I got at if you do a search on Amazon on how to sell in Amazon you'll see there's a vibrant set of books and those authors all tend to be consultants in that space in there are.
A couple of.

[49:59] Trejo's that focus a lot on Amazon sellers and so one community that I I try to participate in is this Community College e-commerce fuel it's a bunch of
mostly seven-figure sale seller so you know if people are selling between 1 and 10 million dollars of stuff about half of them use Amazon as their primary vehicle the other half try to sell direct our we have some Amazon presents
and so you know there's a lot of sort of the Consultants that like Emerging Market themselves to those kind of communities any any other tips you have stopped.

Scot:
[50:35] It's kind of starting to feel a little bit like Dacia world where you got some local people now you got some Regional players and you've got some national and agencies it
a lot of choosing the right consultant is are you a brand a retailer how big are you
how much Amazon experience do you have and then you're where I'm seeing the most activity is around Amazon ads and we have a bunch of questions coming up around the Amazon ad Network.
This is where there's just a frenzy of activity around Amazon's add soap to on the Amazon side they're releasing new units they're releasing new apis there's a lot going on there, show me how rapidly that's growing.
Artists similar large number of agency type people that are kind of like you're coming in from the SEO PPC World kind of in a Feeding Frenzy on that I do know on the soccer side of the company I started Channel visor
we're not really a consultant, we're really a software company and you know.
I do believe there's an area for a we're not included in this I don't believe cuz we're not we're not online sign up.

[51:46] But if you are a software company I do believe within Seller Central there's a little market place so this is kind of thing where I think at some point Amazon needs to step in and say
hey here's Google send a great job with this you find out all their programs better than I do Jason but they have the steering say say
you know this company is a Google Certified AdWords Platinum company what that means is.

[52:11] You got there been to the certified Google training they're using API stay support all the big initiatives and these kinds of things
I see Amazon kind of eventually doing that since your Marketplace and Amazon's got like
thousand low marketplaces all throughout their that got all the App Store and all that stuff so I think we'll see them normalize that
now that is interesting Aldi ad companies to Google Facebook Etc they've always got these oscillations for how they treat third parties trying to get between them and their customers,
Amazon's not known just generally for really caring for that and you know
it is kind goes to the cycle were in the early days so I can wheel of agencies yeah they help us and then over time as growth slows they start saying how could we get more margin let's cut all these agencies out of Facebook Google in those kind of more mature platforms
and that cycle I would say just you
we're about to say I do and then you know here we are in the early stage and it seems like Amazon's pretty open to encouraging this industry so it'll be interesting to watch to see if Amazon all of the same Transit ultimately starts to squeeze margin out by eliminating those this gentleman.

Jason:
[53:25] And at the moment I was a Amazon has the least mature tools for advertising so it's even more important the agency's or to fill in a gap but as a tool sets get better.
Like it it becomes much more viable to eliminate those middle.

Scot:
[53:43] Question number 3 at give me a time check Jason how are you doing.

Jason:
[53:46] Yep we are 53 minutes in the show so we got about seven minutes left.

Scot:
[53:50] I'll try to get these two Done Quick.
This is Adam from Facebook and it's been cakes how will the CDP change in the next 3 years
and how does personalization continue to evolve thanks for all your time and energy on the show Ben from Compass read in Philadelphia I don't know what a CDP is so I'm going to kick that one right over.

Jason:
[54:19] So I'm assuming like there's lots of acronyms and some of them have multiple meanings I'm assuming he needs customer data platform which ties in with the personalization
so there's an alphabet soup of all these
systems that a business might use to track information that they use for advertising and marketing person
purposes and for personalization and customer experience.

[54:44] Purposes and said started that a popular when you hear about a few years ago was called the DMP what which is a data management platform a lot of advertisers that didn't necessarily know
the individual audience they were marching to might use a DMP to keep track of the segments they were,
are marketing to and then sort of evolution of the DMP is this CDP which is
a database of attributes on individual customers and customers a site misnomer
oven at the prospect not a customer so it could be both prospects and customers I'm so that it's a database you would use to keep
Keep information about people I mean salesforce.com is a you know it in all the time that contact management systems are in some ways cdp's there are
bunch of specialty CDP is that our Focus for particular use cases and.
In general how that's going to bother with it in the next 3 years like obviously data gets more important expectations for four more
personally relevant experiences get more important and so all businesses just have to collect and act on data better A lot of these systems are still design for
a single-use case now so they're sort of siloed on one particular thing and I think over the next three years they get more generalized and you know the date they become a system of record for Content that that.

[56:12] Get used in a bunch of different places so you might use it for your advertising and for your email and for your
on-site personalization platforms and all these sorts of things where is today.
Each EDP tends to be optimized for you no one or a few particular touchpoint so
in in super shorter I feel like that's the evolution and I guess the last thing I'd throw out is a lot of people that already invested in these platforms are now having to take kind of a step back because the
the Privacy regulation is getting stronger and a lot of the data that had been previously collected and put in these systems
hasn't been collected in a way in which the businesses are authorized to use at so 1 new
new Wrinkle In all these platforms is data governance and audit trails and making sure you have your permission to use all the individual elements you know about that customer in the way that you're using up so it.
Maybe industry industry a heck of a lot more complicated.

Scot:
[57:12] And what he says how how does personalization continue about the sooner you can get some data to drive it are you a big believer in some of this machine learning AI is being a total game-changer here or or do you think that that's a little bit
overdone.

Jason:
[57:27] I think it's important but I do think it's overhyped the I don't think
just because inexpensive personalized it better and so I think it if your goal is to take an experience that was the same for all your customers and personalize it for each of your customers that's actually dumb golf
because that doesn't guarantee a better outcome like I think the reason you'd want to personalize those experiences is to make the experience more relevant for each customer interview,
you happen to have one experience that's irrelevant for a hundred million customers as for example Apple does like
knock yourself out that's awesome don't don't spend the money to the personalized that preaches hundred million customers.
It was one experience words but in many cases you have lots of different Shoppers with different missions that are different contacts and so you need to personalize to make it more relevant and so like if your goal is relevancy
yeah collect all the data and do what you have to do to get more relevant if your goal is just to be personalized for the sake of personalization I I would argue.

[58:28] That's that's kind of a silly goal
and you know I would argue some of the highest value personalization we've already been doing for 10 or 15 years I mean the recommendation files on Amazon are 35% of all Amazon's revenue
you know his is a i and better data making those recommendation tiles better today than they were 10 years ago absolutely but it's it's.
Evolutionary not revolutionary so I think there's places where it's a big deal but I think however big a deal it is is overhyped by the vendors right now.

Scot:
[59:02] Cut it and then our fourth and final question for this installment Don't Panic if you submitted a question and we haven't gotten to it we have a good
15 more that will get to honor Nexus request and show this one comes from long time listener and guess Jamie Dooley Jason Scott have you heard any news or updates around,
Conoco Amazon Singularity which is the
so I think he's making out that name I've never heard it called that but there is this combination going on at Amazon between vendor Central and Seller Central and he makes a joke that he has heard the project school name is a brexit.

[59:39] Play Leon the brexit turn I'll kick off this one and then
and take it over to you so long time Amazon had two ways you interacted with them
that's if you're a brand retailers were always kind of in this third party bucket and then he sold other brands and then transfer into their Central the world's all smushed together because every retailer wants to be a retailer and so what's happened is just give you the slang so you should be that if you want to sell in the hole so relationship with Amazon
you would use this portal called vendor Central it is very simple it's essentially a kind of you know
chatting with your buyer and uploading you know kind of negotiating and saying hey I'm going to send you a hundred widgets and and this kind of thing and then
South Central is the third-party Marketplace World Hunan Seller Central very quickly you know it's kind of I would say.

[1:00:36] 10 to 20 x functionality of vendor Central soup. All def ba and there are you reporting
by box pricing Dynamic this that I'm so sorry Central really got more sophisticated as
as Brands kind of came on the scene song or direct they wanted the kind of had to use when they're Central.
And then they wanted a Seller Central experience and then they started just do both which created this hybrid model that that we talked about on the show Jamie's kind of
early Pioneer of his times at Doral Inn and Creek so.

[1:01:12] What's happening is Amazon's decided to squish the teams together and really have a central kind of a thing that makes sense but it's quite painful from what I'm hearing you know I I talk to Brands and
they literally will talk to three Amazon people and get different answers of
should baby one piece rebuke and a 3p can they do hybrid who are they dealing with I'm so there's no
to be a little. Of total chaos over the Amazon around this right now it's best I can tell so yeah I do think it's going to reconcile itself Amazon obviously is very.

[1:01:47] Focus on the consumer experience and Wildland on a great consumer experience but there is a lot of chaos there that have looked into wow you know they have this
they have these record reports to get around like.
Demographics your customers out there searching on reports
and then there's a couple ad sites that used to be only in there and then the the more enhanced pages on Amazon used to be only available there so as their special needs together
so that good stuff coming from 1 p.m. to 3 p 1 P people were always like
gosh I really wish I had more control over my listing and I I had a lot more dynamic system for the set the other so a lot of that,
I think the game is going to be good and it has a lot of pain to get there.

Jason:
[1:02:44] Yep and I I guess I would just had a couple of things like early on Amazon head you know some interesting Protections in place if you wanted to be a three-piece seller and Amazon and therefore you're using Seller Central,
you you you had to agree to let Amazon buy your product one p if they chose to so,
they make it a century kick you off the platform review if they ask to buy your product first party and and you chose the only sell it third party
the Indian that they have the flip side if you're one piece out on Amazon you need permission to be a three piece or so
in some cases vendors that were hybrid sellers had permission but more often.
They were they were one piece hours in 3p sellers in Amazon just didn't notice and in a few cases Amazon noticed and post it but more often.

[1:03:38] Amazon would just to let it ride and so like you know some some mergers that have already happened
there's two businesses used to roll up two separate execs and we're separate p&l is an Amazon now they roll up the one exact
and it's way less likely that you was a seller are just getting away with it unbeknownst to Amazon so it.
It's much more likely that Amazon has visibility and and you know is used for the implied in the question
they're strong rumors out there that the tools will eventually merge the the
name for the tool I have heard the most and rumors is Amazon one vendor so I don't know if that that ends up being the.

[1:04:18] The universal replacement for Seller Central and vendor Central will have to see but obviously you know a couple months ago there was a brouhaha Amazon.

[1:04:31] Cold the one piece hours so they said hey if you're selling if you're selling us just one p and you're not doing 10 million dollars a year in Revenue it probably doesn't make sense
breast keep you the one piece hour or so we're going to ship you off that platform and the way you should have a relationship with Amazon at 3 p so they're there were a bunch of hybrid settlers and small one piece sellers
aren't you getting forced to go to 3 p.m. and you know all this stuff is playing out out simultaneously but I do like Jamie's names.
I do think it would be funny if it was high brexit.
And I think given time that is going to be a good place to end because we have done it again we have used up our a lot of time we do have a bunch more questions to go to the store going to record Another show here pretty soon and release it in the very near future
there's also some news happening while recording the show Chuy's just
did their IPO today so if you do have any comments or questions about the
the stuff that we did discuss on this show please jump on the Facebook or Twitter and and let us know as always if you enjoy the show
we love that five star review and we didn't get you a question keep your eye on the feed will have another show out super soon with the
the rest of the questions thanks very much.

Scot:
[1:05:50] It without your five star reviews were never going to make it back onto the top 10 podcast cast list so we really need everyone to step up and leave some reviews so we can be on there for the Meeker report next year coming to listen to show everyone we really appreciate all the questions and engagement out there in the community that's what makes it really fun for us
and until next time.

Jason:
[1:06:12] Happy commercing.

Jun 5, 2019

EP176 - Tuft & Needle Co-Founder JT Marino

 

Tuft & Needle (@tuftandneedle) is the original digitally native direct to consumer mattress brand (founded in 2012).  In 2018 they merged with Serta Simmons Bedding company.  JT Marino is a co-founder of Tuft & Needle, now Chief Strategy Officer for Serta.

Topics covered:

  • Tuft & Needle origin story
  • Merger with Serta
  • State of the online mattress industry
  • Tuft & Needles Amazon strategy
  • Future of Direct to consumer model
  • Omni-Channel opportunities

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

Episode 176 of the Jason & Scot show was recorded on Monday, June 3rd, 2019.

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 is episode 176 being recorded on Monday June 3rd 2019 I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-host Scot Wingo.

Scot:
[0:38] Hey Jason welcome back Jason Scott show listeners one of our favorite topics here on the Jason Scott show is direct to Consumer brands or digitally native vertical Brands to choose your poison
the day we are really excited to have one of the
Oggi’s JT Marino she strategy officer at Serta Simmons bedding welcome to the show.

Jason:
[1:05] We are excited that you’re able to join us tonight JT one of these we always like to start off as give our listener and a little bit of a bio background on yourself can you talk to us about how you came to starts a tuft and needle.

Jt:
[1:20] Sure so background let’s see so I study Computer Science and Mathematics at Penn State
and that’s also where I met my co-founder on it something you don’t Daisy Park we’re best friends
bear and help several startups build their engineering and design teams product teams and one of those startups that he actually ended up joining.

[1:46] And we decided that we wanted to Branch off and the time was right you wanted to start something of Our Own,
but we wanted to do something very different we wanted to start with
so trying to trying to come up with an idea this would that I would like this company for this week we really wanted to start with a problem that we knew.
I needed to be solved the big problem and what better way than the start with something that you experienced yourselves.
And so the idea we went to the prom We settled on was shopping for a mattress.
So I add you don’t have to call a judge had gone shopping for a mattress which was supposed to say worse than shopping for a used car.
A lot of money like it try to return it couldn’t return it and so literally every night was reminded of this big mistake had made and so that was one of the items that are one of the ideas for your problems to solve.
And in a way it was eccentric on the list because it wasn’t software-related which was primarily or background.

[2:54] So we decided to do you know instead of coming up with the idea of finding some co-founders building a pitched backcountry.
The BBC’s Kearns money building your team W product a year or year-and-a-half later launching it to find out if it works or not he wanted to rapidly test it and see if we can find product.
Ideally within a week.
So we knew if it would have legs or not or whether we should move on something else so we did was we built a single single page website.

[3:28] And I and I actually should say the way that we
approached the value proposition in formulating part of the business model was started with what we called hate must be took a legal pad we’re at the tables at the top
we wrote down everything we hated about shopping for a mattress and everything we hitting about mattresses example walking into a mattress store and having all of these different options to choose from.
Another commission sales people who are like really pushy and he’s all their sales tactics also not about a lot of fun,
I’m having a scheduled delivery take a day off work to receive it and so on return processing just there’s so many tears so many things in the flood literally for the page we do a line down the center and just what we would do instead
set up all these options one one mattress set up a commission sales person no commission sales person having go in the store will start online
instead of having scheduled delivery to ship it via FedEx it possible to things like that we reduce the the feature list to the minimum we fought with
it would take to convince me to buy from a company didn’t they never heard of and then just converted that to sales material on a website took a photo stock image of a mattress.
Put that up there in a credit card for the bottom.

[4:43] And the credit are formed it wasn’t fully wire. But it would send a signal somebody attempted to buy lunch the site took out a Google ad in 15 minutes later there was somebody just jamming on the on the process button.
We knew that we if we could get within 15 minutes of somebody already trying to buy.
Then there was something something here so that’s what we should decide down that was Junior 2012 over the summer no BB figured out
how do you make a mattress to make slime with a supply chain wires in a and then in October we launched tuft and needle the first product.
I’m online but it was October 2012 without Venture Capital it was fully bootstrap usage at 4 months
Runway with my savings just to survive before we had to either get a job or something ourselves between successful in doing what about 3 months post 1.

Jason:
[5:35] That’s awesome did that first test customer ever get a mattress as far as you know.

Jt:
[5:40] To be honest we we we we lost a customer we didn’t have their contact information.
I really appreciate them. Who knows maybe after that maybe somebody wouldn’t have no somebody didn’t attempt it within the first day we might have abandoned the whole thing but I’m glad I’m glad whoever it was.

Jason:
[5:59] Yeah so that’s an awesome origin story I’m sure it’s a ton of the the diesel need to come in as we talked about on the show
come out of this Factory at Warden and you were across town like is there a Penn State Borden rival Reaper or digital native brands or not really.

Jt:
[6:17] To be honest I’m not I’m not sure about.

Jason:
[6:19] Yeah if you guys don’t have a softball league or anyting.

Jt:
[6:22] There very well could be I will alternate there’s there is a pretty strong network of very successful entrepreneurs in Silicon Valley from Penn Station.
Yeah something like Stanford Harvard but we we we definitely have a good feel good group going Wheatley and.
A few others that works in the early entrance into y combinator in the first the first.

Jason:
[6:47] Yeah it’s an interesting that that that part of the country has been such a fertile hotbed for for entrepreneurs especially back in 2012 you took a pretty untraditional path in.
Not raising outside money will talk about in a second that you were ultimately part of an acquisition but.
If you can say like where you able to then grow organically and did you ever have to raise any money before the acquisition.

Jt:
[7:16] Yeah we we we grew so we started with $6,000 and we grew that.

[7:23] Sort of an anomaly so we grew like a fast-paced start up with a hockey stick all the way up and see the point of a merger.
And we merged with Serta Simmons the largest mattress company in the world last last October.
And it wasn’t something that we had to do we actually decided to do it because we strongly believe that would be the fastest path to completing the mission of company our mission was to not only disrupt the industry.
Are catalyzed A disruption what you did but it was also to shift the industry to being focused and prioritizing the customer.
And so we three felt that this was was a way to do that better between 2012 and.
In 2018 read re zero capital on the first three years we didn’t have enough.
Prophet to actually have much of a marketing budget and also be heavily relied on an iterative process of using customer feedback
and it’ll rating on the product or service that I pop all of those things to be Best in Class which then turned into I’m a very strong organic growth promoter score the highest in the industry.
North 75 on MPS and we really relied on our customers to spread the word until we we had enough profit actually start feeling I’m feeling the Dubrow.

Jason:
[8:47] That is on bo4 are an awesome I’m curious I I presume you get asked for advice from other entrepreneurs is is that a path you would encourage other people to follow because I feel like there still is a lot of indoctrination and brainwashing.
In the BC community that they’re the the path to entrepreneurship.

Jt:
[9:06] Well it really depends on what path you give me what do you want is your outcome we are going to disrupt something big but we also had a minimum
our goal as a minimum was to build a company if it if we couldn’t really grow it and beg him and caused a kind of change the ministry that we wanted to
we were okay to settle with a lifestyle business I could pass the soccer he’s we’re making at the previous company and then we would just build something else so
but one of the nice things about it so we we had a bad taste in your mouth with the proof of the previous company that we would work for 9
Venus not number of times how much Capital Money can be.

[9:45] Can be toxic to the decisions you make when you prioritize growth of everything a lot of times you forget about the cost of the very customer you’re serving or it sustain the shity product.
Never really should exist and you don’t really need to Sprint to solve it because you got this money floating you
so you know are orb just burning cash in buying your customer rather than turning them and having them or do $2 I’d rather than buying finest customers convincing them so we viewed it as a constraint
I having this constraint it forced us to make.
The brands of The Full Experience beginning to end for our customers so good that they would spread the word so additionally gives you a lot of options as to what you want to do you want to build a lifestyle business you want to sell it
want to do a merger you want to go public you know how the company grows you you have a lot of flexibility is to
how to do it you can operate your business build the culture the way you want to build it you don’t have anybody to condense I will say it’s playing the playing the
play the game on on hardcore mode so the risks the risk is much greater.
I’m the reward could very well be much much greater as well as high-risk high-reward.

[11:01] In it and I’ll also say I we learned a lot about building a real profitable business
building it up proper budgets and understanding the P hiding under Cena piano from from Day Zero before we had a CFO I just.
I say it was it is it is a huge learning experience for Daisy and I and it really set us up for whatever else you know we may want to do in the future but it’s really
it is really up to based on where you want to go that we ended up moving out of Silicon Valley because he knew he had to get out of that bubble of thinking.
If we were going to limit on some nothing kitchen hours.

Jason:
[11:39] That’s awesome one of the things I like about that model as you pointed out it is it is potentially hardcore mode but I have a premise that there’s a lot of businesses out there that can be really vibrant.
100 million dollar-a-year businesses to $900 a year businesses that can,
you know it support People Help customers gameplay employ a bunch of people and that can be really successful business if you’re able to grow to be that kind of business organically but of course,
that’s not a win for a venture-backed company in so you’re sort of forced to get to that that next stage.
Weather whether there’s organic demand or not and then like it it feels like we’re starting to see some of these these companies have to occasionally do foolish things to try to.
Does BC multiples when the business maybe dance support.

Jt:
[12:30] Yeah I’m in even even just press unimpressed is a good way to getting exposure
the Press we found it they don’t for the most part don’t like to write about startups that that had to raise Capital because it’s all about the valuation all about the amount of money raised and we always struggled to get to get noticed
where the architects of the destruction in the mattress industry and I’m in it it’s always been hard to cut through the noise.
I’m to really get that story out so but yeah I mean it’s it was definitely definitely an extreme position you know the Other Extreme raising a lot of capital but I’m in the end you know and it really depends on you know what
come product with the markets are in it possible there’s a few factors that made it possible for us to bootstrap it I’m in there in the early days
but in the end I mean my co-founder and I we eat we owns now 80% of the business I’m right up to the merger and be a given away 20% to the employees and then.
Set alarm to find me solve a long way to go through the merger to fully realize what it was originally but I’m going to Wild Ride but.

Jason:
[13:41] That’s terrific and you mentioned just rubbed her I feel like there’s this or the traditional notion here is you know you had these disruptors that come in and come in industry and they either.
Disrupt the incumbent and become the new incumbent or
you know very often we see the incumbent acquire the disruptor another thing that’s interesting about you is is you alluded to earlier it wasn’t really an acquisition it was a merger of a disrupter and
in an incumbent in the mattress base and you know I might even characterize it as sort of a reverse acquisition in that it feels like.
You guys are not the leadership team for Purser. And you mention you’re you’re the chief strategy officer not for tuft and needle but for for all of Serta Simmons bedding.

Jt:
[14:30] That’s right so yeah so the merger it was operationally legally and financially emerger
and we would not have done this unless it that was the case and that was only going over the strongest and sticky and I had.
I’m about to be honest that was also the way message because her descendant also wanted his if you if you think about it you know these these companies that.
Heavily rely on retail, as their primary distribution.
I’m when they when retail when this this whole landscape has and he cusses him completely changing the customer journey is completely changing what’s happening is direct-to-consumer is is the starting point of the customer Journey,
and so if you if you are you see that ends and they did see that.
That is what leads the business and you know a non long the customers Journey then some of them go to retail that’s the ship that’s happening so we are taking me to ship and are also currently I’m currently responsible for
I’m building out there direct-to-consumer business and getting a setup properly.

Scot:
[15:38] Freckle is it on are you guys doing that on the platform you guys filters at, reimagining of of weather look like.

Jt:
[15:46] Yes it’s it’s it’s almost completely on our platform you know that
in the first couple years I’m at built out all the software from the the e-commerce side with the front end all the way in the back ends and Order management customer service tools
I’m today to factory floors where we have scanners and all the logistics the nice thing about having her own stock is that we have all the data and we can automate everything so versus using like an sap origin of some kind of other or
you know like Shopify some
I got your very your business rules and your business process do not have to conform to the software that you’re using you can literally don’t let the way you want so imma get it is a competitive advantage
and for us I mean it’s it’s fairly simple to replicate for for the other brand so don’t go all operate with the same efficiency.

Scot:
[16:42] Spoken like a true comp sci.
The so that’s good background let’s talk about the state of the mattress industry so you guys kind of I think you were really a side I don’t have a good yardstick on this then now you can’t throw a rock without hitting
10 mattress companies how did that kind of developed from your point of view.

Jt:
[17:04] Yeah it started we were the first it’s so we started there were some company company selling mattresses online that it had converted their money,
and started before I mean mattresses were sold online back in the late 90s but that had converted to the model so we are the ones that said architect the model but really,
meet when we started in 2012 we got noticed in 2013 By the Capital Community.
I’m in another there’s a point where I heard the phrase meet decided to play in the space on actually to the Venture capitalists.

[17:39] Said that if we all had actually told us that if we didn’t take their money they would find somebody who would and they did about two and a half years later we had our first look alike company start.
The most heavily funded on competitor.
And then about six months after that it should more and then about a year after them probably 75 and now there’s two hundred plus,
enzyme you know as a first-time founder I will say that it was exactly.
Emotional emotionally it was emotional trial for me.
To get over the fact that somebody was building a company exactly like yours you’re not really much you can do a do about it.
And zabuton has I saw that this was actually a really great thing.
Because I’m all this Venture Capital flooded into the marketing is being spent a marketing raising the awareness of of consumers they knew they now know there’s a new way to buy a mattress
and as long as you do a good job of getting your name made it out there you know this is a.
A high-ticket item will do a lot of research on his long as you have a solid.
If not better value proposition in the competitors their dollars become your dollars so it’s been very good for accelerating our growth and and helping to stay safe out of the way it is this as it’s growing.

Scot:
[19:07] Then what made you pull the trigger on combining with Serta.

Jt:
[19:13] So in an initially started with so I want to say it wasn’t you have a 2000 mm 15 the beginning that we began to develop on the retail strategy.
And I’m in an ARP roach and where were also the first ones doing this and building the store was not to take the approach of a pop-up we we we,
I guess we’re sort of righteous and taking a right to standpoint or idealistic standpoint that the retail model is not dead.
It’s going to take a new form and that we just have to figure it out the unit economics must work out somehow.
And so we open up a store in San Francisco in followed by a couple more and it took us it took us a few years to figure out how do you build a store a retail store in today’s day and age that’s double lasting to the Future.
An Xin into a profitably and when we figured that out that was really in 2017
we are
well one of the things we learned was it something around the 6-month pay back before you know you making money back for a living and sorcery really wanted to rapidly expand it where you would being cash-poor because we’re following all are profitable growth.

[20:30] I’m being bootstrapped really wanted to go fast or we would have to raise Capital so we decide it okay we’ll take some capital on so we originally wanted to erase 25 million,
which isn’t much and I was actually it was very easy to get to a two-term sheets but it was very difficult to get the term sheet for that small amount
I’m so we as we were going through our options we had a lot of the word got out that we are raising
and then he got out to
I’m big giant retailers I got out to strategic factories and competitors and then we started to get calls and bounce from others and when Serta Simmons reached out
it was actually driven by the the private Equity Firm that owns majority
bed base I’m seen this and they saw the opportunity and they we
decided OK Google will meet with them and just see what they have to say this is one of the the big boys ever going up against fighting against and take him down by the time we met with them we saw that,
their point of view is completely different their executive team nobody laughs industry is on their executive team should weird their vision of the future is very similar to ours
enzyme.

[21:50] We just saw that there was actually almost for alignment so so we decided to pursue it and if it worked out of work. If it didn’t you just continue on with Rick will raise at Capital and will
we’ll expand our retail footprint, faster so yeah that’s that’s really the Genesis of how.
We are arrived at the concept of the merger.
And to be perfectly honest digitally native brands have a predicament when you when you capture the majority of the online Market you have to do something if you want to if your goal is to really be the number 1 2 or 3 you have to keep
and you have to expand and distribute and so one of the the key benefits of doing this merger was that sir Simmons has the largest distribution Network mattresses so essentially
unlocks all of those channels for us to expand so that was a way to greatly accelerate the growth of subliminal.

Jason:
[22:49] That makes total sense. It’s interesting to see how much the evolution in the space has changed consumer behavior in some ways and expectations and then in other ways,
you know maybe it hasn’t we’re recording this the week after Memorial Day is that still the mattress Superbowl.

Jt:
[23:08] It’s one of them yeah that’s it’s definitely one of them and it’s unfortunate that mattresses are sold this way from my point of view
it’s very promotional markets and its trains on customers to shop that way unfortunately.
I think if if it wasn’t so promotion promotional if people didn’t shop that way we’d actually be about all these companies I should be able to provide products at a lower price but yeah it’s customers point of customers expectations at least the ones that now no
are there any way to shop now expect at least so the way I the way I frame is usually is our biggest competitor is really Apple.
And Amazon because what they’re doing is on bear setting the bar,
so customers expect to get the kind of service that kind of product and kind of experience from the great companies that that are leading the way in other markets and sell them to go to buy a mattress they’re expecting something like that and then on top of it.
The people that are not learning about Stephanie Tolan and some of the others are now seeing that there’s also a better way to buy a mattress so that people want their mattress right now
they want it
easy it when a good price they want best-in-class customer service they want free returns easy return they come to expect all of this so that so any of these companies listed in comments that do not have died after I just going to the just going to die.

Jason:
[24:32] For sure.
You mentioned where they got Scott whipped up into a tizzy of a word so we’ll want to get to that pretty quickly here but I did have one one other question like.
As so many digital competitors have emerged in the space one of the negative ramifications is
all the digital marketing tactics are super competitive and so that Brit drives up cost of customer acquisition and all those things and I and I want to say like back in 2017
there was this Fast Company article talking about like,
a lot of oily marketing practices in the mattress base that I you know I think one of your competitors,
was actually suing a review site and they were accusing him of being fake and then they they bought that review site and
and I drop a laxative I have the story right.

Jt:
[25:25] Yeah that’s that’s about right eye so,
I’m not going to name any names but the mattress industry has been dirty since its founding I mean this is like it’s prolific
so I’m the reason why you know those law tags that are on a mattress exist was that mattress salesman would sell you a mattress topper
debits advertised that it was the used horse hair is very premium very high-quality material but instead it would be filled with straw.

[25:52] And so the government stepped in with a law that you have to disclose what’s inside the mattress so that they can track back if a customer to open it and discover or there’s an audit that you were you were lying then you do know
Yugi is a good thing because
customers buy a mattress so infrequent and if so uneducated really what to look for I’m like a computer like we no processing power
Aaron’s memory and screen resolution me know these things now it’s pretty easy to the brush up since the last time you bought one but a mattress it’s very difficult to too and to know what to look for the teaser fleece customer
and so it just the nature of the market is is set up for it set up for that and it also stems from marketing digital Lisa saying you’re something that you’re not.
We’re saying oh yeah we have that too but you really don’t you know that you can get away with it because you’re just a customer to mattress store and you know where you’re having it so but anyway yeah one of the
one of the tactics that used is these these review sites which I I refer to as the digital manifestation of mattress sales
so in and they’re not all like this but in general but how it works is these bloggers will write a write a review.
And I’m talking to a affiliate program or they get a kickback if the traffic flow through their website.

[27:18] And we have seen this. Where would be the more you give them in a kickback.
The better your ratings will be or if you choose not to participate the lower your ratings will be.
And we do have some on some evidence this this happening to us very frustrated because it’s it’s,
our customers to know what they’re reading in are they going to see the little disclaimers at these are these are paid on the simply advertisers but yeah there’s several competitors that we have that I’ve either built
I’m using these independent unbiased I’m doing are quads unbiased mattress reviews sites.

[27:58] I built them and long stem and tried to disassociate themselves and just review their product better and some of them have acquired a few and maybe just found another place another affiliate that we’ve been working working with.
I was actually invited or so and what do you suppose what do you do if they have a lot of customers are flowing through there if you’re if you’re rated poorly you.
It starts to influence your people perception of you it’s it’s almost like if you don’t if you don’t work with the mafia that you’re you’re going to lose.
We refuse to work with it so it’s for a long time until we finally decided that if we did in our company’s not going to survive its,
what about doing the deal with the devil it’s very frustrating but yeah it’s it’s a it’s a dirty market and that’s just one of the game that’s played another one is,
persistent promotions another competitor I don’t want to name it runs a promotion 24/7.

[28:51] And that’s not a promotion after they’re literally rules to marketing if you run a promotion for if you don’t stop your promotion for a. Of time before you.
You’re next one then that’s then it should that supposed to be your actual price
but again customers a fool because they come in to buy the mattress when I leave and you don’t see them for 4 8 10 years so I’m those are just two of the tactics that are used and for a company like tuft and needle
we’re we’re hiring people that are that are wanting to do right by the customer
go to company that’s focused on the customer change the industry that way when they see this and these tactics working against us but we we know we can’t play that game or it’ll it’ll it’ll taints
you know our ethos and I mean I’m certain that we would lose customers I wouldn’t be able to sleep at night it’s it’s definitely challenging so that is one of the key challenges took me to has is it is it
which fingers do you know hopefully continue.

Jason:
[29:51] In this particular ironic when the the senior leadership of a mattress company can’t sleep at night but yeah.

Jt:
[29:58] Exactly.

Scot:
[30:01] Call so we can introduce to Amazon it would be a Jason Scott show if we didn’t kind of do a little bit of a dive into Amazon.
Maybe it’s interesting from historical standpoint I believe you guys sell on Amazon and it’s hard to tell if its first party or third-party or are a blend and then now so
it’d be nice to hear your historical aspect of how do you make that decision.
And then it looks like everyone selling their and now of course Amazon has an Amazon basic mattress in a box kind of thing how do you feel about all that.

Jt:
[30:34] Well we sell first party onto to Amazon so in the in our second year we,
we were struggling.
To do it stops when you’re building a brand from scratch one of the things you have to do is build credibility until just everybody knows your name and one of the ways that you do that,
especially is a company that’s on unheard-of is you you collect testimonials you collect reviews so they never talking about this all we’re going to do reviews we can’t post them to our site or like,
have them write them on our side because what customers we wouldn’t trust that if we are buying it from somewhere else so we’re just like somebody’s going to read a review,
where would we read reviews on where to find one more shopping and Amazon for the places that both of us read reviews for you by whether it’s through Amazon or direct
and so we have this idea that we would list our product on Amazon didn’t even know if they would sell mattresses and just so that we had a place to send their customers right videos.

[31:33] And so we did and it took a couple months to get to get to buy button activated so that we can have reviews place there
and then we started sending our call our customers everyday to write reviews
and within about read a beautiful mess with the highest rated they were selling matches with the highest rated mattress in their store we are also the highest rated product in the entire Furniture category and we held that spot for almost two years so we were at an early mover.
Enzyme and we still have majority to Market of mattress sales above the $500 mark.
I’m on Amazon Nummies also developed a product with Amazon I’m called the knot.
And so they did really surprised to label but you know that one of the things they found is that brand new Mater and they wanted to do a collaboration so we did develop a unique product if only available exclusively on Amazon.
To serve their customers at that lower price point above or below $500 so I’m the way that we view it is.

[32:37] For us to only purely sell BTC,
the market is only so big so the online is only so big it’s something like 20% of mattresses the bottom line for once once your growth curve begins to slow.
That year your next question is where do else could we grow and there’s other markets and one of the big markets is Amazon so so far if there are customers there that want to buy up the needle why not be there,
as long as it makes sense for a business so one of the things that we’ve we’ve always done is we’ve separated so so those reviews ended up turning into a lot of sales and then end up being something like,
percent
the years of art Marcell we would always measure penile separate or operating expenses so that if for any reason something happened to Amazon it wouldn’t include our business and I also gave us enough
leverage to negotiate I’m healthy healthy.
Chirps I’m at how it’s being sold there and but you know what the fees are in all that and to be perfectly honest I mean it’s always difficult working with the big partner but for the most part it’s been it’s been a good relationship, we’ve done very well.
I mean you know of course the money that we make their wewe just further in investing the brand so it sits and there’s definitely some cons but there’s also going to want to Pros for our business.

Scot:
[33:58] Men are so not only did you going to partner with Amazon you partner deeply the soap so a lot of people a lot Skeptics say okay you gave Amazon all this.
Data and essentially LED them right into the mattress industry, how would you respond to that.

Jt:
[34:14] I would say that’s probably true
we did we did share a lot of learnings with them they should a lot of lemons with us but if you think about it it was really do need to be honest with somebody else on it was bound to happen
but if you like here’s an example so we had a hundred Knight trial,
we found that hundred I tried worked really well and they had a 30 nitrile that was really upsetting all of our customer so we prove to them with data that this was something that they needed to do survey they didn’t they don’t do this they didn’t
my mom said he didn’t do this another word other categories so we convinced them to increase their their their trial on their return process to DeMatha are such an example is many others but but there are people who shop there
and they should get a good experience I didn’t like we had talked to me or has customers that buy on Amazon we want them to be taking good care of so even though it’s technically not our Direct customer.
We do want them to be taking care of him or Amazon to do a good job at themselves.
I’m we viewed it as a as a good thing to to collaborate with Amazon but you know their Amazon wants you know their customers by and about all categories and they want to do a good job I want to be competitive
they’ll figure it out you know just like our come out other competitors and figure it out so so that’s I mean it’s a difficult question to answer but that’s the sort of how I feel about it.

Jason:
[35:38] Interesting in 1/4 vacation cuz I think you have one of the the most mature.
Amazon models out there so you see you have sort of your core product or original project product what you sell 1p through Amazon and you sell direct and obviously one additional challenge.
Protab selling 1p through Amazon as Amazon set the price at sets their price so they can potentially sell your product at a lower price point than you’re trying to sell your product.
You have this exclusive.
Product on Amazon Dena data value price point but then if I have this right you also have a premium product damn it that’s only available direct that you don’t make available through Amazon his back.

[36:24] So

Jt:
[36:27] And I think that’s like a sew-in are there the way that we view it is.

[36:35] All the products are the products that we sell elsewhere we want those to be available direct with the exception we know we violated.
That idea with the nod and we don’t intend to do that with anybody else but but you know when you’re building your when you have your own stores and you have your own website.
There’s got to be some value,
Special Value that you would get coming direct and so we want to make sure that you have the full product menu available track I am so so so some Distributors may have some product that will not have them all,
no we don’t want to put on everything and every point of distribution is only makes sense like we’re we’re in Walmart we’re not going to.
The mint mattress would not sell in Walmart it just wouldn’t the demographic it wouldn’t even match unit just like the original wasn’t selling Crate & Barrel so we saw them in there.
Like we we just pick and choose where we believe the product would be best suited you perfectly honest some of these higher price points we don’t necessarily believe are the best spots for Amazon.
Until until proven wrong so we the majority of the match is being sold are actually below the $500 price point so by these these Chinese companies in factories or import export in for 10.
I’m just honored coming.
So you know we we don’t really see it necessarily has is it is a huge business. And sell them at the same time we also at the balance with a special value is like does example if you were to going to Best Buy and see the.

[38:00] The store in store for shopping shop for Apple doesn’t have all the products are just like at Walmart you might see an iPod you and the Apple Store there’s all their products you can play with all of them there’s all their merchandising you get all the.

[38:13] Experts about everything about the products there’s a reason why you still go into a Walmart to check out a product that you still want to go into an Apple Store.
And it’s the same thing with our own stores and Zen are digital store is that you have to think about the the the balance of value that you’re providing your customer specially if you want if you want at least some percentage.

Jason:
[38:36] Yeah so speaking of that like one of the things that’s interesting to me so you were primarily as a direct model you do this merger with Serta and I think sort of had some direct sales but I
my son said they’re overwhelmingly a wholesale model.
And so now you have some sort of experience and Legacy on both sides of the fence we’re seeing one or more of the the the digital native brands that originally only sold direct through their own website.
You are starting to do Partnerships with traditional retailers but what’s been interesting is my senses a bunch of those because you.
Already built this desirable brand that has a special Affinity with customers before you go to the.
Crate & Barrel’s in the Walmart has your often able to cut a better economic deal than the traditional wholesale deal.

Jt:
[39:33] Yeah it depends on you measure it so if you if you look at what the operating costs are for us to be in Lowe’s and we’re rapidly expanding Lowe’s and we’re the first mattress tattoo to go into a DIY store.
I mean the business is growing very very big and very fast.
But the operating costs is its primarily the the shipping by truckload which isn’t much different than that should be FedEx or customer so okay so that’s that’s you know that
that’s not neutral so but it but how many people does it take to run that to people.
If you look at my if you look at the clock, and we have we have a hundred and fifty employees so but but the thing is it’s it’s not that it’s not that easy you can’t,
that’s the old way of thinking about retail.

[40:21] All of these all these team members that are building this that you know the digital brands and then all the advertising all that in the products they’re building the value.
That the customer stop at it looked like on the customer Journey there’s a stopping point before they go into retail not to sight and then that gets them excited to want to go to Lowe’s to buy so it’s almost like you have to,
blend your expenses erase all your costs on an overhead across your digital but also.
I’m also your distributor so so it’s to answer your question yes it may and may be more profitable.
You know direct but you know by,
but honestly like it it’s still there still a lot of costs are involved with Lowe’s on everything that we do is driving driving those costs should be attributed to two loves them in Crate & Barrel in Walmart and all those.
But the thing is like customers.

[41:18] Customer if you want to build you the online Market you know just depends on which market like if it’s Electronics Electronics I’m going to 30 or 40%.
How it ain’t true that point for mattresses like 20% so if you want to keep growing you’re going to have to,
Spence you’re going to have to be to go into retail and the customer start online and then they they discover you whether to advertising and or Googling around finding you and then you build the excitement know either by the Y right there.
Or
don’t want to go and see it for our specific Market on the mattress is Pete there is a large segment of our customers that want to try the product that’s just unique
that’s probably fairly unique to the mattress industry if you’re if you’re not in a retail store you’re just not going to get that sale so we’ll just lose those customers so it’s almost a requirement if you want to continue to grow to serve.

Jason:
[42:13] Yeah and I feel like even categories that made me don’t have quite as strong a tri component are still landing at this model where you really need to be Omni Channel,
just survive and that you know that like it it seems like all the brands that started at exclusively selling directory website,
are finding for me either customer acquisition standpoint or customer satisfaction standpoint they need a brick-and-mortar footprints.
The compliment that that drug sales model.

Jt:
[42:45] Yeah yeah it’s it’s just it’s just logical so it just depends where
like where are your customers go where the people going where are they buying from so I could say that yeah retail is shrinking just. It is drinking digital is eating eating the retail world the question is,
are we just going to stay digital until it fully transitioned over how long will that take.

[43:08] Even if we know that. But saying 10 or 20 years the 20% micro to 60% of something like that it may make sense to open retail stores and expand,
with the intention to contract the retail stores as a transition it just depends on how fast you want to grow and in and you know what what kind of business you want to build but it really just goes back to the customer customer service to go and see your product or they,
some people want to go to Costco or Sam’s Club and they want to buy their that’s just where they will buy their people that only buy from Amazon,
it will not buy direct so do you choose not to serve them you know that’s just a business a business decision so that’s in our point of view is that.
We want to we want to change the industry it’s over to do that when you insert a lot of customers and we need to go to where our customers are so I’m going to channel.
Is the way the thing about omni-channel was it makes everything complicated because the way that you attribute your marketing dollars like.
You know and I miss being able to measure what you know is this a creative or is this cannibalizing and that’s all very complicated so it’s a challenging problem but if you’re determined and smart.

[44:22] So the model that I can inform those decisions it can’t work we’ve proven at least Madison.

Jason:
[44:31] Yeah I know and that that’s a great point about timing being so important in these disruptions as well I actually started my career million years ago in the like a late eighties early nineties a blockbuster entertainment.
And every year there be some super smart investor that would pontificate that that you know
physical media is going to get replaced by digital and they would short Blockbuster and,
well they were all certainly right in the long-term Horizon they all took a bath shortage.
And that that’s probably a great place to leave it because it’s happen again we have used up our in our listeners time if you do have any burning questions we didn’t get to or want to continue the conversation we encourage you to visit our Facebook page or hit us up
Twitter.

Scot:
[45:22] Thanks sweetie we appreciate you taking time out of your busy schedule to join us if folks want to follow you online or you Twitter or a LinkedIn publisher or anything like that.

Jt:
[45:34] I’m not much of a social media person but my my emails JT at 10. Com and our website is is tn.com you feel free to feel free to email me.

Jason:
[45:46] That by the way is an awesome URL and will wish everyone happy commercing.

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