EP084 - Amazon News, Walmart Earnings, RumorsAmazon News
Scot will be hosting "Amazon & Me" an all day workshop on Tuesday June 6th at IRCE, he can be found in the Channel Advisor booth #607 for some of the show.
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Episode 84 of the Jason & Scot show was recorded on on Friday May 19, 2017.
Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at Razorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.
New beta feature - Amazon Automated Transcription of the show:
[0:25] Welcome to the Jason and Scott show this is episode 84 being recorded on Friday May 19th 2017 I'm your host recent retailgeek Goldberg and as usual I'm Scot Wingo.
[0:39] Hey Jason and welcome back Jason Scott show listeners Jason spend a little over maybe a week week and a half since we have chatted how have things been if you've been how many cities have you had since we last caught up.
[0:55] This may be the first time I've been able to see this all year but I have hit zero City since we last chatted I meant home in Chicago for almost two straight weeks.
[1:07] She is she's at she has helpfully packed my suitcase and is eagerly awaiting my departure to the West Coast on Monday morning.
[1:16] Put it right by the door there.
[1:19] Cool so I guess we can't talk about any trip reports any other things going on you want to highlight before we jump into it.
[1:29] I do you know where you like to talk about the fan mail we get on the show but I got some angry fan mail this week.
[1:39] Well it's always the same angry fans Jason Delray of recode.
[1:47] What did we do to engage mr. Del Rey.
[1:52] Yes what's the argument sorry about don't get an argument with people that buy their ink by the Barrel in there.
[2:00] The digital anchor pixels by the barrel.
So if you recall last week we had a great conversation about Amazon with Andrea and the.
Topic came up of jets and I did mention that the Jason Del Rey.
I had written the article that sort of implied that that perhaps jet.
Close I'm sorry that the Amazon closed Quincy.
Out of spite for Mark Lori you know who's not competing with them at Walmart.
So we had a little conversation about that and Jason me actually very kind note to clarify that I had I had soda misrepresented his position and then.
He's really doesn't think that,
did Amazon close Quincy because of Mark Glory but he does think that some animosity for Mark Lori might have played into,
the communication around the closing of Quincy in the fact that they said like what we closed it because it was too difficult or not possible to make it profitable and so so Jason series more of that like the communication may have been a little more of,
negative as a result of the of the.
The Jeff Mark animosity then then the actual business case then I suspect that he's probably right like that certainly does make a lot more sense.
[3:28] Yes it's almost like you know Amazon kind of crap that if you will.
[3:35] Exact exactly that I quickly showed up on a crap report and they in the shutter shutter down.
[3:43] Google that's said there's been a ton of news in industry and as I always like to say it wouldn't be a Jason and Scott show without some Amazon news.
[4:07] Yeah Scot it feels like there's another interesting stuff going on and Amazon this week I think we finally got the announcement about,
Prime day for this year and I'm I'm struggling to even call it Prime day because I think it's now Prime days plural.
[4:27] Prime day is prime day 30.
Yeah Dave it's weird because there's several news reports picked up and said they're hearing from Amazon that it's going to be the week of July 10th through 14th,
betting person was in 11th that's kind of where I'm going to put my money and then it's going this year it's going to be 30 hours were just kind of interesting which is like kind of random it's a,
day in 6 hours so I guess they're trying to pick up another nice 18 hour window and then.
The six-hour window when when most folks are asleep and then pick up a morning would be my guess.
[5:09] Yeah you could you not yours you could imagine they're just creeping it ever every year and that eventually it will be like in always on promotion.
[5:22] Or cynical person might say that they're making sure that they dramatically beat last year sales numbers.
[5:28] That is now it should by its nature since the six hours longer to see that's going to be one sick so the 18% more juice from hours assuming a linear distribution.
[5:42] Thanks for doing public math on the show that's always impressive to me.
[5:46] Yeah yeah this is why we have to delete the other two shows.
[5:50] I was just going to point out no editing involve folks.
[5:54] I think also someone exciting we had talked about the the likelihood that this was going to happen but Amazon had a nice little uptick in their stock in their valuation is now officially twice that of Walmart.
[6:12] Yeah yeah and I haven't seen anyone else who visited the word perilously close to that point that I've calculated again in real time on a show probably around midnight a caveat there,
that's a basis would be,
close to the number one richest person with over a thousand in the stock is kind of hovering around the 965 970 so we're not too far away from when I think that too so,
let's see I think I have some kind of a strong showing in Q2 or some kind of catalyst gets it over $1,000 I think we'll kind of see some articles about the.
[6:50] Yeah that that is going to be fun to watch regardless that's a really high tax income tax neighborhood with with Jeff and a Bill Gates end up there.
[7:04] And I will one doesn't even that same neighborhood does I meant within a mile and a half you got two guys paying a lot of income tax.
[7:11] I thought you meant the neighborhood of the top five on The Fortune 500 not the physical neighborhood.
[7:14] No I'm just saying that that police force in Seattle is well-funded is what I'm.
[7:22] The PTA is is the coppers are overflowing.
[7:27] Yet another nursing one is this week was the 20th year anniversary of Amazon's IPO and you know when that happens with these accessories is he always interesting data points and if you put a dollar in your every dollar you invested in the IPO 20 years ago it would,
each of those dollars would be worth a $641 today so if you done a thousand that would have been worth 641000 and if you done,
you can continue the math 10,000 will get you up to 6 million and that's why Jeff Bezos is at the heading towards the top of that list because he owns a lot of Amazon.
[8:05] He invested about $2 in in that original IPO.
I think that's mostly true but when you say when you invested or you might get that I would point out that back then you probably get a paper stock certificate and I would have lost the certificate so I wouldn't of came the money but.
[8:24] Even 20 years ago the paper was really just about sibo and you're registered and it's okay if you lose the pay.
[8:30] Oh thank God I was losing a lot of sleep over that.
[8:33] So you should actually check there's every state has a place to go look to see if there are someone looking for you to deliver that lost share of Amazon stock.
[8:44] Luckily right after the Libyan Prince they're usually calling me so I don't I don't have to look it up.
[8:50] It's odd anniversary year for Amazon it is also the the.
Anniversary of the Amazon one-click patent and the reason that's interesting is it's the the final year of the Amazon one-click patent so that expires this year.
[9:09] Who do you think will see a rush of people kind of coming out with one click now that they can't.
[9:17] I suspect that we will like I feel like you'd only on Amazon like.
[9:24] Exercise the pageant really aggressively and I think that you know they got a licensing fee from eBay if I'm.
If I'm remembering right but I feel like people had been skirting the line on that patent more and more in recent years and so you know maybe it won't be a,
a watershed moment but I think it in certain sites it's certainly going to make sense and so I do think we'll see more of that.
[9:47] Nothing eBay doesn't license that's why I have this weird kind of two-phase commit it's kind of like you know,
buy and then you can go to the PayPal flu and even unit they try to integrate those things are there still a two-faced but apple is one of the biggest licensees of one click.
[10:05] Okay so I may have remembered it wrong I thought eBay was the company that the Apple actually prosecuted the pastor that Amazon prosecuted the Pats and again and there was some settlement or something but I'm a.
[10:17] This will be a fun thing for Lester's to help us research Sean I definitely do Apple license is a very large licensee I don't know who Amazon tutor.
[10:27] Answer those guys I'm certain are looking forward to that patent expiring if nothing else.
[10:33] And then there was also some news that it looks like Amazon is getting more serious about a couple new categories,
Furniture in potentially most interesting the the Pharma industry the Pharmaceuticals.
You know what's what's fasting about these rumors are Amazon announcements I think they a lot of them come out of job postings so the two I read kind of hit read between the lines of job posting this and then talk to me Amazon source,
but each of these days so CVS was down pretty materially the day the farm and news came out and then Wayfair and a couple other Furniture companies for down pretty substantially the days the furniture.
Sucking out so.
Yeah it's kinda it's really interesting your last 20 years to see this work like 20 years ago I run laughed at Amazon and if they announced we're going to come out for my run be like or if they even if they acquire drugstore.com NC,
I care too much about it oh no sorry the other guys did but they weren't investor drugstore.com and.
We're playing in that area and everyone scoffed and now when they're just so with that they're getting there they put a job putting out stocks go down to 20% so pretty amazing.
How much to move the needle here in the last 20 years.
[11:48] That alone is a very powerful in both these categories are interesting cuz to your point.
Superficial like there'd be a reason that both of these categories are.
Difficult and obviously there's a reason that neither one was the first category that Amazon went after and there you know there's only going to be reasons that the Legacy in that the incumbents in those two segments,
are saying here's why we don't think Amazon will be as successful in our segment as they have been in all these other segments and and that of course,
you know I gets the hashtag Famous Last Words Furniture is interesting because it's not likely that the.
The enormous of fulfillment center infrastructure that Amazon has is very well suited to Furniture in so that you know there are some third parties that have built these these Furniture distribution Networks.
And they often require like white glove deliveries and you know very regular size stuff and even though.
Amazon has built a couple of distribution centers or Phillips centers for a regular sized items but the really design for things like big screen TV's not necessary sofas.
Inside of Amazon where to get really serious about furniture.
It would be interesting to see if they would build a new fulfillment center infrastructure or how they would it would handle that that whole part of the thing because it doesn't seem that could leverage all the existing FC's.
[13:16] Yeah and that's that's one of the keys they report so some of the job postings are 444 falmont centers that are going to be designated specifically furniture and Appliance so so but they never been contact with that.
Name an end to point and never to my knowledge I know they got a pair of them at centers that have kind of steaming and ironing and kind of some very apparel they have a grocery footprint,
they have a small item that return footprint that have a large item that's largely is for large Electronics this is the first time I've kind of seen,
any Donuts Center tag with furniture and Appliance in and then certainly it sounds like they're building for sale that's.
Pretty interesting and going to be a whole new new them footprint to see what they're doing.
[14:04] Yep and that that is a category that you look at and say has not been very digitally mature a lot of the the.
The traditional Furniture retailers would say like oh gosh people aren't going to be able to aren't going to buy furniture they can't come in and see it and so they hid them under invested in.
In digital in e-commerce there's certainly some exceptions out there so that's an interesting category and then potentially even more interesting is Pharmacy again bunch of unique challenges about.
The distribution Network for that and in that case particularly the delivery and dispensing has a lot of regulations attached to it.
But you talk about disruptions you know you have three very large chains in in the u.s. Walgreens Rite Aid CVS.
And the something like 60% of the revenue from all three of those chains is Pharmacy.
I said that literally is their reason for being that drives all the trips to the stores and then they hope to sell all that all that stuff on the Shelf as a,
serendipitous Discovery when you're coming in the store to fill your prescription so so it won't have Amazon was able to disrupt.
Pharmacy in and you know really really own direct-to-consumer.
Fulfillment for pharmacy that that would be those those chains could not survive without walk-in Pharmacy.
[15:31] Yeah do you think the whole prescription thing in management of that is insurmountable or you think there's actually a better customer experience to be had in there.
[15:40] Yeah I know I think it's exactly the opposite I think it's inevitable that the majority of prescriptions that people are going to want home delivery like it just is a better experience it's a chore to have to go.
Pick that stuff up like there's a subset of that industry that you need kind of on-demand fulfillment so you just had a medical procedure and you need to stop on your way home and.
And get some pain meds or something like that but the overwhelming majority of Pharmacy are these.
The stuff that the majority of Americans now take for for chronic conditions and so you're just.
Virginia if your whole life and it's a heck of a lot easier to have that stuff,
show up at your door there's some really Innovative companies that are tackling individual markets like I think of capsule and in New York for example and you know Amazon certainly has the resources to.
To go after that and saw that on the national basis and you know if and when they do that that's going to be a scary moment for other traditional drugstores.
[16:44] Another category that's interesting we talked a lot about on the show and I know it's kind of a hobby for both of us to follow this one and it's kind of the B2B industrial category,
and I'm just kind of the brief history here on this a deep dive cuz this is definitely out,
that we should go deep run but that the Amazon piece of this is what she back in.
April I think it was April of 2015 Amazon launch time.
[17:14] Amazon business they used to have the thing that preceded it was Amazon Supply and it really signaled.
[17:21] That Amazon is getting pretty serious about B2B and you know it's funny a lot of the B2B players really kind of laughed and said you know we have this network of.
A thousand stores we have same day delivery there's no way you'll be able to counteract that and I would maybe think of this is Granger I was just one of the big players in this kind of B2B category and Industrial.
Lovegood's has had a really rough first quarter so it started out they they.
The mr. numbers worse than they ever have and then it took awhile for them to kind of come out and explain what was going on and they really just a simply said they've seen a seismic shift over Ecommerce and dinner.
They called out specifically but reading between the lines it sounds like Amazon strategy is really taken root and it is causing them a world of hurt,
one of the things I thought was interesting is when they came out and said kind of readjusted expectations they said they now predict that.
Over 80% of sales by 2021 will be online and that cause analyst to take because they're so.
Built out in the stores and all their margin is kind of.
The accounts on people coming in the store analyst came out and cut their whole long-term margin Outlook by more than half.
[18:36] So there's definitely see changes going on in that part of the market we haven't had a ton of time to talk about it and I think it warrants a deep dive.
[18:45] That we should talk I've been to that one either,
Factor there that seems really scary for Granger a lot of these B2B companies have contract pricing or negotiated pricing with each individual customer so there's,
their tents and not be a public price and,
you know they rely on price application you not knowing how much anyone else is paying for the goods and so Granger's had an e-commerce site for a while,
but they they charge like the highest possible price on that e-commerce site so today,
you know that the customers are buying online we're paying the highest price and one of the other things that they announces that they've had to dramatically.
At as all shoppers are shifting the purchasing online they're their price sensitive online and so you know how to say Amazon,
has the exact opposite pricing philosophy so they had to dramatically lower their prices and so it's a double whammy you say like wait a minute all your stores are so your sales are shifting online away from this huge investment in brick-and-mortar that you have,
and you're having good to dramatically reduce the margins you get for online sales you know that doesn't give us a lot of confidence in your future.
[19:53] Yep that's when I want to talk about it really news but it's kind of trend I just wanted to bounce off you and see if you're seeing the same thing so so it's my talk to.
Brands all the time.
And yeah I don't really causality but because I think we talked a lot about Amazon comes up for really interesting conversations over the years used to be.
[20:19] What should I trade you be in that kind of thing,
now what I'm finding is in Pride like the last 10 to 15 conversations I've had with Brands there they're really getting very serious about advertising on Amazon and I don't really see this out in the press three much but no.
I now hear that stat come a come back to me that that I use all the time and that you no more searches are done on Amazon then for products than other sites like Google and it for she was the first service this like for five years ago and now there's several sources for the data,
Answer the conversation goes you know what we're doing is restarting it's been a lot more on Amazon ad Platforms Night if I have to that AMS Nama and we can go into that on.
If I do Deep dive on this too and certainly you know it had gas like Andrea and most break talk about it on the periphery.
What you interesting is what I'm seeing is this very quick lifecycle where brands are starting to the test and then it is a brand that you know.
There their name brand so they have a lot of marketing dollars already in all kinds of different buckets,
and at least we're starting to see them slash those at dollars it towards Amazon rapidly,
also some folks have moved north of 30-40 50% of their previously mostly Google ad dollars over to Amazon and it's because of that so they can measure very.
[21:50] Easily how it is moving the needle on Amazon itself but they're also seeing a very powerful spillover effect off Amazon.
[22:00] It's hard to quantify that and I've talked to some of the other doing and its proprietary nothing.
I don't want to go into it now cuz though I think it would reveal who they are but it's really fascinating to see this and I would not have guessed this would happen this quickly and I just kind of wondering are you are using the same thing in the hearing the same discussions.
[22:19] Yeah absolutely.
In it it it feels like for a couple reasons like certainly one is there is this like shift 2 more miserable,
forms of media and more more sort of green eyeshade evaluations of marketing spend and your point when you advertise on Amazon you can it's Noah believe that that had resulted in the cell whereas a lot of other advertising Vehicles it's not been so the KP eyes have to be more,
more wishy-washy and frankly like there's a lot of ugliness in the whole digital advertising space about like when you measure things like impressions.
How accurate those measurements even are and is it about that sing that are person as that below the,
the the full the never invisible to the human eye on all these sorts of things come into play into the the ads on the Retailer's site,
you know certainly have an advantage and measurability but I actually think it's it's two other factors that are really driving it like that.
The top on when you mention like hey if Google is been a traditionally effective way for me to advertise in particular. I've been really effective and then you start to hear that weight 55% of all.
Search traffic starts on Amazon not Google you say man my portfolio of of pieles should.
In 55% of those dollars should be going to Amazon not to Google in so you're starting to see Brands want to make that shift.
[23:51] And then you have this third problem for the account teams that are particularly responsible for selling their own products on Amazon.
There's a Amazon has this great virtuous cycle for Amazon which is when you launch a new product on Amazon the only way to find it is inserts right like unlike a lot of other e-commerce sites where.
We're about 90% of the users are using the nav and maybe 10% are using search Amazon is almost exclusively a search based.
Experience and the only way to show up in search is to have a high velocity of quick through on your product.
And when you're a new product you don't have a high velocity of quick through so.
You literally have to see the system by buying ads to improve your visibility so people could through to your product detail page so that you can get some volume so that you can start organically showing up in search.
[24:44] So it almost necessitates that you make that that investment and what's what's been interesting to me is.
[24:52] You know a brand of spending money on marketing like these tennis spend money out of a couple budgets and so usually.
The first thing you see is that there's a sales team at you know Procter & Gamble or if you know you pick any brand.
And they're responsible for selling the family care products through Amazon and they have a sales budget to invest in promotions on amateur Amazon that help himself just like that.
Promotion budget to invest in in-store Shopper marketing at Walmart tell them so.
And into those are the guys that originally are investing in these these AMS services to have their products show up so that they can start getting that search visibility.
But there's a much bigger marketing budget that's owned by the CMO and that's the sort of brand building General awareness budget,
I'm in that usually the budget that's invested digitally and things like like Google and so the interesting trim we're seeing is a lot of brands have always had a presence on AMS,
MN other retailers advertising platforms.
From those account teams but now it's becoming much more common that you're seeing the CMO allocate part of the brand building budget to showing up on these retail or sites and well.
Amazon's the by far the largest Network in the US the Walmart advertising that work W an ex is very big target has a meeting full of network,
Best Buy has a meaningful Network like almost every big sight there there's a separate team that's called the site monetization team and they're focused on on selling these marketing products brands that that died.
[26:31] You don't want visibility on the sites.
[26:33] Young I'm kind of curious if this going to start to show up in a lot of the ad tectonic companies.
Results on specially Google because it does seem to be this,
the kind of destroyed the Google milkshake so it'll be interesting to see if if we start to see him it back or maybe you could just big and diversified enough it doesn't it's not Material or something that we should if you're interested in this maybe,
Too Deep dive ideas maybe we could get some Worcester feedback on you know which one of these is most interesting so we've got a Amazon marketing platforms and entrance and then we've got the B2B DS2 topics there.
[27:15] Yeah good stuff and I guess one of the thing I would say there,
one thing holding Amazon back a little bit at the moment is there ad platforms are not nearly as advertiser-friendly as,
since somebody that their Core Business Like Google right so there's lots of friendly api's that all the Aztec guys can build products that talk to on things like like Google and the.
Technology you can use to interface and execute your ads on on Amazon and and you don't even greater or stand on all the other retailers sites his is.
Relative William in church so that feels like with the one area that needs to change for it really to catch fire.
[27:53] Yeah and we've had several guests on the show say that they're pretty big kind of aspirations there so I think they'll get there.
[28:00] There's their zero doubt that they could solve that problem and likely will.
[28:04] Cool exit on Amazon you think anyone's going to slow those guys down.
[28:13] Well I guess it depends on what you mean by slow them down III I certainly think that they're going to continue to grow and capture more market share in so if you're if you're picking a winner it's it's clearly got to be there,
but I don't think it is a one-horse race and so I do think there's some other retailers that you know of,
in a position to carve a pretty big pies for themselves and the one you think of the most in the one that you know frankly at the moment has a much bigger than Amazon is our friends at Walmart.
[28:46] Yes yes oh Walmart had their first quarter earnings out and I think.
Most of the reaction I've seen has been really positive some some folks are saying you're out of the woods and others are calling and green shoot so kind of,
yeah different levels enthusiasm but mostly enthusiasm the one metric everyone's really excited about and I thought was.
Pretty awesome is Ecommerce was up 63% year-over-year to you as a reminder e-commerce cornichons going about 15% maybe at 2 gets 14 desktop in two or three said that night maybe.
Natural north of that but called 15 to surrounding and,
Amazon consistently as a company grows in the mid-twenties and then if you take out a bunch of pieces the egm part of Amazon instead of the marketplace are growing,
to clear around 30% so twice the rate of e-commerce so here you have something growing for X rated eCommerce witches witches great now Walmart hasn't been consistently doing that they've been all over the map here,
so you're one skeptic one skeptical think people could say as well.
The last year they didn't have a jet so is this all inorganic growth into the Wall Street analysts have taken some of Walmart's comments but I gave him enough data to back into it and,
no the ones I've said have estimated that the organic growth was 40% your beer so still a really good showing ahead of Amazon's growth rate and then when you later in the jet would she have the Dell 23% or you get took up.
[30:21] Pretty significant growth number so you have it too early to call that the strategy is working but there is definitely this is better than - 5%.
[30:30] Absolutely and you know it,
a huge warning sign for everyone else in the industry Let's Pretend analysts are for sure right in his 40% organic growth so the whole e-commerce Industries growing at 15%.
By far the largest player in the Commerce industry that alone is is like 30 or 40% of the industry,
is growing at 30%,
and this and like most likely the second largest player in the Commerce industry is growing right now at 40% so that actually does not leave a heck of a lot of growth,
for everyone else to get to that 15%.
[31:10] Yeah there's there's two kind of outcomes if if the industry keeps going at 15 then.
Online people to share will what I actually thinks going to happen if I grinning kind of a golden HD Connor Square I think if you don't just ties into the mall again theme I think we're going to actually see the,
Tire e-commerce sea rise and we're ghosts are too.
Bump up from that 15% we've had for years and start to get up towards the 20% that that's kind of yeah I think that's what's going to happen because and then the,
and what that'll do is the percentage of sales that are online is going to start accelerating it's been kind of if you look at the comscore data in the Census Bureau data,
it's in the sky like straight line for a while and it.
I feels like the elbow the curve so I think this between q1 and Q4 I think it be a attic will start to see the really interesting inflection point there.
[32:01] I think that's totally possible I like to think of it is,
the really isn't an e-commerce industry like they're a bunch of product categories that are each a different places in there,
certain maturity or adoption curve in in general across all the segments we see you once they get about 20% of their their Sales Online like it becomes a major disruption for the the incumbent model in so I think they're just,
a heck of a lot more retail segments that are that are rapidly approaching that that 20% threshold in so like I do think that you can,
that you could imagine a bunch of those crossing over that threshold then driving up the overall industry average.
[32:46] Coupler just two bits of so if the first time they just close the DMV number in that was up 69% so when,
when Revenue grows slower than gmv that mean to take rate is going down at I don't think that's enough of a Delta to be concerned it usually that can be explained and mix so all these marketplaces have.
No a different mix a different take rate for electronics let's say is usually some 10% and then some of that jewelry is north of 15%,
what is a nursing kind of trend watch over time which could indicate that there's some price pressure there or something like that,
I'm Sims 4 sales improved 1.4% in the physical stores so that's good and.
[33:29] And that beat analyst estimates.
[33:32] Yes that was an improvement and you know it.
[33:37] Walmart's been on about a year Journey may be teaching months where they've been investing in stores in hiring people and raising their,
wages and cleaning up the stores really focusing on you have the day today blocking and tackling at the store level and that's an indication that that seems to be working and as we know later than other same-store sales numbers out there and 1.4% is,
printable right now it's going to got a plus sign in front of it which I think many retailers would,
really like to have on their teams for sales the quality of earnings growth improves which is good and then what the guys always measure on the sun and this is I've been being this drum for.
Pearl every 15 years is at this point in time Amazon has you know,
over 3 and 55 million skews so when it comes to selection no one comes close to Amazon it's that marriage of the one p and 3p model that does it Walmart seems I've got religion around this and it's widely reported,
that they went from 10 million skis a year ago to now that 50 months can still drop in the bucket kind of 1/7 of Amazon but you have to go up 5x in a years is pretty impressive when for you know.
What was yes 15 years and be a Walmart has been kind of in single-digit millions in here the last couple years they've they've really started to get very serious about adding selection.
[34:59] Yeah absolutely in it it seems to me I mean when Amazon or when Walmart first wants to Marketplace like you know they didn't get immediate Traction in there you know they were kind of,
judicious about who they let on to the marketplace and I know the sellers like really complained about.
The platform in the the the tools and how many schools you can on more than all these sorts of things when you see that jump from 10 million to 50 million my section is that they fix the bunch of those problems in the third,
they're much more seller friendly than they then they were originally.
[35:39] Couple other little things in the Walmart world there's a great store concept that I can't remember we never talked about on the show,
call the story or or formal name this is story which is a retail space in New York City and it's kind of an interesting concept they they.
Are a great mix of Commerce and content,
they come up with a theme every month or two and they redesigned the retail space.
Based on that thing so the theme could be.
A category product like health or you know measured self or innovation or something like that,
and you know they design a complete retail space around that theme in so,
when you go there from month to month you you wouldn't expect to find the same product you'd expect a completely different sort of Rich immersive experience,
from the original concept they have been able to sponsor a number these stories so they had Brands come in and say hey we want you to develop a whole store concept around,
are our particular brand and this month's story debuted a new A New Concept in the space and it's it's jet.com fresh.
[36:58] You and I have been to several shopping at work meetings at at that store it's really cool it's kind of.
Antiques curation to the the Instagram think because the store is the simply just wipe and replace every wish you do every 2 or 3 months is it courtly.
Every month with what's that site.
[37:17] I think it tends to be about every 2 months but I don't think it did so I got to fix schedule.
[37:20] Come on Sia yeah yeah so are you going to go I think you're going to be in York City going to go stop by.
[37:28] Yeah I haven't been to this concept yet it just open I think my next trip to New York is maybe end of next week or two weeks from now and so I will,
definitely look forward to checking it out and hopefully we'll be able to tell our non New York westerners about it after that.
[37:45] And then no one other piece of interesting new Walmart news this week is that Walmart's I filed for a number of Internet of Things past tense,
in the, space so like everyone's really familiar with Dash buttons and dash Auto replenishment Walmart has patented and number of sensors.
Detect when a consumer is likely in need of replenishment so it sort of,
implicit is a replenishment instead of explicit so you don't maybe it's a toothpaste holder that can tell you when you're out of toothpaste,
but other interesting play with some of these sensors are designed to tell you when the product you bought the perishable product you bought is about to expire so I could warn you that your.
Your milk is expired or your cheese or something like that I don't know she's never expires now that I think about it but you get the.
[38:44] Cheese expire this green stuff on it.
[38:48] That green stuff in cheese I'm just getting I think it's penicillin no that would be bred never mind.
But in any case interesting that the Walmart is investing in that in that ipspace we talked about.
The internet of things and Auto replenishment on the show a couple times and it is very likely that five or ten years down the road sort of 40% of the goods that you.
You buy in the grocery store today are likely items that magically show up at your door because your house knows you needed him so,
I think that the retailers that are investing in returns and brands that are investing in that technology now are are wise to do so.
[39:32] Yeah yeah one news item to kind of break out of the Walmart side that we were remiss and covering and so we had this flurry of activity there were Walmart bottom of Oaks in between shows of one of our gas company was acquired so Samsonite acquire D-backs was cofounders Peter Cobb is good on your end we've also had John Norma,
two of the three or four Sounders on on the show.
[40:01] Yeah yeah I'd say so.
I don't think it's a huge stretch to say that we basically put this deal together but anyway so it was acquired 405 million,
that's great outcome for everyone in and you know this trend of,
brands of accelerating their digital footprint by buying e-commerce players is as fascinating in its.
A shout-out to our friends at ebags and congratulations on that one.
[40:27] Yeah absolutely it's going to be interesting to see I got his bags has a lot of that digital expertise Samsonite now also owns to me so it'll be interesting to see how they're able to leverage all those those new digital chops,
across like you know both of the stores brands.
[40:47] And then I'm also in news so we're,
Walmart usually one of the last folks reports or kind of heading towards the end of the q1 reporting cycle and I saw a really cool chart where well one of our joint Twitter friends Ryan Craver has been tracking the sand,
what is he shows kind of graphically same-store sales Trends and you know this was fast about this chart is.
Yeah he has what he has kind of groups without call value-oriented retailers or their counterparts so things like Burlington Coat Factory which is a discount on Nordstrom Rack.
The Nordstrom Rack piece of Nordstrom Rack shoes TJ Maxx,
Dollar Generals in the dollar stores then there's a grouping for department stores and there's a grouping for wholesale clubs and it is a tale of three cities so wholesale clubs in generally the discount guys are doing well with positive same-store sales results and.
Department stores are doing really really poorly with with severely negative same-store sales.
So we'll put this in the show notes or check either my handle or Jason's on Twitter and by the way both retweeted this so you can see it there but it's really,
interesting graphical display out of this where consumers are spending their money is actually an end the feast and famine that's going on and offline retail right now.
[42:15] For sure I mean it plays perfectly into the,
the retail Armageddon that we talked about that but you know protect those department stores are super distressed as consumers are making different decisions about where to shop been increasingly it's at those those more value-oriented retailers.
[42:33] Yeah and one of the young,
no one of the folks that did not make it out here in the last week or so as a retailer or rented towards team some all based retailer oriented towards teams called rue21 the file for bankruptcy so remains to be seen if they'll be closing all their stores or what's going to happen to the bankruptcy but usually it does mean store closures.
[42:57] Yeah in it.
I mean then we talked about the number the earlier bankruptcies a doing some interesting buzz on Twitter one of the bankruptcies was Gander Mountain and what kind of interesting,
that Gaynor was bought out of bankruptcy by Camping World in the reason Camping World might be interesting to some listeners is the CEO of camping world is the star of retail Park a profit show on CNBC if you ever watch this.
[43:30] Leon's Marcus Leon saskia.
[43:35] Exactly and so Marcus has been Super Active on Twitter and he's been super transparent a gander had a.
If memory serves like 60 stores and campers world is going to reopen like,
20 of those stores in so you know he's been like sharing real-time data on Twitter as they make the decision as to which stores they can reopen versus which ones they they.
[44:02] So that is really confusing because,
the stores all say the stores closing and we're liquidating everything then he is saying no no no no the store yes or selling all the stuff but the stores going to stay open so I guess they're going to,
no they have their own supplier relationships and Logo replenish the stores and then they're also rebranding them the brand is like.
Cinnamon Big Gander Mountain it's just Gander outdoor but he wanted to create a bunch of distance between the brand but it's like the same essential name side,
Nas represent tracking.
[44:36] No I think you got it,
exactly right I think he did not buy the inventory the distressed inventory in the stores so the Liquidator the did has the right to sell all the stuff out of all of those stores and then the stories he reopens he's going to have to replenish your point prison while using the campers world supply chain that he already has.
[44:56] Yeah that's commuter Sting If you can make that work because it's certainly very confusing consumers I forgot it's pretty in the weeds try to explain that to him.
[45:05] Not for sure I just found the thing interesting you know if this had this this kind of thing plays out all the time when returns go bankrupt and I'm played out you know 15 years ago or 10 years ago when when Circuit City closed.
They give you work in a Circuit City store you have no idea if you had any potential for a new job or what was going to happen and you know you'd be waiting until you read something in the newspaper and now you've got like.
All this this real-time information you jump on Twitter and the you know Marcus is out there tweeting list of stores and saying like Hey we're going to hire people in that store so I did.
I think that's another interesting ramification of the of digital disruption.
[45:47] Yeah that's good point I think it is super helpful for the employees to have some some in real-time information what's going on.
[45:53] Absolutely So speaking of digital disruption another big guy digital event this year or this week is Google IO.
[46:05] You would what you think about that I was not able to watch it real time I read several the summaries and,
yeah it sounds like Google went from in the early days being kind of search for Sony search to than mobile first and now everyone's saying there AI first so the AI Buzz was a Google IO and you have to get excited you're going to be in it's like,
this thing you can hold up your camera and it'll decode something in the real world and Google's had several iterations of this and they've all been kind of you know nice demos but not like,
game-changing cell I don't know I felt like a real use cases so interesting to see if something was like changing for you.
[46:50] Yeah we'll see nothing I would call life-changing but I do think it's interesting,
why is one of these double-edged swords and we we for sure need to do a deep dive in there if you turn on on AI for Commerce because it is over hyped Buzz thing right in and so you know all the big,
Big Rita a big big guy technology companies are talking about becoming a I first in and innocently that was the big play from from Google in,
you know my argument is no one should be excited or buy something because it is or isn't it,
bike was not an outcome and you don't people like I need some of that good at so so we'll we'll talk about that a little bit on the Deep dive,
but I do think it is true that the AI is enabling a bunch of,
much more interesting user experiences and much broader a digital user experiences then have been possible here to for so so I do think that is on the cusp of enabling,
huge of systemic changes to how we shop across a bunch of categories and I am excited about that and you know that,
but I would,
I would encourage people to get much more excited about this specific use cases that are likely to affect them and why they're going to be a better experience than that it has the AI label or doesn't have the a highway.
[48:21] So I think it be fun to do a show where we talked about what some of those near tournament fart termed use cases are but I know one person that's in my camp on this is our our number one listener Jeff Bezos.
[48:33] So she possible Deep dive so if you want to let us know your thoughts,
tweet at us or I'm Scott Wingo Scot Wingo in Jason his retailgeek.
[48:49] Or go on her Facebook page and let us know which of these deep-dive topics is most interesting for you so to recap we have business kind of with an flavor of Amazon business what's going on we have.
[49:03] Artificial intelligence and then we have Amazon advertising and and that platform so let us know what's interesting to you.
Jason one big retailer that's been pretty active here in the last week's news that we haven't talked about his Target have you been tracking all the I don't know it's news I think it's more like,
gossip at this point now have you been tracking what's coming out at Target and interesting macro things going on there I'd love to hear your take on.
[49:32] Yeah so I think there's some gossip and some news I think they also did have their earnings call this week,
and I did not write it down in the note so we're going from memory so don't hold me to these numbers I think they basically beat the analyst expectations but they definitely had negative same-store sales so,
in my head I want to say that that the animals were pretty thing that be down like 3.7% and they would only down like 3.4% or something like that so.
Definitely not the you guys want to beat analyst expectations but definitely not the kind of thing you claim victory on and and pound your chest about.
When you're just just the shrinking a little more slowly than an analyst. Yes.
They also did an ounce pretty good e-commerce growth I think also above that average so again from memory I want to say.
Then I was like 20% eCommerce growth.
[50:33] But it's interesting like all of those things at Target are in this backdrop of news we talked about in the last several months that the target is really curtail the lot of there.
Forward-looking initiatives in program so they.
You know they have these stores of the future that we're half built then they they announced that they were closing they had this big goldfish initiative.
And now this this Innovation officer westering feel that you know they're working on all these Innovative things and they hired a bunch of people to build them.
And they they abruptly pulled the plug on all those things and parted ways with Wes.
Their Chief digital officer you know they left the company.
Maybe 4-5 months ago they're cheap Innovation officer Casey car of the company this month so it really feels like.
Target is investing all of their chips in their near-term fundamentals like they're they're trying to improve the guest experience in the stores,
and they're all in on the winning in these five signature categories that they're focused on in store.
At the expense of a lot of these these other initiatives then like obviously there.
Their results or to belittle why that you know they don't have an unlimited amount of money to invest in all these initiatives.
[51:56] So it's going to be interesting to see how that played out but in that context we we got some some rumors from her friend Jason Del Rey that he wrote an article about today.
And that was all that they announced that they are selling Casper inside of Target stores,
and that's that's not rumor that that's news they're not actually they're selling the mattresses on the line but they're selling a lot of the accessories in the store so so the Casper have a footprint in the store,
and if you want to buy a mattress you can buy it direct from Casper but you can also now buy it from target.com and the ship it direct to your home,
for people that aren't for my red Casper you know that that is clever combination spring foam mattress that they're able to.
Compressed down enough that they can actually ship it in a UPS box in so this,
this is kind of in line with a lot of other moves we seen Target they like to surprise and Delight their guests by having these popular brands that you wouldn't necessarily expect,
Cabot Target in so regionally that was like designers that were too high in for that you might have thought were too high in for Target but more recently it's been some of these digitally native brands that are showing up in Target so it was Harry's razors and now Casper.
And what Jason's article says is the target tried to go a lot further than just caring that they actually tried to acquire Casper and then when that was unsuccessful that they've taken some sort of investment and Casper.
[53:33] So that's interesting.
[53:34] Yeah and I think the number that was been thrown around as a billion do you have you heard what Casper is revenue run rate is how I remember when they crossed like a hundred million me was 2 years ago I heard an update on that.
[53:48] Yeah I don't have a number in my head.
Like for sure that they got to like a hundred million in like their second year of existence so I know there's a lot of talk about that but I don't know.
Where they're at right now and it's interesting for Target to take an investment in them right so.
If if I don't know that makes Target a majority shareholder or a minority shareholder or what sort of you know board seats and all those sorts of issues but you could imagine.
Why does Casper sell on Amazon today and will they continue to sell on Amazon with with Target as a majority board member,
would any other retailer B12 Kay Casper with Target as a board member and might see,
sales velocity on those on those in those other retailer stuff like that like it can get messy for a retailer to have an investment in a brand that they're not exclusive to.
[54:51] Channel X the thinking goes if I'm going to make these guys are Rockstar.
And I can't own it then I want to participate in that Rockstar creation cycle that's probably what's going on from Target side.
And they probably wouldn't do the deal without investment and then there's also stuff the offense part of it in their defense that kind of says.
And so you things can come with your pretty real needy right of first refusal kind of things so that you keeps one else from buying it are you have at least two by two that so I wouldn't be surprised some of that was in there and in,
Must have really wanted the distribution or her felt like it was worth it to accept the investment in any kind of other entanglements that came along with it.
[55:35] Yeah and that does it mirrors Casper's a prototypical did you need a brand.
You think about someone like both of those right like very similar,
they cut a deal to get distribution although their primary Channel distribution is direct they cut a deal to get distribution in Nordstrom and they'll at Nordstrom to take an investment in them and so,
in that way this this deal doesn't look so different from that and of course none of us as a sort of aggressively open guide shops at showrooms Casper has some some guide shops or not shops Casper has some showrooms.
So it feels like it's falling on a pretty common playbook for these kinds of companies at this point.
[56:20] Yeah and I don't say it feels like I'm outside I don't have any inside information on this it feels like a game of Music chairs is accelerating so,
now we saw Walmart scoop up a couple of these really quickly and the Rumor persistent rumor is bonobos is going to Walmart so then if your target your kind of like.
You know why I need to get in the chair here and we also have heard rumors that they were going to pick up boxed up which is more that Amazon Pantry style kind of competitor so so I think what you're seeing is you know you start to look at the digital I need a vertical brands that are out there at scale,
your dollar shave club's been picked up so now you have Harry's in the Casper,
there's it does to the three largest wins mod causes a lot of times mention of that discussion and bonobos those two are off the table so you're really left with.
Pretty small number of scale over hundred-million-dollar companies there and I am I leaving any off.
Which puts two chicks in there I don't know if that counts.
[57:23] Yeah they're slightly different animal but they're like even you know probably larger in scale at this point I think there was some they publicly announced and you know we we have I can only take their word for it at this point but they clean a satellite.
760 or 780 million in annual sales so that's that's a pretty good size company of that church.
[57:45] Yeah feels like a four five billion kind of a swing it back there so it's pretty serious to me.
[57:52] Exactly some of these might be a little more digestible then than Stitch fix at this point I do think you're right like there's no.
Diminishing number of these I think there is another interesting play where these guys are playing some defense.
Another piece of innovation is so fast now that all these companies that have disrupted Industries,
are not getting very long honeymoon before they themselves are getting disrupted so you think of Dollar Shave Club as disrupting Gillette and Shake.
And you know you could talk about the cool video in the subscription service in all that the real reason Dollar Shave Club disrupted.
Gillette is because you at sell $7 razor blades in Dollar Shave Club sells one dollar razor blades but now you've got dorco who's the.
Razor blade supplier to Dollar Shave Club launching their own subscription service and selling $0.20 razor blades.
You're like hey wait a minute like I was that young fun disrupter with the shockingly low priced and now I've got guys below me in the same thing as happened Warby Parker they're a bunch of direct-to-consumer,
frame manufacturers that are even coming in and even let you lower price points than Warby Parker and the this mattress industry is,
particular competitive so either at the Casper wasn't even the first they were really I would argue the first one to get sort of mainstream awareness.
[59:24] But there are five or six a significant players in this new digital direct-to-consumer mattress space and if you're you're Casper you know you would have had a big incentive to get,
eat a dick the kind of visibility in distribution you get through through Target to differentiate themselves from that competition.
[59:45] Yeah there is a,
an interesting data source CB insights had shown when the rumors about Casper came out that there's three or four other mattress companies that are actually in the neighborhood of sales is caspersen Target must be really enamored with Brandon and think that there's some absurd you there with their there.
Fire door password.
[1:00:07] Yeah yeah absolutely so it's a it's a fun spectator sport to watch all the stuff planned out right now.
So Scot we're coming close to time but I know you have a pretty cool event coming up do you want to remind the listeners about it.
[1:00:24] You know one of the biggest shows the year for e-commerce,
internet retailer Conference & exhibition which is commonly abbreviated IRC and last five years I've been doing a Amazon Workshop they're called Amazon and meet so I'll be at internet retailer love to meet up with any letters that happened to be there Channel have a booth and I'll try to spend some time there,
I'm a bad founder and don't know the booth number but I'm sure it will be in the guide there so I'll be at the booth and look for to see you there and then I'm also speaking at a venture capital friends about,
what's going on in Destin DC and that's June 7th so look forward to seeing everyone as I'm starting to hit the road here in the early summer.
[1:01:12] Graco I love it that you are potentially traveling more than me.
[1:01:16] Yes I may have to I may be able to a trip report so it's going to be pretty darn exciting.
[1:01:21] I tried to be a cool and find the booth number for you while you were talking and I sent you exhibited in too many hours to eat.
[1:01:28] Yeah her for quite a while.
I still have to put that on the show notes and with that it has happened again we've wasted a perfectly good hour of our listeners time so we certainly want to thank everyone for listening and encourage you to write us a review on iTunes of you enjoyed the show and we would love it if you'd come to our Facebook page and give us some feedback about which of those deep guys would be interesting to you.
[1:01:58] Until next time happy commercing.
EP083 - Andrea Leigh, selling on and negotiating with Amazon
Andrea Leigh is the owner at Andrea K. Leigh Consulting, which helps clients sell on and negotiate with Amazon. Andrea enjoyed a 10 year career at Amazon where she served in a number of Buying and Category Leadership roles. Andrea is a recognized expert on Amazon, who has written a number of helpful articles about Amazon on linkedin:
We spoke with Andrea about her background and experiences at Amazon, the digital grocery market and Amazon's efforts in the segment, and the best practices and common pitfalls in working with Amazon.
Andrea will be one of the speakers at "Amazon & Me" an all day workshop on Tuesday June 6th at IRCE, hosted by Scot Wingo.
Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.
Episode 83 of the Jason & Scot show was recorded on Thursday May 11, 2017.
Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at Razorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.
New beta feature - Amazon Automated Transcription of the show:
[0:25] Welcome to the Jason and Scott show this is episode 82 being recorded on Wednesday May 10th 2017 I am your host Jason retailgeek Goldberg and as usual I know Scot Wingo.
Scot & Andrea:
[0:39] Hey Jason and welcome Jason Scott show lister's let me first apologize it is peak,
pollen season here in sunny Raleigh North Carolina and my allergies is amitab attacked me and I have a sore throat so I apologize for the the lowness of my voice however I will be doing some Darth Vader quotes later so it will come in handy,
Jason before we dive in it's been about a week and a half before we chatted any road trips you want a report on.
[1:08] I do have a couple of days or so very sorry to hear you're feeling under the weather it's sort of Harkens me back to our famous shop talk shows where I didn't have much of a voice.
[1:19] And our live listeners are totally on it that I've got a bunch of my text messages since I just did the intro in this is actually episode 83 so I want to apologize.
For the falls.
Boss intro a minute ago but thank you to all those folks that are listening in the show Live this week I was I got to do a trade show in town in Chicago in my hometown which is a rare treat for me.
Mwb research does a show every year for the B2B in this week I'll be to be online so I.
I just got to go do a presentation there yesterday and talk to some folks about B2B e-commerce which is her that interesting contrast to the the retail stuff that we talked about.
Scot & Andrea:
[2:02] Yeah did you get a lot of questions about Amazon business that's whatever you ask me.
[2:06] Not as many as I would hope I would take it as a better sign of people were a little more concerned in that space about Amazon business,
perhaps a parallel the sum of things we'll talk about today.
There's some really Advanced B2B e-commerce companies but the general level is pretty digitally immature and so,
you know you tend to be talking to people in that industry that you were talking to retailers about maybe four or five years ago,
and I have a theory that that a lot of the cpg space are also somewhat digitally immature and a rapidly trying to catch up and so we we we make it to hit upon that in today's episode.
Scot & Andrea:
[2:45] Coolest part of your talk to call the audience to Julie immature.
[2:48] The love I do talk about the digital maturity curve and I let them judge for themselves where where they're on but my talk.
Is ironic cuz I I was mainly talking.
To stakeholders they were really interested in watching B2B initiatives inside e-commerce initiatives inside their company about how to get c-suite buyin and since I've been kicked out of some easy sweets I thought maybe that was.
And ironic choice for me.
Scot & Andrea:
[3:16] Old Town ironic if your c-suite the immature.
[3:19] Exactly I've been in a lot of sweets just for a brief period of time.
Scot & Andrea:
[3:22] You're mature getting kicked out of six weeks.
[3:25] Exactly how I'm high on the kick after blow on the maturity curve.
[3:31] Just got one of my favorite thing,
the show is you know from time to time we get some nice listeners that right in and say nice things about the show and had told her to reorder top and something and I always enjoy that,
but I thought you liked this week I may have gotten my favorite piece of fan mail.
Scot & Andrea:
[3:49] Go to zip front and what they say.
[3:51] Yeah so it is from a listener and Marie who runs the e-commerce site called dog quality.com and she's a regular listener and.
Had a recent occasion to go to our website where the show notes are and.
There there's an about me tab there with a picture of me and my dog MacGyver and so Emery who obviously is in the dog industry so I'm a guy her and wrote MacGyver a piece of fan mail.
Scot & Andrea:
[4:17] What are you going to read it first.
[4:19] Well I won't read the whole letter as she's right kind of currently Doug quality focuses on.
Elder dog quality of life in and products that the older dog specifically need and she was nice enough to say that in the Guyver looked like a spring chicken and probably didn't need any of her products,
but she is she certainly offered hook MacGyver up should should the need ever arise and I was laughing because she doesn't know this but the MacGyver is a frequent guest on the show MacGyver is Jenner sitting on my lap for the show and so he was,
very pleased to find out that he finally got some of the recognition that he he well deserved.
Scot & Andrea:
[4:56] GoFundMe you wear at shoptalk it sounded like he was he was doing your part.
[5:00] Actually he is a man of few words but he's much more insightful than I am and I don't know this but I think you have a couple dogs that have at least made a cameo appearance on the show as well don't you.
Scot & Andrea:
[5:13] Yes sometimes in my podcast recording studio here which is also my home office ad my 10 year old Border Collie kit sits on the floor and that we have A1 year old,
Cavalier named Lulu and she usually sits on my lap but tonight they are elsewhere hanging out with the kids.
Scot & Andrea:
[5:33] We'll just before the podcast goes to the dogs we have an exciting guest for listeners tonight.
As you listeners are well aware I'm a little bit obsessed with all things Amazon and every time I talk to tonight's guest I learned a ton about that what makes Amazon tick,
and really spent a decade and Amazon from 05 to 15 and now runs a consulting firm called Andrea Kaley consulting or she helps Brands and sellers with their Amazon strategies as well as other e-commerce growth in it,
I'm hosting a workshop that internet retailer Conference & exhibition which is commonly abbreviated IRC.
And Angie is one of our speakers talking about Advanced strategies for Brands and wanted to go she ate with Amazon and you're welcome to the show thanks for having me.
Cool and so we got Central covered with Jason in Chicago on East in assume you're in Seattle in 7 days.
How's the weather is it is it typical Seattle are you guys getting your sunny days.
Know where we got a little bit of fun but you know it's still we still have to get to the Fourth of July before summer really starts here cool so um.
We really want to jump into it so one background statement before we jump in.
Sometimes be a few back for listeners will jump right into Sonny's topics and I neglect to cover some of the basic so tonight when you use phrases like one p3p hybrid,
we see one PSP specifically in the Amazon context that usually that someone has a wholesale relationship or a first-party relationship with Amazon third-party usually refers to more of a Marketplace kind of relationship.
[7:07] Are the hybrid is a lot water brands now that exploring kind of a dual approach so a wholesale Ana Marketplace approach just wanted to let her listeners kind of have that that little glossary there at the top of the show before we do it.
And I'll turn it over to Jason who is dying to kick off.
[7:24] Thanks, let me highlight for a listeners that are not driving weather listening to podcast that the whole one p3p hybrid thing also makes for an excellent drinking game.
[7:39] So it's winter before we we get into that and III.
[7:43] One p3p question for you where I think there may be some Andrea Scott controversy early I hope there is but before we go there.
Maybe we can start with a little bit of background about you and sort of you can walk us through how you got into this industry and what some of your experiences.
Scot & Andrea:
[8:02] The absolutely so I said you know probably the majority of my career at Amazon that was there for 10 years from 2005 to 2015 and I was on I worked in the retail group for the entire time,
I'm in different roles as actually started as one of the founding original buyers for the amazon.com grocery category and you kind of,
migrated my way to the company and number of different roles,
including divisional manager for the baby category and working on getting the Amazon,
baby registry can I prevent in and then good good order with customers as well as a leading category teams for Amazon Fresh,
Rawhide most recently before I left and for the longest actually for a little over three years was a category leader for a hard-line soft lines.
And consumables for Amazon Canada where and we watch consumables and softlines on while I was there I also ran the prime program and Canada and Italy Avon with it with the transportation team,
in addition I've worked on the,
crab process for Canada help develop that and get that thing running up there if that some of the term that everyone is familiar with that's Amazon's term for can't realize any profit.
[9:32] Which is through their way of identifying items that are unprofitable for them.
And I left Amazon two years ago to start my own Consulting practice where I work now with Brands a lot of them that I worked with while I was at Amazon,
you know to help them achieve their goals on Amazon whatever those might be gross profit you know I saw him planning.
Etc and in the category leadership relate Amazon if you're not familiar with that sort of structure at Allegan General Manager and you're responsible for all of,
a buyer vendor management planning in the stock management marketing product management sometimes the technology teams as well so that's a little bit about that rule the last years I have been working.
And Consulting can I have them working directly with Brands doing some speaking and doing some writing.
And a man actually really partner with Melissa Burdick the kind of team up for Consulting practice and so that's,
that's kind of what I've what I've been up to.
[10:41] Questions about that you went from being the evil buyer to helping Bray.
[10:51] Kind of like going from the federal government to becoming a lobbyist is there a man.
Scot & Andrea:
[10:54] You know it feels like there should be,
the Empire is not but I mean I really feel like for the most part the work that I do is really Amazon's best interest I mean when it's actually one of the reasons I wanted to start my order form I mean in the early days of the Amazon Vendor Manager spent a lot of time with her and I spend time with my brand I'll be in them figure out how to grow how to use the platform head understand it to be successful and kind of coaching them and teaching,
and you as Amazon,
skilled and crew become more automated and that's my role grew and I took on my two teams I just found that I was sending you know very little time talking with brands,
an Amazon in Genoa spending very little time kind of in that teaching capacity,
and so you know that was kind of one of the reasons that I wanted to do this,
I think would just like a small amount of Education about the Amazon platform,
no Brands can see some really amazing success by applying some really basic principles and it's not hard you know it's it's I think it can be pretty straightforward once you understand how Amazon is different from other retailers.
Quarter certain types of Brands you properly work with her show cpg seems to be a real house kind of area for you or your little bit all of them.
You know I've been all over the map where's and small and end in any number of different categories but I will say that this species tend to have kind of the biggest challenges on Amazon pretty early because they were you know they're they're off and doing a pretty sizable businesses.
[12:34] In addition to I'm just having a lot of products that are really difficult for Amazon to ship profitably so I think they kind of think they they have the most challenges,
I'm as it relates to Krista voorhis with the with the,
a platformer a business model where products are shipped directly to customers often in the single units but I've but I work with all kinds of brands.
Across all categories.
[12:59] Nice and you mentioned um baby for a while and if I have the time line right the Quincy acquisition happened right in the middle of your tenure.
Scot & Andrea:
[13:08] Right in the millimeter exactly and it's funny because I remember when they first got on our radar and we were and we were really thinking about like they're getting some really great friends on the site and how are they doing that and I remember thinking like we should go for this we should do we should go get them,
we should call them but I'm and it's it's really interesting but I mean you know you know how all acquisitions go it's pretty it's pretty hush-hush internal lake cinemas that stuff happening.
[13:37] Yeah but so did you literally go from hating them and they were an amethyst to like becoming a partner.
Scot & Andrea:
[13:45] You know I had moved on to another category by the time we actually started integrated integrating with them but you know I was there I was definitely there for the acquisition piece and you know they were doing.
Three steps hi I'm just doing a really nice job pretty Leanne diapers.com,
Beano getting new customers and as we all know that time when the consumer becomes a parent is just such a pivotal point in terms of brand loyalty and brand switching is really high at that point and they were really they were seeing a lot of success with some of their marketing tactics,
in an option that consumer as well as you know getting a lot of kind of more perceived higher-end baby Brands to to partner with them.
[14:31] Nice and I don't know we've talked about this on the show and I will surely understand if you don't want to share an opinion but you know there's been a little controversy is his Wizards probably do know.
Scot & Andrea:
[14:43] They spend down Quincy Quincy this year and there's at least one of our friends in the media Jason Delray that that.
So it has this hypothesis that it literally was out of spite for markquart who's who's competing with them Amazon it at Walmart and I'll just pay for the.
I personally don't believe I don't know what the real logic was behind spinning a down I can imagine there's a story that we don't know but I have a hard time.
[15:14] You know potentially several hundred people are getting laid off space. Out of some competitive spy on the part of of Jeff.
Scot & Andrea:
[15:23] Yeah I read Jason's article about that.
Yeah I read that article that I mean I think that's possible and obviously I don't know I don't work there anymore but I,
email Amazon just serve god with a needed out of that relationship,
and there wasn't a lot of sense in keeping up separate websites me over the years Amazon had tried to spin out other web sites and it's just really challenging it's really challenging to drive traffic to a new site I mean as hell with the endless launch and then take down they got so mad it is so much traffic through going to their native site so kind of continuing to some,
pour it into additional websites just seems really.
Really tough and I'm not really sure why that would be a great strategy for them and you know if you think about like they sort of got what they needed that of that Arrangement they were able to you know take out app,
who is Fab a fast-growing and competitor that was getting a lot of traction you know this is going back like 10 years ago.
And then them from sort of like,
becoming you know a real material competitor and then in addition to that you know they were able you know to integrate some of that inventory or those Brands under their own site no maybe some of the brands or harder for them to.
Dino to acquire so I still feel like they got what they needed and it's really expensive.
Having a Second Sight means possible there was some slight there it is truly when you look at that whole it's Story I mean it's like a soap opera.
[16:58] Terms of the level of drama.
I mean it's just fascinating but I think Amazon is a company with more Integrity than.
You know that one that might you know I have all that and you know I just have a lot of people suffer.
[17:18] No I think the URL consolidation makes a lot of sense and there are just good business reasons for.
Amazon ultimately to go there at the one I I guess ironic thing is they thought they were making an acquisition to take out a competitor and all that money that used in the acquisition ultimately was used to create a new competitor so I guess.
Scot & Andrea:
[17:37] Flatbush feel like soap opera or irony I'm not really sure that's why I need that's the real twist in it.
[17:46] The irony of me is that I use the word irony wrong all the time.
[17:52] So changing topics you mention the crap program in Canada and we we talked about a crap a little bit on one of the other shows.
But maybe you're in a good position to confirm or deny.
The rumor is that that was started as an internal term that was not intended to be.
Scot & Andrea:
Exactly what I read in one of my articles he was not intended to be public-facing it all it was a term that was developed by the finance team like I'm very clearly recall this and I don't know I can't imagine they share this room just funny,
and you know I remember seeing in the fruit one of the first meetings where the finance team brought us this program and the program itself makes sense you look at stuff is unprofitable and figure out how to get it more profitable,
I put the acronym Chris is really terrible and I member we all kind of looked at each other like this or go it's like really and you know I don't think it was ever meant to be other two vendors but now it's out there and now it's like an industry term.
[19:01] It's it's really awkward cuz they a category that's particularly vulnerable to crap is of course toilet paper in so when you're,
to a cpg manufacturer that's talking about their total,
trapped out it's really on the potty humor goes goes downhill really fast.
Scot & Andrea:
[19:19] Yeah and I mean I don't think that I don't think the procedure of that was lost on them right I mean diapers and toilet paper or two of the kind of like really on really difficult items to ship,
take us to Harris profitably and so I'm pretty sure that was so,
Davidson strategy around the name but the funny part is like by the time I left we were just tossing it around in meetings and like it was the term has lost all of its like conversations,
and I think it's funny now and I talked with Brands and I and I talked about crab and,
really quiet like Amazon came up with it hasn't explained it so disgusting.
[20:02] So the shocking part to me is not that any of that happened the shocking part to me is when you move to Canada that you didn't find a nicer friendlier term for Canada because it's Canada just say is nicer.
Scot & Andrea:
[20:10] You know that's a really good point like at that point it didn't even occur to me that when we started the program in Canada we could have called it something else but you know it's too late now.
[20:25] So one one last topic before I let Scot get a word in edgewise,
at the beginning the show you talked about or Scott introduced the concept of one p and 3p and we talked a lot about 1p and 3p.
And when a 3p seller is using FBA as their distribution strategy.
Scot and the show generally talked about them being a 3p seller that uses NFPA and I've noticed in some of your writing that you call.
FBA sellers to pee so I'm just curious if you and Scott and have our are aligned on that vernacular or of or.
Scot & Andrea:
[21:05] I mean I think I think I think it's 3 PS1 of encompassing both Merchant sold as well as,
social Diana son so you know where Amazon a store in the inventory shipping on your behalf they are still there that's to pay the sizzle by Amazon program,
mn3 can include that but I usually it's referring to Merchants that ship out of their own warehouses.
[21:29] Got it so what do you call a vendor for field FBA.
Scot & Andrea:
[21:34] I would call that she pee.
[21:36] Gotta and Scott are you are you okay with that.
Scot & Andrea:
[21:40] I try to keep it simpler so I think that would maybe confuse people,
chicken official Amazon me cancers that just no actually never heard these turns until I left.
And they're sort of what a lot of my clients used to describe the different business models and with some of the folks in this kind of like ancillary Amazon industry send you so that's it those are the ones I've adopted but you know there's a really simple version is one piece retail,
is Amazon buying product from Brands and reselling it and then 3p is where,
the brand or the other retailers uses Amazon's platformer services.
Who is one thing I wanted to jump into before we get to nerdy on e-commerce side is is on your bio you are part of the Amazon or raise our program of study that a lot as a internet I'm kind of obsessed with Amazon's culture in and how they,
such a large company she needs Innovative and doesn't seem to have a lot of bureaucracy and it seems like the bar razor program is kind of,
last couple years decided as a really kind of key contributor that four letters that aren't following that is close to as I am maybe give us a quick background a bar razor and,
tell us about your experience being in that program.
Yeah absolutely I'm in if you really interested in Amazon's culture and how they say Innovative actually you love my next article I got one coming out another week that's just the really just phones and on that specific topic.
[23:13] I would love that actually if I could really use some other program,
and I think this is some Polish so I don't think there's anything like confidential here but it's essentially her Amazon where there's a set of interviewers that are meant to,
teach other interviewers how to interview so this is like so the more experienced said of interviewers go through specific training to teach others had a interview and then you know you need to have.
I need to have someone in this from this program at least you did when I was there on every interview Loop scissors or busy,
and you know that the idea is not that that's like the tough interview or whatever I think that's been written before actually not true it's it's the person that facilitates the conversation and really drive out all of the insights from the interview from all of the people who interviewed the candidate,
and really make sure that you're having a cohesive discussion and that you're applying kind of them.
Does cats a consistent set of principles to hiring decisions across the company and so it's not your consistency,
and for maintaining the culture not true,
being like a really particularly tough interviewer although probably some of them are really tough interviewers so I was in that program most of my time there I mean cuz I was,
I know I started there you know kind of it before they started some of their real significant growth.
[24:50] And I got into it early and I think by the time I left I have done almost a thousand interviews and you know,
mayilada hires connect during that time. Cool so you're in the interview and then you also delete a post interview kind of debrief is that I would have her.
Exactly exactly any ideas just really for consistency and for us I think the same is true in any organization where you've got some time so it's on interview Loops it University experience or.
[25:23] I'm in after struggling a little more to apply some of the principles,
you know the leadership principles are still learning the leadership principles and so is their kind of someone in the room that's got some experience with that and can help guide the conversation.
Clannad articles I've read say it,
cuz of this book number one usually by razor is in a different apartment and so you would be the Barbies are for like engineering or something and some other person would bar raise for fire,
a person like that I mean it's like I couldn't I couldn't facilitate a conversation about someone who's going to,
be on my team you know you want certain external perspective but I think that's just a general in your dream practice Amazon anyway regardless of whether it's a bar raise or not it's just a lot of perspectives on a Candida think the weirdest interview I've ever participated in was for it was,
like a mad scientist like an economist,
I remember prepping for That interview and just thinking like what am I going to ask him if I did try to get this person some Economist questions I would be hard-pressed to judge the quality of the answer and I remember though it's sitting in the defense I didn't know anything about the contents of this person's work but it was room market like the process of,
determining if they work a candidate was like,
damn I mean was really it really didn't change so do you have a go to question like why are manhole covers round how do you do the mountains.
[27:01] You know I think one of my favorite ones someone who asked I heard someone else asked in an interview as part of our thing is like you to train people you Shadow and you,
we go along and someone it's something that like your job is to lunch the houseplants categor live houseplants category on Amazon like what we did see how would you approach this,
is this at lunch or something and I remember just thinking like,
that's a tough one it's just kind of shocking anyway.
[27:30] I think that's where you go to selling seeds.
Scot & Andrea:
[27:33] Exactly exactly.
[27:37] A in it it occurs to me that like in addition that Consulting with brands on how to do a Amazon you could also do interview Consulting for a candidates have you helped anyone interview since you up.
Scot & Andrea:
[27:49] I'm in a little bit here and there I can do some projects on it and I had a Consulting project recently where there was a component of it where they were looking for some some guidance in their organizational structure,
and had it had a sort of resource this business and what skill sets and things like that are critical to a little bit but you know the core of it has been,
if people don't want people just tend to want to talk to me about her half and one piece EP 3 p and headed to go see it with Amazon Amino seem to be a bit,
the topics that are the biggest draw.
[28:28] I asked questions I always like to ask XM is zonians I've never work for Amazon but.
I have great admiration for the company in the caliber of former employees I've met all the reading I do it frankly comes off as a totally unappealing place to work.
[28:50] Talk to ex amazonians that sort of Concur and I talked to ones that wildly disagree and so I guess I'm just curious.
Scot & Andrea:
[28:57] Most of the ones that don't agree probably still work there no I thought it was an amazing,
inspiring place to work I mean I have.
I just had a really incredible experience there I feel really fortunate to have worked with the high-quality caliber of people that I was but I interacted with you know I wasn't working with more and more on Clans and other organizations and just realizing how remarkable that was,
I want a time I mean I feel like I had some pretty nice career trajectory there that you might not see it,
another types of organizations I mean I thought it was an amazing place I think you know when you think about like that,
I'm bossy Channel article of it was like,
it was right when I was leaving that that article was published about how terrible it is to work at the corporate headquarters and the people cry at their desks and you know that article everything except probably some of that I feel like some of the past employee like the people who'd been fired sort of testimonials sounded off like they didn't sound consistent with the company that I knew,
the rest of the day that was like pretty true I mean if I'm really hurt it's really hard hard to make history and you work you working with some of the smartest people,
I think around but the article was just really um.
And it will be amazing there any Amazon.
[30:28] Top 5 Business Schools all those people we have a choice we have to work there and they have lots of options there for a reason and it's because it's super inspiring and you can be Innovative and build your own business,
you should hire a nanny is taking a lot of responsibility,
I'm here if you have an idea and it's a good one and you can put together a good business case for it it still even though it's a big company now it's still the type of place where you can,
you can see that through and so I mean I think it's I think it's an incredible place or I didn't see it it's a it's a.
It's like running a marathon you know you can't do it has to look at has to stop at some point I think it's hard to it would be hard to work there your whole life.
There's no free snacks.
[31:19] Bananas free banana.
Scot & Andrea:
[31:20] There's no reason I give you the Sheep pens you know just don't know books are like that you know the $0.50 ones there's no there's no curse reality leadership principles you can use PowerPoint Jason I make a living on power,
Point sucks really dense white papers,
I think I think I got some of the best writing training.
Bear in just being a headache ran the most about and data into like the shortest way if you possible.
[31:58] Yeah so that brings up one of my biggest garage with X amazonians I'm I'm always super excited when I hired one because I'm thinking like I'm going to get these really insightful well-written long-form deliverables.
And then I keep getting these crappy power points from them.
Scot & Andrea:
[32:14] They're just so excited he's her.
[32:15] Exact exact.
Scot & Andrea:
[32:16] That's just for so many years and now all I can I cancel team does a star play for almost everything I'm one of those people I totally am.
[32:26] Yeah so that was a little bit disappointing for me I have to be honest.
You don't want of the categories that I am super interested in at the moment it's been a lot of time and is grocery in and you use us and gray.
Experience in the impression Amazon might my premise is in North America.
[32:48] Wholesale e-commerce like the battles basically already already been one right like you don't frequent frequent statement in my practices you're not going to Amazon Amazon and so you're looking for Winchester or you know.
Little place around the edges but like you nor anyone else is necessary going to just build.
400 million skier general merchandise catalog in and capture majority market share from Amazon but I do believe that grocery is a huge category potentially larger than general merchandise.
Did just now is coming into play for for digital Commerce City.
[33:30] We deliver that in so I do feel like it's a white space and I think we're seeing sort of Walmart Amazon and you know to a lesser extent the.
The pure plays in Kroger and stuff all all battling it out is that it are you following that category at all still in.
Scot & Andrea:
[33:48] Oh absolutely absolutely both Serta professionally and also personally my husband has a firm idea quickly build,
Play click and collect software so I follow it.
Religiously and he mentioned the consumables categories are there in Norma semi dwarf,
the other general merchandise categories but I think the beauty of them for e-commerce is that they uh they drive frequency in traffic,
and you know I think once,
once Amazon in one Southern retailers can I caught on to this they realized how important it is to make this work online because you know when you think about it like you only buy coffee maker like every couple of years I need a picture in TV is like those don't those types of products,
don't drive frequency and visit people like every week,
so you know these categories I mean this forever or the trip drivers and they called them truck drivers.
They got people in the store we sell them for their stuff I mean the same model those two Outta mind,
you got customers traffic through the consumable categories and then in a while they're there hopefully they buy other things.
[35:04] Yeah until 8 and I was here in Seattle so you get to see a lot of the first iteration of concepts of I assume you've walked by the ghost or if you haven't snuck in with an old age anything in.
[35:18] Don't get in trouble on the show don't get in trouble on the show.
Scot & Andrea:
[35:21] And we also because we can never even rolled out,
wake me to tell Gram here for a while where I think that was only in like two or three markets we're in this I think this is the precursor to Prime now where,
or they would deliver your stuff and like a bag on your porch with no over boxing or anything,
I mean I'm sure it was really expensive to get all the stuff that was pretty cool and you can sign up for like a tote day was like a regular schedule day so we get all kinds of Pilots here which is kind of funny to see experimentation with Amazon so yeah I've been by the ghost or I haven't gone in,
and I think it's really I think it's.
One of the more remarkable technology that Amazon has Philip Justin just walk out technology.
Scot & Andrea:
[36:14] Is she literally just walked out of the store was actually sounds kind of awful if I'm shopping with my kids but I'm sure Amazon for your at the above.
[36:23] As we pointed out early on when they want that concept that they're claiming it's his big new revolutionary thing and myself and one of my peers we're using that technology in high school so.
[36:34] Not sure it's quite as impressive if you got a chance to go by the the fresh pickup location yet.
Scot & Andrea:
[36:43] No I haven't but that's the second lunch of those in Seattle we had another pilot years ago to pick up points so CA,
I'm seeing the model and I know where the spot is in fact I was thinking maybe next week I don't think it's up and running yet but I was going to go do a drive by and just check it out to pick up stations in Seattle I mean like it it looks like I'm driving through it looks like a drive-in burger joint with like all the ankle parking,
pretty is pretty cool and then another just bring it all out and put it in your in your car but I mean this figuring out pickup,
I mean it's super expensive to ship dog food to customers dog food to Prime customer and you're totally upside down economics,
and you know in order to be competitive and figure out how to make money in the space you have to figure out how to get people to come to you and sell them a bunch of stuff at once.
[37:41] Yeah for sure and it I do think that's going to be the dominant model for grocery like I think you know it and you use only strings this with.
Fresh but like you know most of the Amazon Goods get delivered on a route and you can bundle a bunch of deliveries and I can be really efficient but when you deliver fresh in the person has to be home to receive it because they have to put it in the refrigerator,
settling you're not doing routes accepting in a few really high Denso occasions you're doing individual deliveries and that,
that's super expensive in for most of the country the economics just don't work and so it seems like saving all that shopping time and having that pick up.
I it was my. That's going to be the the mainstream digital grocery experience and I have literally nothing.
Thousands of consumer interviews where they just talk about it being life-changing when they start using that that feature from whomever they use it from.
Scot & Andrea:
which is really funny because like this isn't a new feature like I used to when I was a kid we used to call the grocery store and we tell him what we wanted and we drive by and pick it up there's not a new model,
scale is probably a new model I mean I just grew up in a small town but I think what's really interesting is the whole evolution of this thing like I remember going to trade shows and like 2006 going to like that candy and confectionery and.
And talking with Brands and saying, sell on Amazon and they were like that's crazy like why would you sell food on Amazon and then there was like they all signed up.
NN and now it's like a race It Was a Race for a long time you know who would get there first two and half capture all the market share who can work most strategically with Amazon and other in Walmart and can whomever else and then everyone knows everyone knows grocery had a great day,
now it's like it's kale and now he's calories are in a small anymore for these retailers and now they're just like a.
I'm probably suck and so how do you figure out how to make it work and that's I mean that's where I think a lot of experimentation comes into play through a lot of these players it was trying models to see what might work,
you know in Seattle we have fresh we have Prime now we have pickup points we have a,
Amazon go store anything for a different model for the Amazons experimenting with an S with Amazon and then you're seeing really the rise of cook and cut which I totally agree with you I think I can collect is the next,
that's the next thing because I'm already fatiguing I mean I've been shopping for my groceries online since you lunch freshman 2007 here and I'm sitting at the pricing you know it's just it's just cheaper like you just it is because the economics are different and they don't have to ship it to me and another driver.
[40:21] And I'm sure Amazon's figured out you know how to make all that stuff work,
and the reality is it's just worse than even the prime now and even instacart and I were to costco.com and safeway.com you like all the different models and even has to offer higher prices on some of it in store specials online and so I mean as a consumer and fatiguing,
of the pricing I'm Slicker she's just as much like and it's tempting to go back to the store and horrible so I see.
[40:53] Scot would be horrified if you did that.
Scot & Andrea:
[40:55] You're so right for the next model,
and I believe it's click and collect and I believe in you profitable and I believe whatever groceries get on board with this the fastest are the ones that are going to,
you know they really going to kill all the share.
[41:11] Yeah I think that Title Wave is is coming it's going to be fun to watch you're certainly right it's not a new model there used to be this thing in the world called the milkman.
Scot & Andrea:
[41:20] Totally we actually the mailbox I mean we know when delivered anything to it but it still existed in her house.
[41:27] Yeah absolutely so at the end of the day do you think there's a chance that someone other than Amazon wins that space so I could you foresee a Walmart or a Kroger someone else.
Scot & Andrea:
[41:40] Will depend on how fast we can both I mean that's really what it comes down to it's not a complicated model you ordered online you know you pick it out your stores and you know you let customers come pick it up we've got it here at Fred Meyer local in Seattle,
I'm so it's not I don't think it's a challenging model that I think a lot of these larger groceries or kind of,
I don't want to say freaking out but their head of flummoxed by the concept of like setting up a retailer website what does that mean how do you up so customers how you do it right how do you let Brandon getting on it because you're basically recreating like an Amazon,
.com grocery store online and let you know that feels really overwhelming,
and so I don't think they're moving real fast and I think it's just going to be like humuhumu fast but I do think it will be hard to compete with Amazon's Automation and personalization as it relates to marketing.
They're just they're just so good at it and so far you don't haven't seen any other retailers that have even touched it and that's either really where you get like that,
if you're able to drive customers to larger basket sizes online and help them discover products and be productive about like when they're about to run out of things and that kind of thing.
It's funny I said the big fan of this show Silicon Valley and that this is not a spoiler but in last week's episode they,
the two the characters went to the grocery store and they were the only non tasker's in the grocery store there's like 80 people in the grocery store.
[43:11] That is a great point like I the one you're at your hair percent right about the price fatigue the one loophole is it can be really cheap to deliver groceries to your home when you get a venture capitalist to pay the delivery fee.
Scot & Andrea:
[43:22] For Google.
[43:25] I feel like at the moment there's this the short window of opportunity I encourage everyone to use all that good Andreessen Horowitz money to deliver their groceries.
Scot & Andrea:
[43:37] I'm just change topics little bit so then your Consulting gig you can spend a lot of time with Brands you talked about the things they want to talk about which is crap and pricing going to go see a Ting one piece of p3p.
What are some of the pitfalls you see them falling into an ear do they they come to you and they say oh my gosh I've got,
does problem with her your what are some of the pitfalls that you wish things would have oil for they come to.
What are the three things like people they were staying for a bit but a consistent being that I'm seeing is that a lot of them in the CPC space are only thinking like one or two years ahead and it's kind of a reactive model,
a reaction way of thinking to Amazon's kind of,
anyways have a crap program but I think they're getting a little stricter about it and kind of the last one to two years and so a lot of his friends are going items crapped out,
they're trying to keep up with like how to,
how to leverage Amazon's new marketing platforms and they're just really focused on the here and now and not I don't think thinking too much about where's the where's this thing go into yours me Amazon's never going to make money shipping dog food and cat litter across the United States alike what is the future of this look like and I don't think a lot of them are spending.
Enough time thinking about that because this is when you want to plant your seeds for that so you know if it's the next big model is me nice I might.
My opinion is on Amazon they're really going to figure out the pantry program I mean the way to economically ship products to customers.
You know that that is secreted that is.
[45:07] Freshly unprofitable in a direct-to-customer at least should be model is to put in a box of the whole bunch of other stuff so it perfectly fits and charge the customer like a nominal fee that they're not going to really.
And I worry too much about and then ship them a whole bunch of stuff at once and that's basically what the pantry program is and that program seems to be doing pretty well for them.
Really fast cording to some of the brands that I work with that are participating in it so I mean I think you thinking about like where the future is and Pantry still kinda challenging it's hard to hear item set up an assault like an automated thing yet,
and so in thinking about like where where is the next gen of this thing going,
because I mean in the writing on the wall is it like Amazon is not going to keep seeing all these products to lose money in this in the consumable space or they're just going to get really refined assortment.
And so programs like Pantry Paramus Lake you know Prime now or the pickup points or whatever those are the Amazon ones but then like what we're talking about click and collect like.
I think that you know expanding their,
nearest Thinking Outside those kind of the current challenges you're having with your Amazon retail businesses is critical and the brands that are doing that are the ones they're going to be set up for Success because they planted seeds and cut it started that smell,
this is nursing one side so let's step outside consumables and take out a category that's like maybe more mature like up.
[46:39] Electronics repair or something the one that I keep hearing is when the Randall say when I think 5 or 10 years down the line.
Amazon tonight exclusive retailer and that scares me because it's a race to zero so that's why a lot of brands are on the doubt that's that's one of the reasons you did they have map pricing in controlling the 3p Marketplace,
do you think that's that you know you're obviously have drunk a little bit of Amazon Kool-Aid over the last 10 years but no.
Is that what we're going to be facing his is this kind of you know it brings have a logical argument to not be on Amazon because they're kind of feeding their own destruction.
But I don't think I mean it would be difficult to not be on the phone because of the opportunity that presents to Branzino just from League of Revenue prospective,
and sometimes from profit perspective too but I think it's I don't think it's a wise choice,
anti depends on a lot of factors but it's not a wise choice to like think of Amazon is your exclusive e-commerce player me the brands that I see that have healthier businesses.
With Amazon are ones that sell to multiple e-commerce players and are investing in other ones not investing like investors but you know investing time and energy into getting their business up and running and marketing and things like that on some of the other players and so that's where,
I think that some of your business model is feeling more Diversified but if you thinking that you're going to be exclusive on Amazon I mean they change the game there every 6 months,
and you know it only takes kind of like one change that's in congress with your business model to be out.
[48:17] And here maybe that's private label or meet you maybe they want your private label of your product or maybe they either come to you with terms like negotiation terms that are unacceptable to you or that you can't you can't actually if you can accommodate,
can I still run a business and if they're your only Taylor you're kind of in a really tough spot,
yeah I don't think they're setting up Amazon to be exclusive I think they see Amazon becoming a de-facto exclusive because when they look at the online players,
Amazon so much bigger than everyone else to.
That it's hard to build that diversity that you're talking about that that's not what they worry about that kind of say my brain is priced wrong is right now so maybe there is a strategy right now.
I don't help Amazon be the the 800-pound gorilla well and I think that's where it's important,
that's what's important to look on Amazon at some of your third party Partners I need your address with Amazon you've presumably all are presumably also selling to other people that are reselling on Amazon it is important to look at their ass and selling across multiple platforms,
and so you know they're giving you any not might be still small but they're giving you some distribution also they're also giving you an alternative if you don't want to sell directly to Amazon anymore but you still and have a presence there and have a good brand experience and help you have sales,
Anthem anything that's kind of like a another diversification strategy you look so,
so is private label it was kind of jump into that a little bit what are you tell Brands when they say hey I'm really concerned that you know Amazon just opened up a private label in my category.
[49:50] How do you explain that I mean I think they should be concerned but it's not.
Eminem retailer tender copying top selling products it's not too similar differences you know how they're able to manipulate the digital shelf to be able to savor products.
and you know we don't have any like confirmation that they're doing that but it sure seems like they are when you look at the site and I know you're searching for backpacks and you know the one that looks just like the other one,
private label comes up before it in the search results really totally it's something really scared about for sure but if you're also kind of going back to the concept of diversification if you've been,
If your business is so driven by one or two skews you know you're a right candidate for it for Amazon taking on serve a private label.
Copy had approached and so you know figure out how to grow other sections of your business so that you're not completely dependent on laptops Q,
because Amazon Michael private label it I think it's probably a good idea and it you know I've seen them give like favoring some of the marketing and and obviously all the marketing is free for them so there,
those are going to be really high origin ID on this but they look like they're just going after pretty much every category now which means I mean that makes sense for them to do.
[51:26] I think you may have inadvertently given this the secret sauce away earlier I just get into the live plants category.
Scot & Andrea:
[51:33] Really difficult for Amazon to copy must be because they kept asking it as an interview question and they never launched it so there you go.
[51:41] Exactly which is odd because I feel like that's one of the first categories than invented cologne.
Scot & Andrea:
[51:46] Actually I think that I actually might be irony I'm not sure.
[51:52] Yes Neil thank you for that.
[51:57] So I know you're going to be at IRC in a couple weeks and I understand it right that topic is tips for negotiating with Amazon can you totally ruin the irce panel.
Giving our listener some of the high-level pitfalls and tips.
Scot & Andrea:
[52:14] Yeah yeah.
Blue am so I mean the presentations really just going to talk about it I think it's another one of those areas where a little bit of Education will really help Brands be successful in their negotiations and the biggest.
And the bastard of a feeling or pitfalls that I saw when I was out in the sun because she with friends is just friends not preparing for the negotiation not coming with with data me with questions you know not being prepared,
I'm not really thinking through,
the Amazons perspective and being kind of blindsided by some of the ass and granite Amazon desert huge so it makes sense to be helpless by the numbers,
and so I will talk a little bit about that in the presentation will talk about how to prepare,
you know what information to request from Amazon if you have an opportunity to do so I mean I think,
an important thing is he knows the lot of times,
especially some of the mid-tier the smaller hands are not actually negotiate with a live person and so how do you navigate that right like you probably negotiate with a robot doesn't look like a robot in the email comes to you but looks like a.
Can a person that it's you know it's definitely an automated it's going automated process so we'll talk about how to.
How to prepare am had to actually execute and then you know what kind of go through some of the typical ass from Amazon and and talk about like when he's made me sense for you like.
[53:47] Who who who doesn't make sense for it to think about like the cross. Program or when would it make sense for you to invest in some of the,
the larger marketing programs or or Crap allow answer you know we'll kind of talk a little bit about that.
One of the things you introduce me to his this house get this wrong but like driving the car really fast with your.
Foot on the gas your hands off the wheel tell tell us more about that Provisions growing quickly and scaling and it's really critical more and more automated.
And so you know I'm seeing with my clients and also one of the forums like the Lincoln Group and things like that that a lot of brands are just really at the end.
At the receiving end of more automation than ever before and they're hearing from their buyers you know how critical it is that they continue automated and you know not Place manual.
Borders and let the system do its thing can have their hands off the wheel that's the hands off the wheel concept so you know and that's definitely you always been kind of a push it Amazon but I feel like it's getting,
my friends are seeing more of it and I'm in recent here.
An interest Amazon's interesting automation when you negotiate with the with that machine doesn't sound like Alexa.
I mean if you get on the phone you're talking to a real person.
[55:20] For now for now.
Scot & Andrea:
[55:21] I'm sorry Jason we're going to cut your crap allowance.
[55:26] Here's the tip you're not talking to a real person when it's Sign May Day that's always.
Scot & Andrea:
[55:31] Chicken area.
[55:34] Come on you guys don't get Amazon Fire jokes.
Scot & Andrea:
[55:36] No I guess I totally get it.
[55:40] Scot snoody the lack of systems we have to go somewhere for him although annoyingly Scott's car can drive really fast with a hands off the wheel which I'm a little jealous.
Scot & Andrea:
[55:51] Do you have a self-driving car have a tablet doesn't have that that future though I got I was too early in the doctor its equivalent of having an iPhone 1 right now.
[56:04] You can still drive really fast with your hands off the wheel once.
Scot & Andrea:
[56:07] Yeah just let me know.
[56:11] Exactly and any big mistakes you see people making in negotiations.
Scot & Andrea:
[56:18] Yeah I mean I think this one is just giving like a specially for the platform or have experience I have significant growth and so it's like one of the first time actually talking to someone like a live person they just give too much away in the first year,
that you know they don't hold back enough funding for themselves,
Cindy has Amazon ever use an annual negotiation process that you every year and they're going to want more and you know you don't want to give it all away,
in the in there for a couple years of Amazon you've got a kind of pre the reserves at or or just kind of the other it's just kind of,
signing up for the most you can possibly do for that year from a from a Amazon funding perspective and that doesn't give you any kind of slush fund for the stuff they're going to come to you with.
Fourth root beer like participation in certain marketing programs that you know they didn't know about the weekend because you know they're.
A plan a little bit more in a three to six months in advance or are you know price-matching error or some chargeback store.
I don't want to be in a position all year we're all of those little things are extraordinary painful cuz you already gave them like the most you could give them that you're so I always recommend a can of creating a reserved sign for yourself,
you know don't like some leftover money is there be no room in your budget to pay for some of the things throughout the year.
[57:43] That Prime days only two months away don't don't touch.
Scot & Andrea:
[57:49] So I never been a Brandon or works for me but I meant it would be really weird because there's probably this old school believing believe that you reformulation ships and I know I've been a bit more couple times and.
You just see the brand raps just kind of going through there and you know it's almost like the airports Gear Drive for them there's a whole infrastructure and there's this whole,
pilgrimage to Walmart meet that guy try to build a relationship drugs drinks the Dan Draper Martini lunch and all that stuff and then you probably do all that then you try to.
If I go try to beats when Amazon that I won't meet with you unless you're like.
Super Dee duper Top Gear brand so then now you're kind of talking to this AI machine and these brands that kind of holiday how they feel.
Yeah yeah especially some of the larger more established ones that are really accustomed to working with brick-and-mortar there they believe that they will be able to see crater 6s on Amazon to forming a relationship with their buyers,
and I will tell you like the last thing those buyers wanted to do it for him,
bladder relationships because it's extremely time-consuming it doesn't help them execute on their initiatives might get them like that anymore Co-op,
they can also get that by sending out like a hundred automated emails and so you know I still remember kind of,
the concept of like Thursday Amazon buying team they're in their jeans and occasionally flip flops,
I'm at the brand comes to visit and they're all wearing their suits and they want to do a line review and like that concept it's just totally lost.
[59:30] Play baby and they're not going to make it they're not going to make selection choices they're going to list everything on the side so it doesn't.
The best interest to learn a whole lot about the products and which ones are different from one another.
So yeah I mean I definitely see a lot of her and still trying to formulation ships but I'm also seeing a lot of emerges getting like Savvy about that,
he has already had a couple of turnovers and their Vendor Manager and they're realizing that like actually the best thing they can do is educate them so.
Phat Farm and how it works because of no sex that's really understand how the form works that I work with it and keep keep up with the changes to it I think it you know,
the Amazon I think just there was a Jeff quote once and he said we're not in the business of selling things were in the business of helping people buy things and they just,
Amazon believes they are a platform for selling things they don't believe they're retailer wish I think kind of speaks to you know why they don't think the relationship development super important.
That's an important Point Jason spends more time with the offline guys than I do but up but I'm always.
Stricken by there's the still believe there's still this belief and I'm a computer engineering guy but there's just believe that there's this Merchant King,
Merchant Prince water be called Jason and you know they can predict what people are going to do and they go and they buy that hot thing in the ghetto,
the create fashion themselves and that I'm console surprised how much that still exists and I think you know this this Amazon model of.
[1:01:02] Why should she choose like put everything up and let the customer he just seems so obvious to me.
But it really is so counter to hell all these other companies are built that that.
It's the step to get even closer to that existential dilemma than they are right now which is hard to believe but just console amazing to me in the retail world that that no one else really gets that.
Universal some elements of that and that's really like in my opinion when I was a fire that was like the most exciting thing about being a buyer what if you find the next big thing,
like what is it what if you're the one that brought it on the side and I'm ever going to trade shows in finding like weird and scary products reticulate like the Expos and,
Ambien like maybe this is like the new coconut water like we don't know what is going to be so I think there's still some elements of that but I mean definitely a lot less than than traditional retailers,
stop and come from a line review I guess.
[1:01:59] Well it has happened again we've used up our allotted hour Andrea thank you very much for us spending time in the educating all of us and especially for educating Scot.
Scot & Andrea:
[1:02:13] But thank you for having me on the show and it was really great to be here.
Yeah right I said at the top of you everytime I talk to you I learned a hundred things I think I have checks at least that many boxes that is good take me awhile to counter but we're in that that neighborhood,
it is reminder to listener see if you enjoyed Andrews view on Amazon brand strategy and then and other topics she's one of the speakers at internet retailer conference in exhibitions Amazon and me Workshop,
which is right around the corner it'll be June 6th in Chicago,
and Andrea is folks want to follow you your writing online you mentioned you got some articles coming out where's the best place that can find is that a Twitter handle or a,
that chatter where where do you hang out online I am mostly on LinkedIn so you can find me on LinkedIn and it's Andrea Leigh Leigh.
[1:03:05] Possible thanks again really appreciate it.
[1:03:07] Yeah and we'll make sure to get that in the show now so until next time happy commercing.
EP082 - Amazon Earnings, Walmart and Other News
Petsmart buys Chewy.com for $3.35M (largest e-commerce acquisition ever)
Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.
Episode 82 of the Jason & Scot show was recorded on Thursday April 6, 2017.
Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.
New beta feature - Amazon Automated Transcription of the show:
[0:25] Welcome to the Jason and Scott show this is episode 82 being recorded on Thursday April 6th 2017 I'm your host Jason "Retailgeek" Goldberg and as usual I'm here Scot Wingo.
[0:40] Hey Jason and hey Jason Scott show listeners Jason think it's been about 2 weeks since we set down to record a podcast and you've been.
I've been to Orlando and you've been to Paris New York in Las Vegas Indian nursing the retail visits you can report on or trade shows.
[0:59] Treasures of first I'd like to highlight I got to see both Eiffel towers and both empire state buildings so I feel like that I should get some sort of special badge on Swarm if nothing else for that.
[1:11] Appointment by Venice in between there.
[1:14] I avoided Menace in this particular Las Vegas trip I was over the end of the strip at Mandalay Bay.
[1:21] So that that was this weekend that was for oracles modern user experience conference so I got a chance to,
to do a keynote for their Commerce track there and that was fun I got to see a lot of colleagues and talk to some customers and see some of the new.
New Direction that the Oracle Commerce Tech is going in which is interesting.
[1:45] I think the week before that I was in Paris with and clients and we did some store visits.
Maybe not the kind of stores that most of the e-commerce folks are interested in we went to a bunch of unique specialty stores in Paris and so.
Drive for example El Royale which is like the the world's most famous Taxidermy store and got to check out some of the unique merchandising and unique Merchant.
Dice it was available we didn't mention shopping in the Paris Flea Market which is kind of a.
When the longer running flea markets are out there and some school stuff so that was fun but maybe not super e-commerce related.
[2:29] And then I did not see any new stores in New York although I feel like they're a few under construction that I'm I'm here to check out when they open.
[2:40] Abbott used cobbler in Orlando for something much more fun.
[2:46] Yeah this was a spring break and,
regular listeners will know I'm a big Star Wars fan so I drugged one of my children to a Star Wars celebration which is the 40th Year big anniversary did lucasfilm put on down in Orlando,
it's good to be with $70,000 Starburst answer there's a lot of Star Wars and going on I got my fill for the year.
[3:08] Nice and what percentage of the time when you say you were in costume.
[3:11] I am not a cosplayer but no fair large percent of people are so it's always fun to see all the different costumes things people get pretty into it as you can imagine.
[3:22] Oh yeah I'll bet it's annoying at the airport when everyone tries to go through security in the Stormtrooper outfits.
[3:28] The bestest one year they had they always do like a stormtrooper March and they had that someone was doing like a marathon and they cross each other it was really funny watching the runners like run by a big blind of Stormtroopers.
[3:44] Nice and the the daughter that went with you was she the winter or the loser in the Family Pool.
[3:50] Other she's young enough to believe she was the winner so it was it was good.
[3:54] I just wish she was the winner too but I think what we've been talking about all these trips as an Amazon been reporting earnings today.
[4:04] Yeah just came out tonight so this is hot off the presses so.
One pro tip for everyone to is 2 Pro tips every year a must-read for any retailer or person even.
Remotely near industry is the Jeff Bezos shareholder letter I don't want to spoil that at all but I will put a link to it in the show notes to go look at that,
the one of my favorite thing is to read as you go back to the 97 letter right one Amazon with public which they're celebrating 20 years of going public this year.
[4:38] I include this in every years letter so chances are you probably seen this before but it's another thing to go read and it's pretty amazing cuz in that letter.
Basically says we believe these three things aren't going to change control of low prices.
Fast free shipping in selection and that's were going to focus on for the future it's pretty amazing though.
[5:05] Italy nail all that 20 years later that that's a reading it it's almost as if it could be written today so I definitely meant that and then and this year shareholder letter.
Luther departure some advice for auctioneers and things that I found really just really.
Awesome so that's one pro tip partagas two and then the third would be when Amazon does there police they.
I was clueless quote and I was looking to that because that I think you a pretty clear signal what's really important to them.
Also there they have highlights there's 90 bullets these days cuz he does something effectively at least two Presley's a day at the space but that.
What is always interesting and I'll just give you a little bit of it.
R&D team is moving fast and delivering for customers and sellers the teams increase Prime selection by 70 / 75% since launching the program 9 months ago,
increase lung capacity resellers by 26% already just this year announced 18 original TV series in India and last week introduced a Fire TV stick.
I'm such a Jeff Bezos quote and then he finishes by saying Amazon. It's still day one for e-commerce today and I assure you they will keep investing in technology infrastructure,
set that's so you know that.
It's reassuring to me that they chose to really focus on India in the Presley's given all the exciting things that going on so that was interesting.
[6:34] Yeah and I India's a hot e-commerce Topic at the moment,
I think in the last night you know traditionally there been those kind to indigenous player Snapdeal and flip card and then of course the Amazon has been trying enter the market and even others have had some presents.
[6:54] That's I think and last month eBay which she had previously invested in Snapdeal.
Sold eBay. I am to Flipkart and made a big investment in Flipkart and I think the Google and maybe Alibaba had already invested in Flipkart so it,
it's really starting to feel like,
all the Indian players that aren't Amazon or trying to consolidate in the Flipkart and I think there's even rumors that foot card and snap the all-night emerge at some point in the idea being to create a super competitor to try to,
fight Amazon for the Indian market so that that really seems like the the epicenter of the e-commerce Battleground in the world right now.
[7:36] So the flip cart razor earlier in April was a 1.4 billion which is not chump change and then,
Amazon up to two billion dollars in India and I think he knows we're looking for fullment Center build-out.
You're probably already there so this feels like a.
Teenage commitment that this is a super important region to them that they want I want to win and to get enough tools reactionary to that.
That raise that just came out kind of given the timing and things that it's was hard to tell but they're really big on India which was is coming interesting thing from this earning release.
[8:12] Yep in a super high level that's.
White second most populous country in the world next to China they may be a little further along in education of the citizens and better internet access than China in so it's a huge e-commerce market and of course Amazon.
Like basically this point already lost China so it's the largest market in the world it's that sort of open to competition.
[8:38] Yeah I agree and I think Dave Dave yeah there's a lot of lessons to be learned from China of not going aggressive enough there and really kind of.
Getting in front of the the local competitor so that they seem to be all in on India so if we if we kind of pill the.
Onion on the quarter it it when you wake up measured against Wall Street expectations it's what you would call a beat and Rays quarter so exceeded expectations on the top and bottom line and then leave.
Forecast for 2 2 came out slightly ahead of Wall Street consensus so that's kind of where that raise and be kind of nerve being raised.
Language comes from that 35.7 billion and revenue for the quarter after hours the stock is a.
Pretty substantially if so about 5% which ramazan it is a very large cap stocks and that moved it from the effective Lee like.
910 bucks to 954 n last time on the show we talked about.
Jeff Bezos became number two richest person after a big move in this. If it gets around $1,000 by my napkin math that would put him over the top which is which is interesting it just,
another interesting data point is it looks like it if these numbers hold,
it looks like Amazon will have a market cap of about 450 billion and Google will be at 610 so there is this interesting talk about.
Facebook salsa in the conversation will one of these tech companies get to other be the first trillion dollar market cap stock so that's kind of where we are positioning Google's a fair amount ahead by 50% ahead.
[10:17] Abdul also announced of a pretty strong quarter what do you dig in.
[10:24] Every component of Amazon beat Wall Street expectations to the retail business which is their traditional.
Retail business which includes the marketplace this new line on them they just recently broke out called retail subs and we will dig into that Amazon web services which is cloud computing and then the other category Now isn't just the ad.
Business it did very well at all so it was kind of a little bit.
Yep not exceed expectations was International growth a lot of that was due to pre substantial currency.
Teachers going on and we take those out and look at a constant currency International itself did pretty well.
So with us International through 24% in his Baseline and I was like to remind listeners e-commerce is growing at 15%.
To hear you have the largest e-commerce player growing it out easily.
Not quite double at this point but you can certainly faster than the Baseline those they're taking sure I had a pretty tremendous clip so it's 9% higher and.
[11:24] Equate 20 x the 35 billion no that's like 4 billion that just got sucked out of the other pockets of anyone selling online just in one quarter is one way to think of.
So Sienna when is I used to like to look.
And I stress treats people that Amazon doesn't get really clear category data but they.
Always gave media an egm in EDM is electronics Jerome or should I stop doing that this year they provided a bunch of new disclosures annually and then,
going forward it looks like they've stopped with media and AGM set to a bit of a bummer before Shelly I know enough to back into that so I was like to do that because it actually makes the number speaker,
Amazon grew 24% looks like media grew at 7% media's books music video video games any digital books those kinds of things an egm is.
Inside your obvious Electronics but any general merchandise so Sporting Goods cpg all that stuff has lumped into that category and it grew 26% so getting.
Broccoli close to that 30% doubling of e-commerce unit growth was 24%.
[12:35] And what reason is the stock is up is why she was expecting a book 13 earnings per share and it came in at a buck 48 so literally 33%.
Beats by my math coupler components I like to look at Marketplace this is obviously a big thing I follow the number the.
[12:53] Amazon reports is the percent of units that come from third-party and then tipped a little bit it always been taking up literally.
Prime last 20 quarters I think and then I'll ask you for a last quarter it went from 50 to 49% units from third-party.
Wizard we never seen it take down this quarter stick back up to 50% so that was good to see imagine going forward that will see it take up,
car seems to be how it's going inside my bed is too you'll see 51 and then we get up kind of 253 ocean and q42,
just the first part of business really get on fire during that timeframe.
[13:35] We think we talk show if you tore Amazon deep dive there's this this kind of Amazons.
Total sales revenue of 35.7 billion actually mask quite a bit of what's going on in there and what you have to do is take out the Amazon web services and ads and you're left with 24 billion thank you to the first party business,
you would think well okay if 50% is units then it will be another 24 for third-party.
Actually it's a little bit more because average order value of third-party is substantially higher than first party and.
So when you kind of look at gmv versus units by Maya Matthew get about 36 billion for third-party when you had those up Amazon.
About twice as big as it seems to be 60 billion for this quarter so you know that that's kind of clothes going on a 250 billion dollar run rate for DMV across 1p and 2p with witches pretty interesting if they,
give him a solid Q4 you may start to that I don't think they could crush 304 the year but you will Q4 would be the first hundred billion dollar quarter I think they could do that this year pretty easily unless things really slow down.
[14:51] And but you definitely think of their annual DMV is bigger than than the 60 times for right cuz the Q4 would be so much bigger.
[14:57] Absolute other kind of 260 is coming out pencil and if you just kind of assumed the same mix as last year.
[15:11] Which is a pretty big retailer.
[15:13] Yes that's a very large retailer that's a global number I always get asked that AWS cloud computing grew 47%,
I was she was actually expecting a lot bigger so down there's a lot of pricing battles going on here between Google Microsoft and Amazon so that was good and margins held up nicely and that was one of the big treaters to.
Earnings beat people expecting the cloud computing margins to be under pressure the biggest surprise in the quarter is.
Amazon in their annual report started to break out the revenue from Prime,
no some other stuff in there so it's a bit of a noisy number but essentially you can kind of make some assumptions and get close to a nun Amazon prime number so the big surprise they call that retail subscription.
And I did that run you jumped 52% year over year,
now what's interesting is about a year ago is when they introduce the ability to buy Prime on a monthly basis and then a little bit later they broke out the video so you can just do a video subscription,
So currently with this report.
Just yesterday consumer intelligence which is the surveying company and you and I are a little skeptical on surveys I think this is directionally interesting they estimated there's no 80 million Prime users and that that number,
is up to ex from 2 years ago which would imply 2015 was 40 million and a lot of washing hands when they pick the.
Pick through this retail subscription or they get to about the same numbers and it's about 60% us 40% International so that would imply about 45 million homes in the US which is.
[16:52] Pretty darn impressive other things that this report highlighted was that they sales that they.
Amazon gets from a non Prime user is about $700 a year and Prime user spend about twice that it 14 or 1300 year also interesting Lee the survey picked up that now about 25% of users.
I use that new monthly program which is 1099 and I think most of those we knew because if you were in the annual you probably wouldn't downgrade to the monthly useful to Auto renew setting Prime by the fire is.
Prime has surged by.
Coming out this monthly program generating at least half of that 55% growth I imagine his come from you folks that are joining the program and gets washed you excited is there was some concern that.
The way the Census Bureau breaks up.
Household incomes you're the stop here that's over a hundred and twenty K and it would have felt like that was it like 80 or 90% saturation so I think what gets people excited is this 1099 monthly plans seems to,
pulling people down kind of more towards that Walmart consumer which I think is more of a 67 TK kind of household income so that was pretty interesting.
[18:04] Yeah it's it's fascinating the.
I think I was another report earlier in the month that was kind of interesting that was looking at the habits of Prime members and I think there been this assumption,
the Prime members were super loyal in the ones you got locked into that $99 that you wanted to get as much value from it as you could so you.
Aggregated all your shopping on on Amazon and what this study showed was.
They know that Prime customers are more voracious e-commerce Shoppers overall and that well they have a much bigger spin on on Amazon the nun Prime members.
They still use multiple other retailers and spend more money over all men so I don't know if that's how accurate that is again like.
You know somebody surveys are not very big numbers of consumers that they're making big inferences from.
But if that's true that's pretty interesting cuz I feel like a lot of people have felt like the prime is a true walking program.
[19:09] You'll just have to take my word for it or read the show notes yeah the.
So Scott like one of the things whenever we talk about Amazon picture go to a retailer they like you see their eyes roll in the back of their head and they go yeah yeah yeah but you know Amazon doesn't have to be profitable so it's not fair for us to compete with them because we do.
[19:34] You and I both work hard to dispel this one so so just kind of put it to bed that's truly faults to Amazon's been profitable,
as an entity for the last quarter so that's two years and that you would for Amazon is a preconcerted number,
kick some ass kind of conservative accounting treatment that you look at and actually at Amazon if if you start 3D space your letters we don't have time to go into it that's right and what they really look at is free cash flow generated by the business.
So another thing that they break apart is this is kind of unique it's their own measure.
[20:12] Tom is call CSI and its operating income for a business you could essentially so.
So it's call Consolidated segment operating income and she's actually where they say it looked the retail business did this and the non-retail visited that so it's wait for them to come out with a little.
Give you some idea of what component is your profit so.
You're a lot of folks say well okay yeah sure their probable but it must be Amazon web services this doing it all eight eight of us is quite probable.
But the North America retail businesses profitable to it.
The generated 1.84 billion in cash this quarter just can't put a number on it now the one thing you can't peel apart from there as the marketplace so you could argue with the marketplaces hearing all that profit I would probably actually,
but I don't think it's.
[21:04] You can't unfollow the marketplace in retail at this point just say well what's the 1p business making but you know that already we get it its profit the retail part of Amazon's business is Prague.
[21:17] Cloud computing possible and you get free cash flow.
On a trailing 12-month basis which is what they like to look at they generated 10 billion dollars in free cash flow so so I think these numbers are at a scale that.
It's hard Reef you that Amazon's prov1 and doing quite well on the bottom line.
[21:37] Yeah which is crazy of one of the things on the earnings that is that they're there shipping cost went up by a billion dollars so they spent 4.7 billion Justin shipping and to think like.
There their profitable and potentially getting more profitable with that come investment is amazing.
[21:56] Yeah and then um.
Returning service internet number and with that number you saw is like just the cause it doesn't have the offsetting revenue from Prime that goes against.
Set an and fees from sellers actually knocked down by about how this is the actual true net cost.
[22:17] Interesting okay the other thing I heard a lot of a sort of squawking about it.
How well a wso doing versus its competitors so obviously it is the 800-pound gorilla in cloud and certainly.
Oracle and Google and Microsoft have an IBM of really.
Shirt of targeted they're much smaller but at the moment they're growing faster than AWS is because there's so much smaller and I I know.
Earlier in the month the Oracle team was like kind of taking some shots at 8 of us and talking about how much it was.
It was its growth was slowing down.
And I wire you know they thought that they had a better cheaper solution than Amazon and then that I noticed the Amazon sort of took the bait and refuted a lot of that in the.
This weekend I think I saw the president of AWS coming out with some quotes talking about how.
The the old Oracle model of walking you in the mediocre Services doesn't work anymore and that you talking about enough.
An unhappy a lot of Oracle customers probably where that they were locked into this database for all this sort of time.
So I always have a good trash talk but it is interesting it does feel like.
[23:42] Not only is Amazon winning at 8 of us but they're starting to add more Enterprise type software and kind of higher higher level software to the stack that feels like it's.
It's more writing oracles kitchen so let you know they have a very credible database offering news that could help you avoid you having to pay Oracle for a database for example.
[24:01] Yeah one of the things that makes a whole apples and oranges is I know Microsoft.
They switched everyone in office over to that Office 365 and they count that is cloud Revenue so it's kind of a little apples oranges where Amazon's cloud is really.
The pieces of.
Buy at the Lego blocks of cloud in other people putting applications in the bucket so either way so just put a number on it came in 6 billion I'm 16 billion,
in a world of software that is a big business and as we mentioned his growing in north of 40% which is not too shabby and it has.
[24:45] Amazing margins which is nice.
[24:48] Yeah it's a it's a certainly impressive to have these two huge huge growth engines in one company makes you wonder what which which one of those the investors are investing in.
[25:04] People ask me if I think they'll split it out in and I really don't because eight of us is the operating system Amazon runs on and a lot of.
Cool new features they're coming out with have been.
Computer Bates internally through it for for Amazon's retail business and they would have come up with those ideas if there were two separate companies so I actually am concerned on that part I think they love having other because,
the surgery would not having separate.
Other big Amazon used iPad I'd ask you about is the echo look so I want to just grab that for folks that may have missed announced it and I'm curious to hear your thoughts on them.
[25:45] Yeah yeah today announced a new piece of Hardware today which is called the echo book and then start the next Generation Echo it's it's $200 that has all the features of the traditional Echo but it also has a camera in it,
inside the the use case that they're touting is that you would put this in your closet or in your bedroom or wherever you get dressed and in addition all the traditional Echo features,
you can instructed to take a picture or a video of you and so what this would let you do as I get dressed in the morning try on an outfit.
I have Echo take a picture of you and then you can leverage this other service that Amazon launched about a month ago that I think we briefly talked about on the show called style check which is.
Where you upload a picture to Amazon and a human stylus that works for Amazon looks it.
That picture and give you advice about like give you sent pictures of two outfits will tell you which outfit they think looks better though give you fashion advice like human curated fashion advice and so you know now it seems like,
they're making it much easier to use this style check by by putting this camera in your in your closet or in your bedroom.
I personally think this is a super interesting Trojan Horse so.
[27:07] The more information you have about consumers fashion habits and what they actually use versus Buy,
the better recommendations you can make for a close in the better close you can actually design for those customers you know fashion is such a trend based business and so many apparel companies have lived or died by missing trends.
If you're a fashion company which Amazon aspires to be and you have a camera in the closet of potentially millions of consumers.
[27:39] You're guaranteed to be the the most on Trend you're guaranteed to spot the changes and behaviors and more exciting.
You're not getting the stated behaviour you're not getting these like.
Like a sort of artificial new trends that that the designers make when they when they go to Fashion Week every year,
you're you're seeing the actual clothes that consumers where and that's a big deal because a lot of consumers buy clothes put in their closet and never where I'm so knowing what the real preferences are.
A potentially give you a huge leg up in selling and designing fashion and frankly it also potentially has some really utility for consumers to help steer them two words.
The gaps in their wardrobe or the things that they gravitate to and you know maybe I buy a lot of colorful shirts that I never wear them in and so you know Amazon could potentially.
Remind me of the shirts that I'm more likely to really wear for example so it's it's potentially very interesting and it potentially is a super valuable new data source for Amazon if they get a lot of people that use this.
[28:44] Yes reaction to it is really fascinating because every dude I know.
Doesn't get it off then like I thought it was April Fool joke this is crazy why would a man uses every woman.
Pirate in women I chatted with about it they're like that's pretty out that work what kind of recommendations would they make you know that's handy I don't have a full length mirror.
The factor could do a video of you turning around and see that outfit kind of a let you know the 360 view of Elf it kind of reminds me,
when I watch the little promotional video reminds me the magic mirrors you talk a lot about you know where you know they're more touch screens and things with the gym I do the magic mirror is to.
[29:29] You see how an outfit looks and then say Oh I drive another top and then your interactive leave by that actually even better in some ways cuz you get the stylus component and the Machine.
[29:40] Absolutely in the magic mirror like that's a really expensive technology and you put it in this dressing room in in a fashion apparel store and it's.
It's a real challenge because.
You know of a hundred people that walk in that store only 25 of them are going to walk in the dressing room and only five of those are going to actually use the magic mirror so you bought this really expensive piece of Capital Equipment that only touches a small percentage of the consumers in your store whereas,
this Amazon solution is 200 bucks in it potentially touches that customer 365 times a year so.
Like I think it's it's a similar use case but dramatically more valuable than the in-store stuff that you see people experimenting with.
It's funny you mention that the gender divide like you know certainly when you see this you think about things like Stitch fix which is largely focused on women and and you know,
that they've always doubted that they have this Advantage from seeing all these women's preferences and their reaction to the outfits that the stylist curate in that they use that data to design their new clothes,
well like this is sort of that model on steroids so you know you could have Amazon collecting much more data,
I was a much better bigger data science team leveraging that day though so that's super interesting.
An agenda divider was funny I think I had a debate on Twitter with our mutual friend David and he was taking the under on this he's not super excited but you heard it here first I've already you know.
[31:15] Put in my request to be.
To be able to buy one and you know if I do buy one will see if a year from now if if I'm more fashionable than David cuz right now I feel like he has a pretty commanding lead over me.
[31:28] Is going to race to the bottom there I don't know.
[31:31] Yeah it's it's important if it's a reasonable goal post.
[31:36] When I when I first saw just the device and before I saw the video I thought wow that could be really dope.
[31:44] I thought it'd be more like a Dropcam competitor are they called the nest camera now because,
are the nest cameras nice and I used one but then the thing it's a consoling you learning it I like,
some ocean looking like a tree wiggle and is totally useless to the image recognition and the Machine morning on its not very good so when I saw it I thought it came with a voice interface and the motion-capture to be really amazing so I actually have multiple uses for the thing because having it is kind of a monitoring camera,
it's also like an actual to me.
[32:18] Yeah and another use case we've heard a lot of talk and chatter about is a.
Speaker phone or video conferencing phone so you know this this Hardware you could certainly do either those purposes so you can imagine.
You get that same Hardware can be used for a bunch of different uses use cases and they could just add new skills and add new features,
to Hardware all the time as as they already do when the echo one thing it was interesting to me about the hardware.
And they say has the same feature set as the echo,
you know our listeners will remember there's at least there's there's more than two but there to sort of ac-powered Echoes there's the Echo and the echo dot in the big difference between those two is the,
the high-fidelity speaker in the Echo and I think the echo was a hundred and eighty bucks when it first launched as that.
Am I am I remembering right now.
[33:12] It's still one of the other goes 199 and bumped.
[33:15] Solange the 200 is done a 180 so this device if it has the same audio in it that the echo has in it then they squeeze the camera in there are basically the same price.
So I'll be curious if they.
If they did any concert options to the audio to help before the camera or or how that all that all worked out what is of Interest.
[33:39] Did you see they did a over the air update for Taps and now you don't have to,
press the button for to work so they will somehow saw the battery problem that originally,
originally the use case was you'd hold down this button and you had to do that because it was battery operated and because it's listening to the lot of battery that that's kind of what that would do this,
weaker so they run out an update to that to be a basic enhance that device so that that's no longer necessary about that was pretty nursing at its Eli news about that.
[34:13] No I didn't hear a lot about it and what was passing it means there's a.
That is played out in the phone world right and in so they're there are on it it does take a lot of battery to listen all the time and so for example that the Apple iPhone you can activate Siri without pushing a button that only when you're plugged into AC.
[34:34] So like when you're in your doc at night for example there are some Android phones that listen all the time and take up very little battery but the way they do that is they actually have a dedicated ship that's a.
In a single purpose chip is designed to be very little power and listen for that activation work and so you go I thought makes perfect sense that they could build a new that I can.
[34:59] Can listen all the time because I had a new chip in it but the fact that they were able to add that feature just in software is pretty interesting.
[35:08] Exactly and then the other thing and that you know haven't talked about how long they been working on this or any of those things but the one thing that done on me.
Almost every apparel manufacturer I've ever worked with we've talked about closet closet analytics and we talked about the benefits of putting a camera in the closet and understanding more about half consumers are using the product in you talk to him about.
Like having those devices for focus groups and test markets and panels and things are making it,
a widely available consumer product and I probably didn't talking about that idea with a pro manufacturers for 3 or 4 years and it's,
it's frankly probably on a lot of the pro manufacturers road maps but I'm guessing that the Amazon decided this was a good idea.
In a much shorter cycle and while everyone else just talked about it and kind of put it on the back burner,
these guys very quickly just did it and they're putting it out in the market and you know maybe it'll be successful and it'll be a big story we're talking about any year maybe it won't be so it'll be the next fire phone and David will be right and now they'll quickly learn from it and.
Did it before they wasted too much money.
A sport that's kind of the theme of Jeff Bezos shareholder letter but I do think the fact that they just put something out like this when so many other people have thought about it and talked about and not taking action is,
one of the you need to find any characteristics of Amazon to me.
[36:33] No use case I wanted to ask you out cuz I don't know a lot about it is fitment because it seems like if you've got a camera there you should be able to do some body measurements and say to someone,
you know since imagine this thing's been watching you try on 10 outfits and then now you say hey order me a small t-shirt that says,
hey you know just so you're aware I check the measurements and I don't think this is going to fit you don't you think that they could get smart enough to do measurements.
[36:59] Absolutely interpointe like that apparel returns are very high and returns are super expensive returns are super expensive even for Amazon so anything you can do to,
reduce returns by getting that are fitment is is hugely valuable there a couple of vendors out there the try to do fitment with a 2d camera and you know that they can do it but I expect that it's.
Pretty and perfect there's really interesting fitment you can do with a 3D cameras and,
from and we don't know yet what's really in this this new Echo device but it sounds like it's halfway between a 2D and 3D camera so what it sounds like is it only has a single in single camera but then it has a separate infrared.
Rangefinder so that it can measure the distance you are from the camera and that that allows it to get more accurate sizing information about you.
[37:58] I'm so potentially it it it absolutely could have a use case in fitment.
[38:02] Yes winterson to see what direction to take this thing.
[38:05] Yep again you know that was a super interesting product.
You know I don't think much of people are using it as a high-volume e-commerce ordering machine and so you don't have anything you don't look at that and say hey is,
are these kind of cancer my tracks going to be a third a third big business for Amazon in the long run but when they start moving those those things from your kitchen,
to your closet that they may have found some real use cases where where this kind of artificial intelligence can really even potentially Drive.
Actual e-commerce revenue for Amazon then I think a couple other little news things in the Amazon world.
I was actually just sit in a bee last this week in Las Vegas and Amazon had a huge booth at NAB.
And the enemy is the National Association of broadcasters so big video production show all the news guys and it reminded me that Amazon had bought this video Processing Company called Elemental in Portland Oregon.
I'm inside the booth at NAB is a Elemental AWS and they essentially have him put this this Elemental service on AWS and I sell at the broadcasters to to storm process all their video.
And so to me that was just another interesting example of kind of you know Amazon AWS moving from Pure infrastructure to applications or services.
[39:39] They also released the The Lex api's this month which are like all the underlying speech and natural language processing.
Libraries from the echo or from Alexa you can now use in an Amazon in your own applications.
[40:00] And that directly has been competing with like IBM bluemix with the Watson api's and M2 new api's that Google has as well so that was super fascinating.
I think we saw this new subscription service from Amazon probably confused most of us subscribe with Amazon it's the.
[40:24] Did you read about that at all.
[40:25] Yeah I was I thought it was going to be famous on has subscribe and save wear for loosely,
symbols you can buy A110 or need shower you could subscribe and get it coming on a regular basis parties of wanted to be involved in that for a long time so,
you say I'm I don't know I'm a,
biscuits I want a third-party way of doing that that's not available so I thought that's what it would be but it ended up being really more of an app store kind of things so the bility to manage subscription apps to come like Dropbox or Evernote things that nature so it was underwhelming It's All Digital subscriptions not physical and they're opening up.
[41:09] Accident that's that's potentially a competitor to PayPal I'm in part of.
The pay with Amazon Echo System because it turns out one of The Unsung used cases of PayPal is that in our new digital lives we all have these,
these digital subscriptions and recurring costs and you know there's a fair amount of what we call breakage in their search subscriptions we subscribe to something forget you subscribe to it and they just keep charging your credit card.
On end when consumers to discover that that's super annoying and that you know that they want to save money and be able to manage what they're paying for so what a lot of people do as they use PayPal for all those,
does recurring costs so they can go to One dashboard and PayPal and see all the services that they permission for recurring charges,
which is something PayPal let you do credit cards don't let you do and then from PayPal you can turn on or off those various subscriptions and so that this this new service from Amazon feels like,
a direct competitor with with that PayPal service it feels like it's sort of a centralized portal,
for managing all your returning digital subscriptions will hate that's why you have me man.
[42:26] I think it was also a new Amazon patent which is pretty interesting and particularly in light of The Deco style we're talking about earlier,
are the echo look we're talking about earlier rather they have a new patent on for on demand apparel Manufacturing and.
You know that's a technology that the apparel manufacturers are all super interested in Adidas has some pop-up stores where they make your sweater in the store there's a,
a store in Boston called Supply Depot that make the light high-performance will Blazers on the man in the store with ease.
Today on demand weaving machines and now you know it looks like Amazon is investing some IP in being a leader in that space as well so it just seems like.
Another Vector where Amazon is very clearly investing in fashion before the private labels in the Echo look in the photo studios that they've been building and and Union hours to see some interesting patterns in the space as well.
[43:30] The song Come Along the seam I saw that there's rumors that they're going to be coming out with an office competitor so, hosted,
young sweet, thing I don't have any idea if that's real or not but sorry about that thinking that was pretty nice it would sit on top of AWS,
it's interesting in that. Could you maybe I could so down that.
Microsoft cloud growth in your Google's invested really heavily in their their G Suites so maybe it's a meter guy shoot a shot at the by there and then the last piece of Amazon news that is interesting is.
Channel measures had an office in Australia for a really long time very active e-commerce Market there there's really no competitor to eBay so you Bay pops up in in Australia they do really well there,
and I just rumors that Amazon is going to be there for 3 years,
and it looks like it's official there was a newspaper interview with an Amazon head of Australia and he said yeah we're going to become,
coming out in the summer so that's exciting for the people down under that they're looking to get involved in the Amazon ecosystem imagine they'll be a third-party offering and that kind of thing so competitive waves going to hit their pretty hard.
[44:45] Yeah it happens that may be a great opportunity for the channel advisor to host a Jason and Scott show in Australia.
[44:54] Yet you say that I've been there and that flight is really really really long so I'm not any love to fly but that wouldn't break you I don't know if it's like a 24-hour flight it's it's brutal.
[45:05] At those lights are the only reason I ever get to the bottom of my inbox.
[45:09] Yeah it's different in boxing her flight and then if you've watched every movie you haven't seen in the last 3 years and then you walked up and down the aisle 80 times and you're looking you're still got another 10 hours.
[45:20] Yeah usually causes Strife with my wife as well because it's all and never to be forced to watch some movies that we had intended to watch together.
[45:39] So some other exciting news and e-commerce outside of the Amazon Echo System there was an enormous acquisition this month than I think in fact is the largest acquisition ever in the e-commerce space.
[45:54] You can have in the theme of jet Walmart and where.
[45:58] Where the incumbents are saying hey we got to acquire something was really going to get dramatic change in the pet category PetSmart acquired chewy.com,
that's not shoebacca it's more a chewy for 3.35 billion dollars making it the largest e-commerce acquisition today,
interesting there is a lot of these e-commerce Acquisitions of gone for kind of 1 x Revenue so the rumors are that she was closing in on a billion-dollar and rate it so this would put it in over three,
Exxon Road him so this is a really good outcome for the industry to have,
AOA really quality exit equality buyer and hopefully denigration will work in and this could I'm not familiar with the know what's going on with the pet guys as far as their e-commerce things but it is friends easily zombie Channel guys have been struggling so for this whole your help,
the accelerator e-commerce efforts as well.
[46:57] Yeah and you know that we've talked on the show before about this this theoretical Tipping Point in every category where when you get to about,
20% of category sales being on e-commerce that it becomes hugely disruptive to the the Legacy businesses and I haven't seen recent data on the pet category but I have a suspicion that might be one of those categories that the,
you know has recently crossed over that 20% threshold in so that,
you know that may have made it more of an imperative for one of the big brick-and-mortar players touch to invest in a solid e-commerce offering you know even fact.
That that category is really getting disrupted by e-commerce.
[47:40] How about them so we talked a lot about Walmart on the last show they have gone on a kind of acquisition spree any other Walmart news you want you've noticed.
[47:51] Yeah so I think the Acquisitions have continued or at least potentially are continuing the they purchased at URL they purchase shoes.com,
and I don't as I sit here I don't remember what the price was I think it was a couple million bucks was it three million bucks so that.
[48:10] I will put it in the show notes I apologize for,
for not having on the top of my head but that was a pure URL that they purchased and you know one of the first Acquisitions they made in Marco where is here it was this shoe company shoe by and so they they bought shoes.com and they redirect it all the traffic to shoot by,
so you know that that was the only true acquisition we've seen,
other than we did read on recode a rumor that they are looking at both of us as well and so that that would be a super interesting acquisition of that proves to be true.
[48:48] Yeah be a great brand kind of have an exclusive on and so a lot of interesting things there we have the side benefit of housing Nordstrom doesn't Nordstrom carry bonobos.
[48:59] They do I think it could be one of those good news-bad news things for Nordstrom I believe Nordstrom is a significant investor in bonobos.
[49:07] So if the valuation was good you know nor some can make some cash out that acquisition on the one hand and potentially lose the product line on the other hand but not necessarily right like.
I don't know what Walmart with Julie about going to go see if they would let Nordstrom keep keep selling it or not yeah.
Into speaking Walmart or a couple other interesting things going on at Walmart.
Walmart launched this new innovation incubator that they call story which was kind of the original test or for Walmart that Sam Walton ran,
what store number 8 in San in San Bruno they're open this new lab and they've called it story.
And the big news was that they got a Jenny Flies who was the founder of Rent the Runway to be the 1st.
New startup in the incubator and it sounds like she's developing some New Concept around personalized shopping and doing it for Walmart.
[50:10] And then that's what it is it's a Super C.
[50:14] Only the very kind of something focused on personalized shopping in announced a ton of detail about exactly how the incubator will work so is,
is it an incubator that Walmart is investing in and they own a piece of the startups and the startups aren't.
Exclusive Walmart so it was Walmart just investing in this and,
James lunch and company that might not sell through Walmart or is it Building Technology exclusively for Walmart unite I don't think we got we have that level of detail but I will say.
It's just kind of an interesting diversion at the moment you see Walmart investing in new innovation capabilities and doing things like,
like the store and you know frankly getting a big-name entrepreneur like Jenny involved I'm is all pretty credible and at the same time,
you know we're reading about a lot of other retailers and most notably Target like walking away from a lot of their Innovation investments in a day,
they have these Concepts stores that they cancelled they had this project goldfish that we were super excited to figure out what that was and that you know they cancelled that and let the.
The The Innovation fellow that the that was involved in that project leave and then I think this week we read that,
OKC car all who was their Chief Innovation officer is leaving,
so you know on the one hand you have had some retailers that are struggling and look like they're really you're tailing their Investments and Innovation and on the other hand it seems like Walmart's really Double Down.
[51:42] Other interesting Walmart stories was just had Mark Lori written all over it that if you for select items if you.
Order them online and have them delivered to the store for pickup you actually say if you know somewhere between 5 and $20 so that makes a ton of sense as it's cheaper for them they save on the shipping cost so they should pass that on to the consumer that was one of the Hallmarks of the jet system sale,
that'll be interesting doing that's a little weird about it is if the.
Is the imagery you're buying online is also in the store then you don't get a disc if it's already in the store that you don't get a discount so that they just feel weird.
Is consumer to kind of be like well why are you just coming the stuff that's not in the store at United just to see how it plays out.
We'll see how that goes.
[52:31] Yeah I am in very mixed emotions about that offering which I'll get to in a minute but I was also just sort of interested in the industry reaction to this announcement so it was sort of very binary I saw a bunch of Articles from people that are like man this is super smart and Walmart celebrity you know they're there advantages to try to compete with Amazon and and Mark Glory super smart and this is a good aggressive move and then I saw a bunch of other articles that are like,
you know this this is rearranging chairs on the deck of the Titanic and you know this is a silly thing that isn't going to move the needle,
and you don't why it why are they doing things like this when they need to reinvent the customer experience to compete with Amazon did you,
do you like you come down on one side of that other.
[53:19] I can come back to the user experience in just kind of you know how do you explain to people that you're going to save money on this thing cuz it's not in the store but this one it's in the store you're not going to see me on I'm really curious to see how they figure it out.
[53:34] Is it from consumer protective it's not too.
[53:36] That's exactly my problem right like you're balancing two things customers want to save money for sure and you want to,
it if there are efficiencies in encouraging the customer to one Behavior versus another you you certainly want to encourage them to the more efficient behavior and pass the savings onto that customer right like so I certainly agree with that sentiment and I think that's the,
the underlying principle behind jet and I agree with the sentiment on jet as well but the,
the user experience that gets manifested as a result of this is.
Complicated and I think another big Trend in adoption is consumers are looking for simpler lower friction interfaces,
and you know a bunch of the most successful products on the market right now we're out our successful.
Largely just because they were a better simpler interface for a service that consumers were already used to so it like I would argue that,
you know Hoover's Prime right now he probably the taxi was it's a better user experience for the same same sort of service in lower friction and Shear point.
When in every product you put in your shopping cart has a different value prop and a different in a preferred delivery mechanism based on the cost to Walmart and whether or not it happens to be on the Shelf in which,
which up for filming Center in happens to be in an all those sorts of things like I think exposing all that complication to The Shopper is potentially problematic and I would argue it was problematic on jet as well and so.
[55:09] You know the magic question is.
Is there a way to to greatly simplify that not expose all that complication and supply chain ugliness to The Shopper but still like in Courage The Shopper to do what's in the best interest and save money.
[55:28] And so I guess time time will tell on that one I think that they had exactly I sent them it but I think there's enough potential to improve the user experience to do it.
[55:42] Good deal and Scott with that it is happen again we've we've wasted a perfectly good hour of our listeners time,
so I want to thank everyone for tuning in it's been great to catch up with you after a couple weeks and I'll remind everyone to.
Subscribe and write a review on iTunes.
[56:04] Yep that's one person that's all the news we have this week.
[56:07] Until next time happy commercing.
EP081 - Retail veteran, and O Alliance Founder Andrea Weiss
Andrea Weiss has a storied career that has included operating stints at Disney, Ann Taylor, Guess, L brands, and Delia’s. She’s served on many boards including GSI Commerce, and Pep Boys and is currently on the board of Cracker Barrel, Nutrisystem and Chico’s. She also started The O Alliance and sits on the SAP NA advisory board.
We spoke with Andrea a variety of topics, including Cracker Barrel secret biscuit recipe, the current retail climate, retail concession model, and Amazon.
Episode 81 of the Jason & Scot show was recorded live from Shoptalk in Las Vegas on Tuesday March 21st.
Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at Razorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.
EP080 - Accel Partners Brian O’Malley
Brian O'Malley, is a partner at Accel Partners. Accel is one of the top tier Venture Capital firms with offices in the Bay Area, London and Banglore. Some of the companies they have backed include Facebook, Dropbox, Jet.com, slack, flipkart and Spotify. Brian has been at Accel for over 3 years and focuses on marketplaces and next-generation consumer-oriented companies. He has led investments in Dollar Shave Club, Hotel Tonight, Bazaarvoice, and Skullcandy.
We spoke with Brian about his background, his portfolio at Accel, how Brian looks at the commerce landscape from a VC perspective, the current climate for commerce investments, and the technologies that have him excited.
Episode 80 of the Jason & Scot show was recorded live from Shoptalk in Las Vegas on Tuesday March 21st.
EP079 - Modcloth CEO, Matt Kaness
Matt Kaness is the CEO of Modcloth a digitally native vertically integrated apparel brand, that was recently acquired by Walmart. Our conversation covers Matt's background, the Modcloth business, their brick and mortar FitShop concept, the future of commerce, and the Walmart acquisition.
Episode 79 of the Jason & Scot show was recorded live from Shoptalk in Las Vegas on Tuesday March 21st.
Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.
EP078 - Amazon News
In Episode 78, we catch up on a lot of the new Amazon news including:
Episode 79 of the Jason & Scot show was recorded on Thursday April 6, 2017.
New beta feature - Amazon Automated Transcription of the show:
[0:25] Welcome to the Jason and Scot show this is episode 78 being recorded on Thursday April 6th 2017 I'm your host Jason retailgeek Goldberg and as usual I'm here with your Scot Wingo.
[0:40] Hey Jason and hey Jason Scot show listeners Jason was looking at our logs out on iTunes and we've been so busy interviewing retail luminaries that we you and I have a report on since early March so I have a ton to catch people up on.
[0:56] That I told you I'm super excited and I'm equally excited to be talking to you with my full voice.
[1:05] Yeah yeah it's good to have normal Jason back and put froggy Jason kind of into the,
into the catalog there on time hopefully listeners went to put off by it I hear that Mr lister's listen to a set 2X anyway so you were still at Chipmunks on I'm sure it's fine.
[1:22] Just kick off you I have been quite the world traveler I haven't done anything since shop talks up and kind of boring but tells about you any interesting World travels through portal.
[1:33] I have been on the road quite a bit since shop talk mostly customer visits but I did get to do an event I like to do every year in New York City.
Did may not be super for me or do a lot of our listeners so it's called the path to purchase Institute and they put on this annual show called The Shopper marketing Summit and it has stork Lee is not been a very digital Summit it's a long time event,
targeted at Shopper marketers that focus on on marketing inside of brick-and-mortar retailers in what was in.
[2:06] Circulars or like a circular makers work.
There's a little bit of that it yeah but it's a it's a lot more like product displays like temporary point-of-purchase materials like promotions and in-store promotions products samples.
I'm all all the sort of the traditional tools are retail or would use to promote products and more so Brands than retail or so the show is really focused on.
Like what it what is the best tactics for Mondelez are Procter & Gamble to use to help their their product get disproportionate attention on the Shelf.
[2:49] Yes I would I just found interesting is you know that,
how much digital had permeated the conversation there so they were first they asked me to speak so we actually did,
I was on my co-workers from this we did for our workshop on digital disruption and talking about all the ways that the.
The we filled the whole discipline a shopper marketing has been fun and I disrupted by by digital and then you don't evolve impact of purchase,
but they were a lot of other another you like speakers from Kimberly-Clark talking about digital merchandising and then frankly a lot more presentations that you would have extradition Alee expected to see at Academy show your now starting to see if some of these traditional shows in their ways to go though.
If you like the sessions that were most popular with the audience where we would probably be pretty rudimentary touch are average listener but it is interesting that these traditional disciplines are now you know really starting to focus on our space.
[3:52] Digital is eating World As We predicted.
[3:55] It is indeed in while I was there are our friends at Amazon open the new book store 2 blocks from my house.
[4:21] As I said Amazon open their Chicago bookstore and I presume because Jeff is such a loyal listener that he carefully selected a location only a few blocks from my house.
[4:32] Tell Sam to you've been just to refresh listeners in case they shame on them missed the episode when last you were travelling Amazon book stores you went to the Seattle and right.
[4:43] Yeah yeah we've been in Seattle want a couple times now but I was there.
[4:47] The New York.
[4:48] Recently didn't I don't think the New York one is open yet.
[4:52] I think that one Telus about Chicago and I'll do some research.
[5:00] Yes I have been the two personally I've been in the Seattle won in the San Diego one which are very similar and they have evolved over the times I visited them until then,
looking at Chicago Chicago is a little different than the last two in a couple of regards the most notable difference is that it has a coffee shop at.
So he has an expresso bar they're serving Stumptown Coffee which is a favorite.
Coffee brewer from my old Hometown to Portland Oregon.
[5:31] Omen none of the other Amazon site been to have a cafe or any food I'm so so you know.
That was certainly an interesting evolution.
[5:43] Also had a few new categories in it so one of the things that I hadn't seen before is there was a popular kitchen accessories Gondola in the store.
[5:57] And that is a little interesting like traditionally another merchandise books in the store physical books and.
Quick refresher for pubs that will talk to you before then listen to some the other shows it's not.
[6:11] Designed a traditional bookstore would be design right see a couple thousand square feet you want to get as many books as you can into that that's 2000 square feet so normally most of the books are.
Merchandise down their spine and only a few promotional books are merchandise facing you this Amazon store has very few books in it because all the books on merchandise facing you so that it's a much more attractive presentation the print.
Paper price tags next to every book in that price tag.
Orwell fact tag has the reviews from Amazon on its what has the star rating in in a couple select customer reviews reviews play an important part in merchandise in the store and no actually have gondolas.
For merchandising books by rating like these are all books that are rated over 4.8 stars who are the top rated books for the city of Chicago things like that that you know it's a real clever social merchandising,
pricing is really weird any stores they charge list price if you're not an Amazon Prime member.
I'm in if you are an Amazon Prime member you get the online price,
but because as we all know the online price changes so often they don't print the online price in the store so you literally have to use the Amazon app on your phone to scan the fact tags,
to see what the current prices of the book you're going to buy or use one of the scanners that they have built into the store.
[7:34] Cool so you were right I was wrong I think this is a Jason and Scot first the that have not opened the first location in your cat's Columbus Circle and its opening in the spring so I think they have like.
William another month here and then the second one they announce is going to be across from Empire State Building so they announced to open none in New York but opening one soon.
So Columbus Circle will be first and empire state will be second tell me more about the the kitchen section of the store.
[8:04] Yep so as I was saying like you know you have that kind of book presentation and then the book of all the Amazon stores is really that Amazon branded.
Electronics rights of the stores really about Kindle and Echo and you know I would call it a consumer electronics store dressed as a bookstore.
And so on certain they're happy to sell books in that store but it really feels like the job of the stores to educate customers about the the candles and The Echoes In The Fire tablets.
[8:34] And so the center of the store is around that they have their sort of equivalent of a Genius Bar where you can get Live help they do you know scheduled live demos and tutorials a lot of those kinds of things and so you know traditionally.
Those are the two kinds of things that are in the store that Electronics including accessories and third-party products that work in the.
In the Amazon Alexa echo system in the inbox inside this Chicago store with the first story I have seen that had other,
hard Goods in addition to Amazon products and the books and so they would have had a gondola that's like best selling kitchen appliances on Amazon and it's showing things like.
Immersion blender smoothie machines KitchenAid mixers think things like that and so they would really like.
The bed you know 10 of the best selling products in another category and put them in the front of the store.
[9:31] Did you see I'm a some tweets that and I visited the Amazon store and December of 62,
been a while Minnesota and the baby with the tweets of Sean a lot more of the Amazon basic showing up in the store did you see evidence of some of the private label stuff kind of creeping.
[9:50] Yes in categories that are related to electronics right so that they get a lot of the Amazon basic bike cables and batteries are our merchandise but they're really merchandise as accessories for.
The fire tablets and things like that.
There's not a display that's like I sorted based on being Amazon basics for sample there just interspersed on the on the displays where they would be most appropriate.
[10:16] Yeah we're going to talk about a little bit later but they've got enough private label and apparel I wonder in those New York stories if we can't magically see a little infection section open up and be kind of nurse in to see how that progresses.
[10:27] Yeah it it's only well-liked into Italy the stores they design so far are lacking some amenities you'd normally expect in a Apparel Store like dressing rooms and things like that but like.
Could easily be retrofitted or or more to your point like the next door could easily Adam.
[10:43] Anything else from from the roof.
[10:46] Nope I think given all the other exciting stuff we have to talk about that it should probably cover it on the Jason trip reports for this week.
[10:55] Cooper Center in the Amazon new section I wanted to go back to shop talk and that was kind of late March.
They had Amazon had two speakers at shoptalk this year which is interesting bit been notoriously shy about going to conferences but,
they were pretty bold today had Stephanie Landry in this was her second year at shot talk and she talked about prime now I didn't really get much knew from that other than that continues the area where they are aggressively expanding,
I'm in one of the things I like two references you know they sent really once they decided to put.
Pedal to the metal on Prime now they opened up in 4245 markets in the span of two two and a half years so a lot of people,
talk about these experiments are doing in the coffin so it's just an experiment but I always caution people that,
Amazon decides this out of the experiment they can scale it really quickly so it was good reminder,
program and what they can do and you're one of the guy thats decided to build a consumer-oriented business one of the most interesting quotes from that was it when someone looks good.
Question from the audience about,
the profitability of it and she said well it Amazon know we really focus on the customer first and then we can we saw for profit II,
and that in the cooler that was the interesting part and she said,
it's much harder to sell the customer problem then a customer experience problem kind of meeting you this whatever they're building isn't lighting customers versus a profit problem.
[12:31] That's really kind of an interesting talks about putting the customer first but Amazon really really does it and,
the donut since day one when they could afford to now they obviously have the luxury of being able to do that but you know they really don't care about the probability this thing they want to really don't know that customer experience and then they'll kind of get there on the profit side and that's how it started when Prime launch never thought they were crazy and it could never,
make any money and I.
[12:58] When I heard from Amazon and sit there is a lot of controversy as a launch that the basis was really into it and a lot of people could you do the math on Prime you can kind of say.
Our best people aren't going to pay for shipping and are worse people are going to get free shipping and there's no way this economic make sense but I think they didn't those people didn't count on was.
It was such a delightful program for customers their volume when up connects and then it going to match Pace herself so it was kind of interesting it was,
but I like that one comment.
The second speaker was the first to stop talking it's Peter Pharisee and Peter for a while and he works for Sebastian gunningham and runs the marketplace part of,
Amazon and the surprise from me is when I've seen him speak at our conferences and and I think it's been an internet retailer wants it's usually about the other sellers on the marketplace.
Did this talk at shoptalk was 100% about brands,
talking it essentially the whole thing was targeted to Brands how they're an important constituent Amazon and then he talked about,
for reasons why they should saw on the platform they're all pretty obvious no shipping we have the scale we're friendly DeBrands these kinds of things it was a real surprise because I've never seen Amazon talk that way about Brandon Sac to know if.
If one of the questions I get a lot is what does Amazon have any chinks in their armor that kind of thing.
And the relationship with brands has been strained and you know some some Brands I talked about it in my panel where you know a lot of Brands we talk to you.
[14:31] Go with the nuclear option I call it where they essentially say look we're going to yank our stuff Nike is kind of most famous or they've decided not to work with Amazon and a 1st or 3rd party relationship and they prohibit people from selling any authorized resellers from Sun their stuff on Amazon,
so so I think Amazon realizes that's a challenge and they kind of had a softer messaged for Brands than I've ever heard.
[14:52] Did you a catch either this.
[14:55] Yeah I got both of them and I would totally agree with you on the Amazon Prime now you know both how fast they were able to scale that and 18 months getting to them when they have to us but also you know the shocking thing is,
it was like a hundred and eleven days from the first meeting where they discussed doing one hour delivery opening that first.
1 hour delivery concept ride in so that that level of agility is super impressive and terrifying.
And I just like to quote someone was asking when she describes Amazon Prime now the think the picture of when has in their mind is that's the service you use to deliver the cold medicine when you're sick because you physically can't go out of the house,
and you need to quickly,
and she was pointing out that those kind of emergencies are are part of the service but that the overwhelming majority of the service is not for those things that need to be delivered in an hour but rather for things that consumers just wanted an hour and so it's it's less about.
You know it only gets used as a necessity and more than it's a delightful customer experience that people appreciate I also.
So that you know that sort of reminded me of another Super recent Jeff Bezos Square where he was talking about how they had lots of great Innovations over the years that they loved inventions that Amazon loved.
Consumers didn't really care about and he is talking about the fact that like I can assure you that no no invention that consumers don't adopt has ever been disruptive in so just sort of.
[16:27] Focusing on the fact that like the hardest part of this whole equation is is figuring out an experience that that's magic to Consumers and that they want to do.
[16:36] Yeah you just reminded me to that I think some breaking news Stephanie put out there is that occasionally if possible on Echo orders they will if it's in pruritus that and Delight customers by delivering it in an hour,
did you did you catch that Amazon.
[16:54] I think you're exactly right I think she said that like if if you order from from Echo and it's available in Prime now they'll deliver in an hour that sort of surprise and Delight you.
[17:06] Cool and then another thing that's been really interesting is so so since October unrelated but what happens is that kind of screwed into the corner of Wall Street and kind of,
you know that check their channels and they update their models and,
right towards the end of March and early April everyone started doing that and several analysts came out and said you know we we actually think Amazon underpriced here and a,
the time Amazon was out about a hundred $800 the stock price and some analysts came out and,
for that I follow are there kind of called what's the axe on Wall Street which is kind of the leading analysts they really but that price Target up to over $1,000 so one went to,
1025 and even kind of sad you know we think.
The Amazon probably will be the first trillion-dollar market cap stock so then a couple other in-laws followed suit and then the stock took off and as of this recording it's about $900 so that's.
Pretty big run from 800 to 900 what is that,
yeah I'm about 15% and yeah when you're dealing with a company decides a Amazon that that is a material change so Amazon is worth about twice the market cap of.
Not now market cap for one thing and revenues are different you know Walmart has more Revenue than Amazon all these kinds of things we're just talking about the what Wall Street thinks the two companies are valued at,
I'm in if you do those notes so that's a good headline right now to lead our company thousand 25 on the stock in the stock reacts but.
[18:43] I make a habit of reading these things and it is pretty nice thing you know they talk about different colors that that Amazon has now the one that it's been pretty crazy about is the cloud computing Amazon web services.
That it continues grow faster than people have thought and be more profitable the prime business with Amazon is having to disclose more about prime than they ever have and in their annual report,
they gave some new disclosures that essentially let people back into that there's between you can get a range it's not exactly have to kind of make some assumptions,
between 50 and 70 million Prime users so it's kind of putting it about 65 million Prime users show,
that's bigger than some people thought it's smaller than others but it puts a real number there with people are pretty excited about and then the other thing that the new disclosures did is a.
Put some boundaries on the ad business I just kind of two parts to the Amazon advertising business there's.
[19:39] ICBC peace and that's broken out in their financials one way and then there's a banner key switch is broken out another way up and it's a pretty material business it's it's you know it.
[19:50] Any projected growth forward it'll be the number three as business behind Facebook and Google next year so it's already bigger than Twitter.
For example show.
People get pretty excited by that now scale wise it's in the single-digit billions and Facebook and Google or in the very high double-digit billions so it's going to take a long time to catch them and I don't know if it ever will be I think.
It was pretty excited by that because it's also extremely high margin business along with AWS season.
[20:23] In kind of another color.
Is it that's interesting is and yeah we talked about it here on the Jason Scot show first is this kind of Alexa and when Wall Street talks with Alexa their kind of wrapping a lot in their there.
[20:36] Not only talking about the personal assistant but all the things behind it the semantic engine the machine learning the all all the natural language processing in those kinds of things,
and what about analyst Mark mahaney he's kind of said that.
10 billion dollar business in when you report it is not just the sales of Alexa devices but all the ancillary things around the same time Amazon also announced Alexa for the iPhone which is.
[21:03] To boxing I want to talk about I'm just talk is.
You know that Wall Street is also waking up to the fact that at the same time where these analysts upgraded Amazon they downgraded Google which I thought was interesting and I specifically in the Google Beyond grade called out and said,
we believe the Goodwills on a crash course with Amazon and decided the study of United Site a lot that shows that products arches really switch from Googled Amazon but they also talked about that business and they did make a pretty compelling argument that a,
you know in a world where Amazon news whatever the buying that ad.
Business could be more valuable than Google for Google has some search intent but Amazon has a product intense that was kind of interesting take and you and I have talked about early on.
Is it go to this voice is just your voice, so we're going to call it kind of world Amazon monetizes by selling stuff and Google they announce recently too then.
Montage by ads and there now putting ads into you know some of the different things you do on the Google home assistant which is pretty cheesy to be honest with you show.
[22:07] Really interesting.
Example of of Amazon having someone's back against the wall in a funny way and no Google trying desperately like let's forget the customer experience through some ads right in here when you ask.
Does the home assistance for the weather kind of thing it's this really really terrible so I thought show,
I know we have some Wall Street folks listening but I thought it was really interesting to hear a lot of what we talked about really summarize really well as it's kind of you know the pillars behind this this upgrade,
and then when you we look at that the result of that Amazon is now worth a Walmart at Target a Costco BestBuy and CBS all together so that's another kind of interesting thing the other result of that.
Is that Jeff Bezos rocketed up the Forbes 500 list two number two jumped over Warren Buffett and a second only to Bill Gates so.
To put that in perspective and haven't seen when do this this is a Jason Scot exclusive show,
Bill G is at 84 billion and Bezos is now at 76 billion as of recording this so I did the math and if they Amazon stock gets over a thousand,
assuming that there's no big change and let me a Bill Gates is doing then he will be the richest person so there you go.
[23:29] That is crazy I asked you for the Jason Scot show and I'm I believe that those two guys live like a mile apart so that's a pretty affluent square mile in Seattle.
[23:41] Yeah yeah on if they like check each other's mail in their gun and stuff.
[23:46] If they are I would hope that people that do that.
[23:48] Yeah you never know hey Bill could you check my did you watch the dog one at a time.
[23:56] Exactly I think Jeff would have a robotic dog.
There's a bunch of other Amazon stuff going on as well as one that.
Got a lot of attention in my world is there some leaked invites the Amazon has invited a bunch of the,
the brands and protect the consumer packaged Goods Brands to West Summit at Amazon where Amazon wants to talk to them about getting more serious and selling direct and give them some advice about what they need to do to,
successfully sell Direct.
[24:38] What's what's the buzzer you heard any some scoop on that whole thing.
[24:42] Yeah well so the.
The sort of clickbait headlines then because you know Amazon wants to partner with Procter & Gamble to bypass the Walmart and Kroger and all those those things and well.
I think that's certainly true,
I actually think that Amazon is is less worried about like stealing those customers from Amazon or from from the traditional brick-and-mortar retailers and Amazon some more interested in,
setting those those Brands up to be more successful on Amazon in the digital era so I think this this is a lot more about.
Kid convincing and controlling these companies to change their product configurations to be more e-commerce friendly so,
think about the bundling sizes think about how they package their products you know in a lot of other product categories Amazon very successfully was able to get manufacturers to change how they package their goods to make them more,
consumer-friendly on Amazon so they had this whole frustration free packaging program for example and,
consumer consumer packaged goods are predominately designed to Market to customers on a store shelf and so their package really isn't very friendly too.
A shipping in that Amazon cardboard box and I think Amazon interested in convincing them to fix that.
[26:11] Yeah yeah yeah and then no Jason Del Rey who's been on the show had some interesting kind of reaction from the brands that felt like.
Another too caught up in this Amazon vs Walmart war and everyone wants lower prices so that's certainly not a not a pleasant place to be what would you advise to brands that are kind of.
I'm sure you guys get a lot question about this one how do you tell folks to avoid that.
[26:36] Yeah well I mean to twofold I got I do think of you a brand that that's in that space that you you do want to be on Amazon at this point right.
Like more than half the growth in that category over the next three years is coming from digital and Amazon is today more than 50%,
of that that digital pie so pretty expensive mistake to,
not be where all that customer demand is on the Amazon platform obviously we did we did show a couple weeks ago with Melissa talking about the a lot of the fundamentals of being a.
On the Amazon platform and Jason does article really sort of.
Emphasize one of the points from that show right and that's that there's this this really real negative cycle at the moment where.
[27:30] You sell products on Amazon and so you don't party yourself to dream with Amazon is that that you'll give Amazon the best pricing and you won't sell it less than them and they have all these algorithms that watch your price and react to them,
so so did when you give a different bundle to Costco and Costco selling a case of Campbell's Soup and the price per ounce in that case is very low.
Amazon sees that and drip drop the price on quantity one of that that can of soup to that super low price and then they're selling a super low and then Walmart emergence kick in,
and start beating you up for selling the product much lower on Amazon then you're offering the quantity one price to Walmart,
so that the challenge at the moment is.
Is that you when you think about these products of you really think about reconfiguring the products for.
E-commerce you probably want to think about more than packaging like you you probably want to create.
Different skews that are different enough that they don't trigger that that's where the pricing cycle.
[28:42] And so that potentially even means like you know different formulations are different flavors or or you don't.
[28:50] Different sized squares of Swiffer on Amazon than the squares at Swiffer that you buy.
In Walmart so that those aren't the same skew and they don't they don't get caught in that pricing cycle.
[29:03] Any definitely wanna make sure your Warehouse bundle isn't comfortable feeling so good that stuff.
[29:09] Exactly and I do it in the long run that's just not sustainable like that you know the both Amazon and Walmart or someone.
Benefiting from that at the moment and then warm in the margins just aren't there for the manufacturers to get squeezed between those two guys and so you know either.
The manufacturers will have to find some other way to survive by selling direct without those guys and those guys are both launch private labels and you know I think we're seeing the Collision Course between these product manufacturers in these in these products resellers.
[29:43] Another Hot Topic kind of in this vein is Amazon truly ramping up private label as we talked about at the top of the show so suppose folks are familiar with Amazon basic switches things like HDMI cables and whatnot,
another Washington lest I follow has done a lot of research and it's fascinating start some usually the trademark,
the bowels of the trademark database and Amazon this is hard because Amazon uses a lot of shell corporations.
[30:13] Misdirection let's just very legal misdirection to try to hide what they're doing so these folks kind of trying to get down and they know that.
This agent to really works and Amazon and there's ways they can get back into it then they searched on Amazon and they kind of,
figure out that if these things they find our exclusive on Amazon to prime or or there's a certain you can kind of tell how the age of the pages are written the.
It's actually private label so they've identified a good kind of.
[30:42] 15 to 20 private labels that a lot of people don't know about one we talked about on the show is Amazon elements um and you know.
We we talked about that but the area where there's the most growth is in apparel so there's things like.
All of moon is a woman's Bohemian inspired casual clothing it was hurting both of these are prime exclusive which means that if you're not on Prime you you see them but you can't buy them and there's a lot of worry,
and the way the way I seen it now is.
So Amazon has you have the name brand so let's see all pick on one I don't know a good Bohemian brand but let's say dress shoes show.
Men's dress shoes so they'll have.
Cole Haan or someone like that and that'll be the name brand and let's say that's like $125 then we'll be a Chinese kind of just no no straight from the manufacturer and it will have a brand but it's brand you ever heard of,
I'm in it is clearly in a clearly a Chinese brand so it'll be Brand X and it'll be.
$30 Lynnwood Amazon will do as that's a big Golf Mill kind of split the middle so somewhere in that 60 to $70 is were there and check their private label.
And it will it will have a much more kind of now it feels Amazon it feels like it's backed up by Amazon Prime exclusive,
doesn't exactly say Amazon all the time so like to have one Franklin and Tremont some kind of sounds like was at Johnson and Murphy so that Franklin and treatment which is men's dress shoes and that that will be in that 60 to $80 great show.
[32:18] And asked me to hell,
why how do they decide where to do this and what I've heard from folks is its data driven so they can actually know their database gotten smart enough where it will go identify,
and balances between supply and demand so they'll see there's demand in men's dress shoes for an $80 shoe and they will go.
Godin work with manufacturers and create what they think is a missing by looking at the data and put it out there so that's really you know.
[32:49] Everyone in cpg in grocery stores does private label but I think the way Amazon is doing it is is pretty unique by for a couple reasons the way the way they're laying it in with the Chinese manufacturers going directly to Prime and those kinds of things.
[33:03] Yeah and I think what's interesting is even you talk to release a few people and they they have you know they want to talk about Amazon private label strategy and I like to point out no no no no.
Private label strategy it's a label strategy.
[33:19] That way you know a lot of the traditional private label it's about like in all the same feature set at an alternate a price point.
And you know a lot of these products like their they're targeting alternative price points not necessarily lower by the way in and they're they're optimizing features for that price point so you know these are.
These are not just knock-off products of a national brand and Mini cases.
And so you know and many of them they're putting marketing behind trying to build the brand and the most notable today of course this is Alexis is a total credible,
billionaire brand that that Amazon has built and so.
I wouldn't necessarily say there a great brand Building Company yet but they're getting consistently better and they're iterating and so I don't rule out the day that that's some of these apparel brands.
You know how are legitimate brands on their own that that stand out and have customers that are interested in buying them.
[34:22] I think I'm pretty interesting one you mentioned.
[34:27] Amazon elements day I just got an email they have launched a vitamin D products so this is entering the nutrition space which is.
Another space that I think.
Their data has shown then there's an opportunity and right now it's an exclusive invite only products you have to apply to buy it which I did and I just got accepted and one of the novel features.
Is it that they have sort of the Amazon Firefly x-ray technology built into their product packaging in so I haven't received the bottle yet but like when you ain't Amazon app.
With your camera at these new bottles you get a ton of supplemental information about the product so it sort of.
Enhanced virtual packaging for a for these products.
[35:20] Yeah that's kind of a page out of the on this Playbook right but they.
It's hard to put that all in a little vitamin bottles eyemagine that's kind of part of it is bye bye running out of real estate they can and it can be dynamic too I guess if they can.
[35:35] Yeah and change it all the time and again it goes back to this in the old world where you printed the label on the package and that was your marketing and then that label lived on a Walmart show,
that you know there was one approach but in this new world where it's coming in a cardboard box that that packaging plays a different role right like it's it's not the zero the first Moment of Truth for you anymore it's a post ownership experience that's most important on that bottle and so you know it's pretty interesting that Amazon is is obviously the first move there but I think a lot of what they do talk to the cpg companies about in their Summit,
is a sort of moving in that direction.
[36:16] And then the big news since shop talk I'll let you jump into that one.
[36:22] Yep so we've been talking about this for a little while that that Amazon had another store concept it was under construction and they unveiled it last week.
And it is called Amazon Fresh pick up.
[36:35] Inside this is a extension of Amazon Fresh do you build a cart of products in in your app.
[36:44] On Amazon Fresh and instead of having them delivered to your home.
They are available at this Amazon fresh pickup location and you drive through what amounts to sort of a drive-through stall.
[36:57] I'm at this location and someone comes out and puts the groceries that you ordered in the trunk of your car so you never have to get out of your car.
You don't have to perfectly synchronized being home when the Amazon Fresh guy comes to your house so that you can get the milk and put in the refrigerator you go and pick it up from Amazon when you want.
But it is a lot more convenient than having to shop and bag for all your groceries yourself.
So we we talked in this show a lot that buy online pickup in-store is probably going to be the dominant model for digital Grocery and you know that that's one area where the traditional grocery stores have a big advantage over Amazon because they have a bunch of stores.
Amazon doesn't I think what we're seeing here is Amazon's first generation answer to that problem.
[37:43] I'm delayed open a store and the most notable thing I think we expected all of that we were curious whether you be able to walk in the store and buy anything which at the moment you can.
But the big sword of fire across the customer experience is that they are implying a 15-minute guarantee.
So 15 minutes after you quick check out on your mobile app your groceries can be ready to put in your trunk and so what that means is.
You're just leaving your friend's house from dinner and you realize you need some stuff for breakfast in the morning,
you know you can order it and likely swing by that the Amazon Fresh pick up location on your way home or you can remember at the end of soccer practice that you need some stuff.
Order it on the soccer field and pick it up on your way home none of the other grocery pick-up have anything like a 15-minute guarantee like most of them don't have a guarantee,
some of the best service levels are you have your groceries ready in an hour and much more typical is will have your groceries ready in like 4 or 5 hours and so.
You know once again this is kind of like you know the industry shipped everything in one to two weeks and Amazon comes out and says will ship everything in 2 days.
You know they're saying will do buy online pickup in-store but we'll do it in 15 minutes.
[39:00] Yes the grocery I had like 3 questions for you so the first one of watch the video like 50 times the,
it seems like it's very shoppable the store do you feel like actually go in and Shop or will it be restricted to just pick up area.
[39:16] So I expected before they announced it that there would be some limited use cases of going into the storm shopping but might take from the video in the folks I've talked to is than this first generation that's not the intent that the that the inter the store is exclusively for,
the merchandisers to do product picking and take the product out to your store,
car so there is no get out of your car experience in the store at the moment is my understanding.
[39:45] Looks like there's this kind of bank it's almost like a Sonic drive-thru where there's like,
these Banks of places drive-through rights instead of this linear model that my grocery stores to have you going to parallel model and it looks like there's two 15 Lanes but that's interesting,
that makes the scheduling kind of thing make more sense right because you get this window you go up there and that your understanding and.
[40:13] Yeah are you want to serve customers and parallel Nazi really red so,
the more of those pick up Windows like they're not windows but if you know you saw that the more of those Lanes you have the more simultaneous customers you can serve,
oh I would suspect that there's not a fixed number of those lines I would suspect that that the number of lanes they offer is going to totally depend on the.
The footprint of the site they have for the store and and you know that.
Demand density in that in that go I would say that a bunch of the other grocery guys that have gotten serious about grocery pickup,
do something similar so you go to the market where Walmart is doing grocery pick-up you will see like a big Bank of drive-thru stalls,
that frankly was very similar to the the Amazon model but the big difference at the moment would be that that 15-minute guarantee.
[41:08] Got it and then so no one else is close to that because my frustration is our local Harris Teeter offers it and,
you know what you go through you carefully pick all your groceries and then it says oh I'm sorry this is like Friday and I'm getting my weekend groceries in it'll say we're sorry there's no slots open for the weekend your kids your Tuesday hot.
[41:29] Yes so you've hit on a super sore subject most of the grocery pick-up have like two flies right like the window is too long so you you didn't.
Do a big advance planning thing and you want to pick that up pretty soon after you ordered any Mini cases and so in very few of the grocery stores have a guarantee they have service levels they shoot for right like so.
The shoot for that hour but they don't guarantee that our,
I mean that's a problem but then the bigger usability problem that you just highlighted it is almost all of them won't tell you what the pickup window is until after you build the list and check out and so you don't find out that they can't meet your needs and till after you've invested a bunch of work with him which really,
frustrated customers and makes customers mad.
[42:16] How does Sohail how does Amazon get around that by just kind of saying I feel like the grocery store must they must want to know how much is in the car to know how much time so Amazon something.
[42:29] Yeah I mean my assumption and it again it's not.
4 slice of the video implies that they can do it in 15 minutes it does not explicitly say they have a guarantee.
And so at the moment it's for employees only somewhere to go store so we haven't actually gonna try it or even yet talk to someone that's been through it all I'll be back out in Seattle in a couple weeks an alternate logo,
go stock the site and see what I can work but.
If it's a true 15-minute guarantee then you know that puts all the onus on Amazon and it takes all the burden off of the customer right like you don't.
You don't need to worry about if you know you're never going to get have to wait longer than 15 minutes so you just you just jump in order the stuff to do it.
But we'll have to see to your point like if you can't know your pick up time until after you build your list then that really limits that utility.
[43:26] Yeah so who do you think the main company is going to step up and kind of this are using people just aren't worried about it cuz he's just an experiment.
[43:35] No I so I think the two people that are most worried about it have already been countering it before they want to store right like so I think I mean.
That Walmart sells the most groceries of anyone in the country and they have.
[43:52] Probably three or four hundred of these pickups tours and you know they do have quite a few that dedicated pickup locations,
similar to the store that aren't even Walmart store and you know frankly if I showed you a picture of it and took the branding off you'd be hard-pressed to tell the Walmart pickup store apart from this Amazon Fresh pick up store so so you don't Walmart is certainly doing the play from their side,
Kroger has now rolled out pick up in store to 400 stores Kroger's the largest.
[44:23] Actual grocery retailer in the US and for Tampa Bay on your Harris Teeter Teeter is what is one of their brands.
I think they were actually the first ones to do pick up I think they did pick up before trigger bottom but the.
Both of those companies understand that that's going to this is going to be a huge use case they have to get it right in there both investing a lot of money along with Amazon you don't I think.
Before Amazon watches store they wouldn't you know you would have said hey hear the things where Amazon has a huge advantage and and we have some huge advantages to we have 4000 stores are we have 2000 stores we have much bigger parking lots in all all of these sorts of things,
you know I think the big the big fear here is.
The Amazon recognizes the pickup is a significant opportunity in their opening a couple stores and.
You going back to RR Prime now conversation.
If these stores work well for Amazon and they they demonstrate customer demand that this is delightful experience for customers and frankly like I've seen a lot of evidence that customers really do like grocery pickup.
[45:33] I think they could scale those store super quick right like I think they could either buy a retail and convert all that the that retail footprint into these pickup stores.
Or you I think like they did with Amazon Prime now they could easily open $2,000 things in 12 months of if they decided that the market supported.
[45:55] Yeah speaking of Amazon go there was some news there what's up what's going on with you.
[46:00] Yep so you know they watched it last year in 2016 and it was for employees only and just supercoat reminder this is,
the convenience store will you grab the items in you you walked out of the store and you don't have to check out or pay or do anything and artificial intelligence in the cameras in the store.
Figure out what you took with you and charge you for it so it's just walk out technology hashtag jwalk.
[46:24] So that was supposed to be for employees only last year and was supposed to open to the public early this year and as of now it's still hasn't opened and there is a lot of internal rumors that it's not going to open to the public for a while and the reason is,
but they are struggling to support some of the edge cases and one of the biggest cases they're struggling as support,
is apparently when they get more than about 20 people in that store the time they lose the capacity to accurately track all those people and their purchases.
And so like you have a few people in that store and that the technology seems to work very well and you know again I can neither confirm or deny that I have myself been in the store and tried it and it worked quite well.
But it's easy to imagine that that there's not an unlimited capacity to track people and so you know.
Scaling could be one of the problem then so you know that the rumor is hey this is super interesting technology but it may be further away from.
Being totally commercialized because they need to sell some of these these ads cases in this capability problems.
[47:30] To get some computer problem or you think that 20 people the chances of being able to date they can't tell them apart if you think it's more.
[47:38] I think it's both of those things I got like the number of people is just one of the edge cases they talk about other education as wife.
I got it takes off his jacket when he's in the store or guy puts on a hat when he's in the store.
And you know all of all of those things can be hard like as I pointed out in the fact this is kind of a mock store it's only three gondolas there's no blind spots in the store you're not allowed to use the restroom in the store you know how all these other things.
I'm inside you don't from day one I looked at this and said hey this is totally cool technology.
But I don't think we're going to see a fleet of these stores competing with 7-Eleven in the near term because it.
[48:16] Even if you nail the experience in this little prototype with the three walls of Prada.
[48:22] You're still a long way from being able to do it in a 7-Eleven and you're much for the way from doing it in a 200,000 square-foot Walmart store.
So it's cool technology is you think we might see parts of that technology before we ever see the whole store so one thing is.
Does cameras take perfect inventory and every retailer struggles to know what their inventory is every retail loses a ton of money because they have out of,
they have soup in the back of the store in the store room but they're out of stuff on the shelf and customers are shopping for soup,
and it takes 6 hours for a quick to notice that they're out of soup and they have to go get more and bring it out but with this technology you know exactly what your inventory is so it makes it better for buy online pickup in-store it makes it better for,
showing your inventory to people that are pre shopping and don't want to drive to the store until they know you have it in stock and it makes it better for all these out of stocks and all these sort of other use cases so I think was on commercial that piece of the technology before they completely.
Commercial ice JJ Watt.
[49:25] Cool I'm picturing all these Amazon guys watching the security tapes and they're like who is this guy taking off his jacket look at this hat and like to juggling apples and I have a feeling that guy looks a lot like our very own retailgeek.
[49:39] You you you do you don't even have to pick her if you go to the store in the far corner of the store like this the stores all windows and so you can actually see the back room with all the guys dressed in Orange,
they're watching tablets and frankly that's that's exactly what they're doing they're helping,
teach the machine the edge cases so it's not like they're the computer can follow you in there and it and they're replacing the computer with humans but what happens is when the machine gets it wrong a human.
Audited and tells the computer what's right so the computer can get it right next time in and you you could watch those guys work if you stand in that corner.
[50:17] Call Lisa friend told you.
[50:21] You can see that from outside the store so.
[50:23] Okay good.
[50:27] Couple other little things I know we were burning on time but Amazon was pretty interesting new influencer program so that they've always had an affiliate program,
where you know you can you can blog about stuff or put stuff on your social network and put a link in it and you'll get a commission on the sales on Amazon.
And you know if anything they're tightening up that affiliate program and I think you know if you months ago that they will wear their commissions on a lot of stuff but they Now launch this bespoke influencer program which is targeted at.
High-volume influencers and it gives them custom vanity urls,
I think it rewards than more generously for sales and it's just it's an interesting invite-only program and the reason I say it's interesting is.
The news influencers are really becoming the new product marketing vehicle so like in the old world what you generate product for demand for a product is you buy Super Bowl ad are you run a TV ad and you,
you reached 30 million people in one shot now the way you generate demand for a product is,
you know through these micro influencers in and finding the woman that that talks about the particular makeup style,
that suits your product and getting her to blog about your product and put links in it and Amazon appears to really recognize that Trend in is building better tools to support that trend.
[51:51] Yeah we've we've talked about them and if folks had a chance to listen to the coast program for example we talked about kind of the death of the the merchant King of the merchant Prince and forget all we got,
[52:03] Merchant Prince so this is this is you read about these influencers replacing and it's kind of Amazon saying yeah this is this is a thing.
[52:13] Yep yep so that's interesting Amazon did the first drone delivery in the US last month so I thought that Mars space conference the Jeff Bezos was that,
date they do it hurt some sunscreen and then I thought the first time they got FAA approval to do a commercial delivery in the US I think one that got a bunch of bugs this week is,
did they stole the NFL deal from Twitter.
[52:38] Yeah so the scoop there is last year Twitter bought the streaming rights for the Thursday night games I think there's four or five of these games the kind of itsfunneh,
they didn't play out but there's notoriously that the running joke is the Thursday night games and up being like.
The worst games out there because it's usually like the worst two teams in the league kind of think so.
[53:02] I know you're talking about my team is on every Thursday night away.
[53:05] Yes the Chargers and the I don't know all the Cleveland Browns.
[53:13] Cleveland Browns we play the LA Chargers play the Cleveland Browns every Thursday.
[53:17] Will guess what and now it's going to be on Amazon Prime and the Twitter deal never made sense to me and there was there some interesting scuttlebutt that you know to Twitter paid 10 million.
And when they pay that a lot of news folks reported that folks are scratching your head,
they knew any of the other people that been on this would be like Google with YouTube Amazon bit on that last year imagine with Facebook is now in the running for these things that you have a bit more and there was scratching your head why did Windows,
Twitter didn't do much with it and now Amazon has won it this year and they're paying 50 million so 5x with Twitter page,
obviously that's a lot of money and you know the people are kind of saying we'll why would they do that.
And what's interesting is if you think about Amazon prime number one that Amazon has already announced it's going to be prime exclusive content.
They have a lot of data on this so you know they've done another number of programs that driving program his name I can't remember you pray noticed.
[54:19] And you know they've picked it up for these things and it brings in enough subscribers that have more than paid for itself so to do the math of this if you kind of think of,
hundred dollars for Prime which is where Prime is right now you really only need about 50,000 new Prime members to come in and justify that $59 price tag,
those are big numbers but when you have 65 million Prime people get another 50k actually isn't that.
[54:45] Doesn't seem like that hurdle and I would imagine there's if you're an NFL fan you're sitting on the fence and,
this is as you get access to your games and you get free shipping and all the other things that come along with prime so I imagine it'll actually be pretty lucrative for them and and possible so that's kind of a call I guess.
The other thing I saw just quickly Amazon is really hurting a lot of customer service folks they announce they're going to hire 30,000 customer service reps,
and they're doing a lot of customer service reps working from home,
this is interesting we're hiring a customer service rep at my company spiffy actually interview the lady that had done this before,
show you what Amazon does this they essentially they train you that give you an online training program on how to be a good front line customer service,
person and then they just have some basic requirements for you to do this at home usually its high-speed internet desktop,
or laptop that's higher end and then you need to get a mic with a headphone and a mic cept they actually tell you the ones that they recommend,
they actually will turn you on you know you you've been kind of run this program you check in and you're getting a customer service calls and then you log out and you get paid on kind of an hourly and ratings and and performance bases 3 inputs I found that fascinating and kind of funny,
right after I talk to this lady Amazon announced that they were productize in this so anyone can use this functioning functionality now it's part of AWS.
[56:20] And it's that this call center that lives in the cloud and it's called Amazon connect,
and then before that they took another internal to over they have there and videoconferencing Build-Off AWS called Amazon Prime so Amazon is now kind of putting out these things and then release him to AWS which is which is itself.
[56:41] A TBI system it is really kind of small Lego blocks to couldn't do anything with unless your developer and now they're actually kind of releasing these pretty robust applications on top of AWS,
another quick one is the announcer opening yet another for Film It Center this was a million square feet in Virginia.
And finally they made what's one of their bigger Acquisitions in a while and it's this Marketplace from the Middle East called so I think I'm saying that right Sou.
Tube.com that started in the UAE and then,
Calibre where it has like lots of countries in the Middle East that a cover so it covers Dubai Abu Dhabi Egypt Saudi Arabia Kuwait and Bahrain,
there's it's rumored that this was a $659 acquisition of the company had raised,
money at kind of north of a billion so she could have a bit of a Down Round but I think a good outcome for those folks there is some other really big Marketplace that's launching out of Saudi Arabia that has in a billions of dollars of investment,
think it's this is kind of Amazon playing a little bit of defense and suit kind of thing on this is a good time to find a safe.
Courtney storm I looked can't find the DMV for that but the Middle East is it your 50 million people,
lots of opportunity there so so but interesting play on Amazon Amazon news day.
[58:05] They also shut down I'm sure you saw this some Curious we think they should down Quincy.com the whole not just good you.com but the diapers and all the subs,
things are weird news about this so they they shut it down because it wasn't profitable and but then several people,
Channel each to the press that well we just had Amazon zigzag here at the annual kickoff which I imagine would be like,
January I'm saying that you know where this path to profitability and we've had a profit month so a lot of people scratching their heads and so people reading the tea leaves there that this is some kind of a,
Bezos messed around with Mark Lori who's over the founder of jet that's not Walmart not really sure I buy that but any thoughts from you on that.
[58:51] Yeah I know I have the same thought as you I got I just don't think that.
Did Jeff Bezos is going to screw around with a bunch of people's Alive's just to play a game and Mark Laurie right and you know there are people that are losing their jobs at Quincy.
And I think there has to be a sound or business reason that they're moving away from it and I've heard the same rumors you that they haven't been profitable but that there,
Basie profitability in 2017 so that that makes you scratch your head why they closed it and the ones out that occurs to me is.
Did the Dave they vacillated back and forth on this idea of having all these separate URLs and.
Distributor sort of Distributing there traffic across all those other URLs versus aggregating it all in the.
Amazon property and I do think it's possible that in the early days they felt like Amazon wasn't a credible source for some of these these specific product niches and so having a dedicated.
URL on a dedicated site made sense in there you know where moms that would want to join the.
The diapers.com program that wouldn't want to be Amazon moms and you know that back then there was the SEO advantages to having diapers in the URL and all these sorts of things and I think I think of Donna way I think.
The Amazon bran is much bigger and stronger today and I just think Amazon may have decided that makes more sense to aggregate all the Shoppers on the Amazon platform and have him get access to all.
[1:00:24] 400 million products and then it's just it's just not worth continuing to work hard to get quizzy to profitability when the core platform is going so well.
[1:00:34] Yeah and I'm not sure they Consolidated the back in like some of the other things like they definitely have Zappos but I've never heard that they - Consolidated that I think it was still running out of a warehouse New Jersey and stuff so.
[1:00:45] No I need all the employees for sure where New Jersey so I don't I don't I'm not certain about the tech.
But I think that's true and the other thing I would just went out as I think all the employees that Mark Lord knows the web from Quincy he took from them long ago and they were to check which was also it would New Jersey show.
[1:01:01] And they're all at Walmart now.
[1:01:02] Yeah it just doesn't make sense that that that that Jeff is doing that for out of any malice for Mark.
[1:01:09] Couple that was a heck of a lot Amazon news they've been busy busy little guys up there in Seattle any non Amazon news you want to hit here at the bottom of show.
[1:01:19] Given time I think just a couple of things there continues to be that this mall again and talk like this,
this is shaping up to be a really rough time to be in retail so,
there are lots of early indicators that q1 sales for retail just going to be horrible across the board and that's really scary and we're just seeing announcement after announcement about you know retail orders that are.
Taking these austerity measures and cutting stores and things like that and so you know,
Payless's bankruptcy announcement you you add up all the announced clothes stores and it's over 2,500 stores that already been announced to close this year and we're only in April,
last year the major retailers closed 1600 store so where.
We're way ahead of last year's store closing and I'm sure we haven't seen the last of that I have a feeling after all the q1 earning reports that we're going to see a lot more negative news before it starts to turn around.
[1:02:26] Yeah couple quick ones from me on the marketplace at so eBay was also shop talking that they had their see you again and when again I had,
the head of advertising on my panel and you don't it's going to see eBay is not out of swinging pretty hard he made some political statements there was really excited about but they in the world e-commerce their big announcement was,
and then but no you know I think the shop talk trucks I have done a really good job of getting people to announce things at the show that that's kind of.
Makes it extra special worth going to so they announced at the show,
two things essentially that you don't number one they have a new program where they're going to guarantee 3 day delivery on about 20 million items on eBay and they had a program called Fast and free,
I was kind of like a loose kind of promised United it wasn't like.
Primate you stuff in two days I was kind of this thing kinda gets to you usually on three days we think it will.
[1:03:26] I get to you faster than other stuff.
[1:03:28] Yes me that you kind of fast this is like,
it into a launch and hasn't launched yet but you know at least the verbage from the executives is we're going to guarantee 3 day delivery on 29 items.. So that's good you know it's not 2 days but also you don't have to do it so it's free 3-day show,
so that's interesting and then use the rest of his time to really talk a lot about machine learning and you're talking about how.
If you were seller and you wanted to sell a widget you could take a picture that widget in the email recognize it and kind of say,
hey Jason are you selling this podcast microphone and it looks like a roadie 200 and and no do you want to is that right and you want to spend list it for some pretty interesting things you know they're around morning and he pretty much said.
You're not going to do machine learning now you're going to be if actually dead and three years when this is kind of the table Stakes so I agree with that,
yeah he talked to some skeptical kind of long-term eBay kind of folks and you know the the Starkey kind of answer to that as well you know you go to eBay and search for something you can't find it why don't they put the machine on that part of the site so,
yeah that that it is honeybaked continues to cut under invest in that part of the shopping experience so,
they had some of the dishes they haven't really known as best I can tell taken root yet but they are working on it but it does feel like,
some of the stuff they're doing is nibbling at the edges if you,
if I'm what you're looking for so I'm a huge fan so I thought they came out swinging in an aggressive I just I just worry that they really need to prove that customer experience it Scot several iterations.
[1:05:08] Not only Amazon but you know how many channel in and all the other players out,
the last thing is so Amazon is been investing at this is kind of a backdoor more Amazon news I guess,
I've been Amazon really know that they don't break out the numbers but,
from all the data that's available like from comscore and things it seems like they're really true that market up there Bill,
tennis centers of invested billions of dollars there they were to start up there that they were unicorns mean that over a billion dollar valuation Snapdeal and Flipkart,
not news lot of rumors that those two guys are considering merging two kind of have a viable alternative Amazon so it's pretty interesting in in in of the only Market that Amazon is lost in his chinaware Alibaba,
had a bit of a head start and Amazon couldn't you know it's a good country for Amazon but it's the one area where they're like number two or I could argue number 3 or 4 actually behind,
attention JD show.
[1:06:07] Amazon didn't like that and I think they've decided they're going to win an Indian this is a really ended Good indication that they they are.
Even though there's some bureaucratic things where they can't do first party there they can only do third-party but they've they've launched FBA so it's a weird country it's it's,
spa and third party but no first party but that model seems to be working really well for them and they're forcing some changes there so I thought that was,
an interesting International flavors since we now have mercadolibre on this month on the show we can start talking about a lot more of this International stuff.
[1:06:41] Absolutely it's going to be interesting to watch I think that you anyways,
that watching the Latin America and merging the Middle East and four to go to India are you going to be more fun than then watching the US where where,
the winners and losers of Rd emergency little bit more.
[1:07:00] I'm in Scot it is not going to shock you but it happened again we have wasted a perfectly good hour of our listeners time so I want to thank everyone for helping to make this show the success that.
[1:07:14] Getting someone for listening and if you do have a second we would appreciate you liking our Facebook page and leave us an iTunes review if you have something positive to say thanks.
EP077 - Kohls CEO Kevin Mansell
Kevin Mansell is the the Chief Executive Officer and President of Kohl's Corporation and Kohl's Department Stores Inc. He joined Kohl's Corporation in 1982 as Divisional Merchandise Manager.
Kevin sat down with us at Shoptalk to discuss a wide range of topics including the latest at Kohl's, the state of US Retail, Amazon, and the evolution of omni-channel.
Episode 77 of the Jason & Scot show was recorded live from Shoptalk in Las Vegas on Tuesday March 21st.
EP076 - MercadoLibre, Head of Marketplaces Leandro Soares
Leandro Soares is the head of Marketplaces at MercadoLibre.com. MercardoLibre (or MercardoLivre in Portuguese) is the largest online marketplace in Latin America. Our conversation covers the basic of the Latin American e-commerce market, the significant differences from country to country, and the evolution of e-commerce and marketplaces.
Episode 76 of the Jason & Scot show was recorded live from Shoptalk in Las Vegas on Monday March 20th.
Charlie Cole (@CharlieCole) is Global Chief Ecommerce Officer at Tumi, and Dan de Grandpre (@dan_degrandpre) is CEO of Dealnews. We caught up with both of them at a networking event hosted by Scot Silverman at ShopTalk.
Episode 75 of the Jason & Scot show was recorded live from Shoptalk in Las Vegas on Monday March 20th.
Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.
EP074 - Selling on Amazon with Melissa Burdick of The Mars Agency
Melissa Burdick is the VP of E-Commerce for The Mars Agency, and a former Amazonian who was involved in Amazon's entry into the CPG space.
We talked with Melissa about all things Amazon, including:
Episode 74 of the Jason & Scot show was recorded on Wednesday March 8th, 2017.
EP073 - Evercore ISI Softlines Analyst Omar Saad
Omar Saad is a Senior Managing Director and heads Evercore ISI's Softlines, Luxury & Dept Stores team. In February 2017, he published a report "Softline Wholesale Channel Must Evolve or Die." (PDF Download).
In the report, Omar predicted that one of the most pronounced effects of the digital disruption we are currently living through will be the elimination of middlemen throughout the economy. He views department stores and other retailers of third party products as one form of middlemen (between the product manufacturer and the consumer) that is already being dramatically disrupted and will need to re-invent itself to survive. In the softlines category, he believes this disruption will also effect the products brands dependent on a middleman based supply chain, and it's economic model. As a result he downgraded the status of seven brands he follows. Shortly thereafter, many of those firms reported disappointing earnings and/or predicted significant headwinds in their businesses.
In this interview we cover:
a) consumers have instant visibility into price, selection, and value across retailers and brands;
b) celebrities, fashion bloggers, and YouTubers (not department store buyers) define style and synthesize trends;
c) brand building is achieved more through social than traditional media; and
d) the new standard of convenience is same-day delivery, not a shopping center with a bunch of stores in one place that requires a several-hour time commitment
2. What effect this will have on retailers
It's going to be hard surviving as a business selling other peoples stuff. Retailers may shift to more of a "Concession" model in which retailers charge brands for space, and the brands sell their own goods. This model is of course already very common online (Marketplaces) and is also common in Asia. Omar suggests that this element of Ron Johnson's JC Penny strategy may have been right.
3. What effect this will have on manufacturers
In the long run Brands that create innovative product, produce strong content, and are able to connect directly with consumers will thrive. However, Omar predicts severals years of significant challenges for brands as they wean themselves off their current supply chain model.
Episode 73 of the Jason & Scot show was recorded on Tuesday February 28st, 2017.
EP072 - RetailDIVE Editor Jason Ankeny
Jason Ankeny is the Editor at RetailDIVE. RetailDIVE is a daily e-newsletter focused on the retail industry, offering industry news and original analysis, and is one of Jason & Scots favorite industry news sources. Jason is on Twitter as @jankenydive and can be reached via e-mail at email@example.com. Jason sat down for an interview live from the NRF Big Show, and we covered a wide range of topics.
Episode 72 of the Jason & Scot show was recorded on Monday January 16th, 2017.
EP071 - News Update, Amazon, Walmart, & Dept Stores
Razorfish Tech Summit - YouTube video
Toronto - AdWeek FFWD 2017
Episode 71 of the Jason & Scot show was recorded on Tuesday February 21st 2017.
EP070 - Bonobos, Chief Experience Officer Dominique Essig
Dominique Essig is the Chief Experience Officer at Bonobos. Bonobos is a men's apparel retailer that sells direct to consumer through their E-Commerce site, and a chain of company owned GuideShops that deliver an innovative retail experience but do not stock inventory. Bonobos Co-Founder Andy Dunn coined the phase Digitally Native Vertical Brands, to define businesses such as Bonobos. Dominique sat down for an interview live from the NRF Big Show, and we covered a wide range of topics including Guideshops, and their customer service Ninjas.
Episode 70 of the Jason & Scot show was recorded on Monday January 16th, 2017.
Jerry Hum is a Cofounder & CEO at Touch of Modern. Touch of Modern is a members-only ecommerce website and app focused on selling lifestyle products, fashion, and accessories to men. The company is based in San Francisco, California and was launched in March 2012.. Jerry sat down for an interview live from the NRF Big Show, and we covered a wide range of topics.
Episode 69 of the Jason & Scot show was recorded on Monday January 16th, 2017.
EP068 - Deloitte Chief Retail Innovation Officer, Kasey Lobaugh
Kasey Lobaugh is a Principal and Chief Retail Innovation Officer at Deloitte Consulting LLP. You can follow him on twitter at @klobaugh. Kasey and his team publish some of the most useful research in the industry including The New Digital Divide which helps quantify the effect of digital on in-store purchases, and the Deloitte Retail Volatility Index which measures disruption in the retail industry. Kasey sat down for a interview live from the NRF Big Show, and we covered a wide range of topics.
Episode 68 of the Jason & Scot show was recorded on Monday January 16th, 2017.
EP067 - Recode's Jason Del Rey
Jason Del Rey is the Senior Editor covering Commerce and Payments at Recode. You can follow him on twitter at @DelRey. He hosts the #CodeCommerce series of events, the next one of which is in Las Vegas on March 20th. He's always looking for new scoops in the commerce industry at firstname.lastname@example.org. Jason sat down for a interview live from the NRF Big Show, and we covered a wide range of topics.
Episode 67 of the Jason & Scot show was recorded on Monday January 16th, 2017.
EP066 - Scott Silverman
Scott Silverman is a principal at Scott Silverman Associates and Scott is also co-founder of the Global Ecommerce Leaders Forum. On top of that, he also advises several startups in the e-commerce arena. Scott is one of the inventors of the term CyberMonday. Scott is also a former Executive Director and board member of shop.org.
Episode 66 of the Jason & Scot show was recorded on Monday January 16th, 2017.
EP065 - CES 2017 Recap
CES is the largest trade show in the US with 175,000 attending in 2017. The show has become a major PR and Trend Spotting event for marketers across many industry. In this episode we recap the booths that are relevant to commerce practitioners including Intel, Qualcomm, Alibaba, Samsung and Mastercard). We discuss, Amazon Alexa, which won the show by being embedded in over 700 products at the show. And we discuss implications of cognitive computing and natural language processing more generally.
Episode 65 of the Jason & Scot show was recorded on Thursday January 12th, 2017.
EP064 - 2017 Predictions & 2016 Review
2017 Commerce Predictions
Bonus - Digital Wallets - Something other than Paypal/Amazon will achieve 10% of US e-commerce transitions (not occurring on Amazon). Potentially a mix of vendors wallets (Chase, Walmart, ApplePay in Safari, etc...), or the W3C Web Payments standard could gain traction.
Bonus - Amazon will release another phone.
Episode 64 of the Jason & Scot show was recorded on Tuesday January 3rd, 2017.
Scott Morey is the EVP of GGP, one of the largest mall operators in the US. We spoke with Scott about a Mallageddon, Omni-Channel, Millennial shoppers, and the future of Malls.
Don’t forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.
Episode 63 of the Jason & Scot show was recorded on Wednesday December 7, 2016.
EP062 - Deep Dive Amazon-Go Store concept
On Monday 12/5/16, Amazon surprised the industry by debuting a new retail concept called Amazon Go. The 1800 square foot brick and mortar convince store’s most notable feature is that it requires no checkout. Just put your items in your shopping bag and walk out of the store when you are done. Payment is handled implicitly (similar to paying for an Uber).
The store is for Amazon Prime members only (requires a mobile app to act as a key and let you in the store), and uses a combination of camera and sensors to track shoppers and the items they put in their bags. The store is open to Amazon employees only for this month, and will be open to all prime members “early next year.”
Amazon has a website for the store, and a demonstration video
Context and History
In the video and on the info site, they talk about having been working on the store for 4yrs
The store likely leverages image recognition technology Amazon acquired via Snaptell 2009
The store clearly leverages elements of two patents Amazon filed in 2013 and 2014
Implications for the Industry
This is not the first self-checkout concepts. Grocery stores have been experimenting with full cart scanners for years, Apple has self-service checkout, Walmart has scan and go checkout, and startup Twyst has a “smart bag” that adds up purchases as you put them in the bag. What’s unique here is they aren’t just making checkout easier/faster, they are eliminating it. In fairness, IBM made a concept video with the exact same checkout experience in 2009, but it was based on RFID and never went further than the vidmazon has made it real, and is letting customers experience it.
All the technologies Amazon is using have been around (and in the retail industry for a while) but no other retailer has built this store. This is largely due to Amazon’s unique culture… failure is encouraged and Amazon employees are free to experiment. Most legacy retailers would quickly make a list of reasons not to do the store and move on, Amazon did it anyway.
Regardless of the specific technology, operational issues, scalability etc… customers are likely going to love the experience. Once they have experienced it, they are going to want and expect it everywhere. For the busy Mom, lower friction experiences usually win, and taking checkout from something that has to be done explicitly to something that happens implicitly is going to be very popular with shoppers. Once again, Amazon is setting the customer experience expectations that the rest of the retail industry must try to live up to.
Don’t forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.
Episode 62 of the Jason & Scot show was recorded on Tuesday December 7th, 2016.
http://jasonandscot.com Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at Razorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.
EP061 - Cyber 5 Holiday Recap 2016
Black Friday has become a major online shopping day (only $110M smaller than Cyber Monday) and growing much faster (likely to pass Cyber Monday next year). Black Friday is the busiest Mobile shopping day of the year. Cyber Monday set the all time US record for e-commerce sales. Mobile traffic is over 50% over the holiday but mobile conversion is close to half of desktop conversion, but the conversion gap is narrowing. Store Traffic is down which likely means a mediocre overall holiday.
Episode 61 of the Jason & Scot show was recorded on Thursday November 28, 2016.
EP060 - Holiday Preview w/ Adobe's Tamara Gaffney
Tamara Gaffney is the Principal Analyst and Director for Adobe Digital Insights (ADI). ADI aggregates data from all of adobe's products and customers, and is able to provide insight about various markets. In particular, Adobe Analytics (formerly Omniture) is used by over 5400 e-commerce sites, representing 55m skus, and tracking $7.50 out of every $10 spent on e-commerce in North America.
Adobe is forecasting that e-commerce will grow 11% this holiday season (November and December). This is a lower forecast than a number of other sources:
Tamara attributes the lower forecast to slower spending coming out of the US election. In particular heavily populated states like New York and California that strongly supported Hillary Clinton (who ultimately lost the election), are spending at a much lower rate than the forecast models would predict. So far this represents over $800M in lost e-commerce spending (as of Nov 17th), that Adobe believes will negatively effect the overall holiday season.
We also discussed mobile, omni-channel, singles day, and a variety of other interesting topics.
You can follow the Adobe Digital Insights website, and subscribe to their newsletter for frequent updates throughout the holiday season.
Episode 60 of the Jason & Scot show was recorded on Thursday November 17, 2016.