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

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

EP158 - NYC Holiday Store Visits 

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

Some favorites this year included:

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

Some disappointments included:

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

Amazon News

Other News

IBM sold its commerce platform (Websphere) to HCL

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

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

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


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

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

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

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

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

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

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

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

[1:48] 1 of 2 of 3 of I like that.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[25:15] Klingons.

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

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

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

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

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

[27:29] I'd like it.

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

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

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

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

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

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

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

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

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

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

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

[30:32] Helios One C drop the mic.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[55:54] What's the incentive.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[1:10:06] Who wins Miss.

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

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

[1:11:22] Yeah I heard those guys.

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

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

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

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

Dec 17, 2018

EP157 - Bain & Company Partner Cesar Brea 

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Dec 4, 2018

EP156 - Profitero's Keith Anderson Holiday Recap 

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Marker 05

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

Marker 06

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[51:40] Jason be all over that.

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

[51:48] Exactly right.

[51:49] It's another flywheel and that's going to be a great place to leave it because it's happening again we've used up all our a lot of time if you were itching to make a comment or ask a question feel free to continue the
conversation on our Facebook page and will be monitoring that as always if you enjoy the show the
that never went on the Christmas list for Scott and I this year is for you to jump on the iTunes and give us that 5-star review.

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

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

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

Nov 29, 2018

EP155 - Cyber-5 Recap w/ Adobe's Tamera Gaffney.

Tamara Gaffney (@tamarag) is the Adobe’s Principal Analyst, Experience Index.  Tamera joins us to discuss the holiday e-commerce results from Black Friday through Cyber Monday (Cyber 5).  Tamera has access to anonymous, and aggregated data from more than 5,000 companies worldwide that use the Adobe Digital Marketing Cloud (including Adobe Analytics formerly known as Omniture), which represents one of the largest samples of the overall e-commerce industry available.  Her team publishes useful insights based on that data throughout the year.

Adobe 2018 Holiday Forecast and Realtime Holiday Dashboard

Adobe Digital Insights

Adobe CyberMonday Press Release

Long time listeners will remember that Tamara first appeared on Episode 60 with Holiday Predictions for 2016, and Episode 109 for a recap of 2017 Cyber-5.

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

Episode 155 of the Jason & Scot show was recorded on Wednesday November 29, 2018.


[0:25] Welcome to the Jason and Scott show this is episode 155 being recorded on a Wednesday November 28th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scot Wingo.

[0:40] Hey Jason welcome back Jason Scott show listeners
well folks we are past the cyber-5 or turkey 5 or whatever phrase you want to use for those magical 5 days that we plan all year for in retail and
and this is part 2 of our three-part halftime check in for Holiday 18
we are excited to have back on the show for the third time you may remember her from episode 6109 and here she is on 155 tomorrow Gaffney.
Tomorrow is adobe's principal analyst for the experience index welcome back to the show for the third time tomorrow.

[1:18] Hey it's getting to be a trend it's great to be here thanks for having me.

[1:23] I like it when the data animats recognizes that it's a trend that switch it.
Tamara super excited to have you back you're in rare company is a three-time guess I think you might be only our second three-time gas.

[1:37] Oh my gosh that's like do I get it do I get it like a metal or a hat or something.

[1:43] Oh my God all the propagandas in the mail to you right now.

[1:47] I'm thinking a turkey had I've seen these turkey hats for 35.

[1:51] No no no no I knew gift became available today which is exclusively the only gift I'll be giving out this Christmas season Bob the singing bass now Alexa enabled.

[2:03] Oh my gosh really that is just that that's just perfect but it should be a thing in Turkey.

[2:12] Yeah that would be more thematic by the couple years ago a guy hacked one of the singing Bass with an Alexa and now there's apparently an official product so I'm buying them in bulk just in case anyone needs it.

[2:23] I think it will be a collector's item.

[2:25] You are probably right so one fun thing about the show as we keep collecting more and more audience so for the audience that may not have heard the last two shows can we get like the brief version of your background and how you came to it.

[2:40] Okay well the brief background was a long and winding road but basically I love data I do a lot of stuff
storytelling with data and in the case of adobe which most people don't know this and maybe some of your listeners don't those who've been here while I figured out that it will be as more of than
Photoshop and acrobat PDF we actually have,
the infrastructure the we called the experience cloud and it runs in behind the scenes it pretty much runs a lot of the internet of all the way from the websites to how people track their data on the web for in their mobile applications or even I mean
this was really kind of cool you know there was Coke machine that you go up to and you you select what you want or call the freestyle machine some of our technology is even on that screen as well and so you know a baby has
tons and tons of information and put in particular retail information or a trillion business to retail sites that are 55 million
excuse which basically means Unique Products during 80 of the top 100 Us online retailers so that's a lot of data
we've been doing this a long time and to track what's going on by my tail so that's what's coming up out of this report and how we got to it.

[4:04] Awesome and in that experience Cloud there's things like Adobe experience manager which runs a lot of the websites
there's there now is Magento which is a e-commerce platform that our lives would be familiar with but in particular there's a web analytics platform that was formerly known as I'm not sure which is,
near and dear to a lot of our hearts.

[4:27] Yeah.

[4:28] My assumption is a lot of this Pacific Holiday retail data were talking about,
comes from aggregating all of the the omniture clients out there a my my generally right on that.

[4:41] You're generally right although many of them have only been around since before and after that your name was retired which was over
/ what 8 years ago good news Alex cloud is finally getting more search term.
Then on the trailer is after 8 years it was a very good brand so and that yes that's where the date is coming from for this type of information.
And it's your last day. I'm going to be quoting.

[5:12] Awesome and I know you're not the product manager so I'm not teasing you about this
Technically when you retire a name you should change the url and since most analysts get their data that's it somewhat it's not officially retired in my mind.

[5:27] How details.

[5:31] I'm at I'm just having fun and magenta was a pretty new acquisition are you starting to get data from them as well.

[5:39] We are starting to but we've been really
very light touch this particular holiday season because they are e-commerce platform company and so obviously this is their busiest time of year so disturbing them information was
was not something we wanted to do right in the middle of Black Friday when they need to make sure the systems are all running at perfect chub fish.

[6:06] Colts so I have a burning question based on the freestyle machines what's the most popular flavor of grade can you.

[6:12] I have no idea I'm going to go ahead and guess it's just flat-out cook.

[6:21] Yeah my favorite is when kids sit there and they put every little flavor injection and it takes like 2 hours.

[6:30] It comes out like this really you know being or something like that.

[6:36] But seriously back into the world of e-commerce let's talk about holiday 2018 it, thirty thousand foot level what did you guys expect coming in and how are we shaking.

[6:47] So what we expected for the whole season was about a 14.7% growth rate Which is higher than the growth rate we had last year at 14.3%
and anyone who understands stats knows that when you have a higher growth rate on top of the higher number the absolute growth is
quite a bit more and I'm so that was surprising and we looked at
Labor Day which turned out to be the first-ever to billion dollar online day outside of the holiday season and that's happened this Labor Day and we had
over 25% growth on Labor Day so we were heading into the holiday season really trying for it to be big
and so with the prediction was that it was going to be her
gross than last year and and then going through the first part of the Season it was looking I'm even bigger
and what we had predicted up until then
cyber-5 days we were at 58.5 billion dollars which was a 19.9% growth rates
our expectations and then we were looking at what was happening during the the Cyber 5 and it was starting to come in much higher than our predictions so we're definitely seeing.

[8:15] Very strong season so far.

[8:18] Yeah so that was the one of the first things that jumped out of me is is
November December you know somewhat aggressive week calling for 14.7% growth and then you get 19 almost 20% growth rolling into the cyber-5
in the average over the Cyber five I want is some place in the order of magnitude of by 28% truck so I guess I was curious.
What is that kind of expected and it just feels like more of the the sales are aggregating in that like Peak shopping time and we're going to see much more modest growth the rest of the,
the holiday. Or is there a chance we're going to blow away that 14.7.

[8:58] Yeah that's a really good question and normally does cyber-5 is a 20-plus percent growth and so that wasn't
as much of a blowout I'll go Black Friday was higher than we expected it to be and you know that's actually been a trend in the last 5 years that we weave under-estimated Black Friday
Friday's came in within 1% of what we expected the first 5 days of Thanksgiving to be and so we're at a point now where
either if we see a law happening and we did start to see a pitiable also Cyber Monday grew at 19.3% it was a 7.9 billion dollar day
and I remember reporting numbers when we were first hitting two billion on Cyber Monday and now we're almost at 8
and so there are definitely seen a really consolidation along this weekend but the very beginning part of the season was definitely up so if we don't see a Slowdown in the next couple of weeks.
We will probably be higher than our overall she's an estimate.

[10:11] Nice and then one inside baseball thing I think there's one more day in the holiday. This year than last year right so.

[10:17] Serious and I was taking into account interesting little factoids and and some of this information what we're trying to reading now is that is about a 280 million dollar
increase in online sales just to have one more day and I think if you correct me if I'm wrong cuz I'm not sure if it is it's the longest the season gets is it going to go back just too short next year
I think it might.

[10:42] I noticed you're shorter that you can keep Stephanie I I can't sit here and defend it to be say this is the the longest of the total calendar cycle.

[10:52] I think it is I think this is the longest it gets and then what ends up happening is that it locks off like a whole week next year and so,
that costs about 280 million dollars a day just because retailers have pegged to the shopping to start on a day that,
isn't necessarily.
Yeah the same distance from Christmas and that's it that's a really big challenge for them next year this year it's a big chest so.
That's what we we saw that we predicted that into our findings and what we saw actually a couple years ago before we exported the notion of Black Friday
over the pond to Europe wish now is a very big day in Europe but it didn't used to be and what we discovered before we had
steam Black Friday get exported was that Europeans started their shopping
earlier and so what retailers have done by creating Black Friday is delay shopping although this year it looks like there wasn't as much of a delay people got on it.
Elise online a lot faster than the normal.

[12:04] I like it so as lazy Americans are even exporting are are lazy shopping habits I love it.

[12:09] Well yeah and they're both they're all shopping and in London on Black Friday and have absolutely no idea where they're shopping.

[12:19] Yep yep I totally get it in side note it does feel like there's.
Pretty darn favorable consumer macroeconomic conditions this this year and you know there's that the there's personal income tax benefits this year that go away next year and all these things.
The shorter holiday next year and the super favorable climate this year I do sort of feel bad for a lot of retailers they're going to have to comp against this year or next year is going to be a little rough.

[12:46] Yeah I know they're probably going to head into January starting to think how on Earth am I going to get what I got out of this season next year.

[12:55] Exactly but that's tomorrow's problem.

[12:57] It is and you're a little fun fact for you about cyber monday us consumer spent 11 Thousand Years shopping online on Cyber Monday.

[13:08] 11000 man years.

[13:10] 11000 man years I know right.

[13:14] Well it wouldn't be a Jason Scott show if we didn't talk about Amazon and if you don't want to talk with Amazon that's fine we can talk about any interesting retailer trends that you You observe that you want.

[13:28] Well I guess I don't tend to talk specifics about retailers in part because you're getting the permission to aggravate findings
you don't want to really call any of them out per se but one of the interesting findings that I will talk about is what they call.
B o p i s b o p i s.

[13:57] And that was a huge increased 65% increase in that on Cyber Monday and so,
it really gives you a lot of.
Concept around why did Amazon buy Whole Foods and why are pure play retailers setting up pop-up retail
locations or or something for people to try to go and physically interact so it's funny because in the past the idea was you didn't have the
extensive having any kind of physical location but the reality is is
it really is a benefit and so that is a big trend for retailers and it also helps extend the back end of the season so,
in the past we saw shopping pretty much ground to a halt around the 16th or 17th of December and now we will see shopping all the way up until Christmas Eve and that's because you can pick up in store.
And so that's that's what I would say is the most interesting retail Trend that we track this year.

[15:08] Yeah yeah for sure in in side note if you're in Europe instead of saying bopis you say click and collect which sounds more more of sophisticated.

[15:19] Doesn't it there always been so much more sophisticated you know.

[15:21] Exactly Timber instead of what they have all kinds of.
What is the use and everything I thought I saw another interesting stat along with the in the omni-channel category were you seeing.
Retailers that had a break-in Wonder presents outperforming sure play retailers am I remembering that right or am I making it up.

[15:47] That was in the prediction and we didn't put out anything yet on whether or not that's that's coming true but it was a part of our prediction.

[15:57] Okay, we will look forward to hearing how that plays out in increasingly omni-channel thing to me is how customers are behaving on mobile phones because.
There there you know in addition using his mobile phones at home a lot there they're using them in the store until I'm particularly interested in,
mobile played out this holiday and so can you share any insights in terms of like traffic or number of orders or a retinue on.
A mobile vs. desktop.

[16:34] Yeah that's the cool thing about our our dataset is that we can see
visits from any kind of device and track what type of device it was,
by the way those people who came with an iPhone or much more likely to purchase and those came with an Android I'm an Android User so I'm feeling a little bit and now I don't know maybe you got to have an iPhone to be at the pool all the time,
the mobile shopping what ended up happening was Cyber Monday brought into .2,
billion dollars of the 7.9 off of mobile devices that's at 55.6% versus last year so apparently starting to figure out and is jealous
the majority of the shopping list starting to figure out how to get,
that actual sale Austin last year over 50%,
work on a mobile device but much lower percentage of did of the final sales,
that's growing tremendously and I think it has a lot to do with a number of improvements to the experience of shopping on mobile.

[17:49] Yeah I know you probably should have digital index year-round I don't want to put you on the spot to memorize a bunch of numbers but.
The majority like across the whole index is the majority of traffic now on mobile or is or is when it goes over 50% in holiday is that a seasonal Peak.

[18:12] Yeah that's a seasonal Peak those are the most mobile days that we have ever seen
and it has a lot to do with the fact that people during that high-volume visit. Aren't you at home.
And so you'll see really high Mobile on Christmas day you'll see it on Memorial weekend you know the typical times when people are out and about or on vacation is when we start to see mobile heading over 50% but it's not
enough of the year yet to be over all over 50%.

[18:47] Got into it's interesting to me is my clients tend to be very large retards at the top of the echo system and the number of them are like.
Basically experiencing year-round 50% rates now which not surprising their the most likely to have.
In Avid mobile app user base in all these things but the problem we always run into is we're seeing more and more traffic go to mobile but the conversion rates on mobile have historically lagged and the aovs on mobile hey black and so you have this big gap.
We're more traffic shifting to mobile but the mobile is in generating the same Revenue that the desktop is it used to.
And my my hypothesis is that is we all get better at mobile experiences that Gap is starting to naira or can you confirm or deny that from,
from what you're seeing this holiday is is there less of a gap between traffic and revenue this year than there was last year.

[19:43] There is very still look at but it is closing and in particular is closing on these very high shopping days a large part of that is coming from an email click
map of the mobile device and I talked about this maybe in your in the last episode we did together but there's this notion of rolling over here not even out of bed yet
and starting your Black Friday shopping on the phone before you know you've even put your slippers on and so,
the combination of
those people who are willing to buy off of their mobile devices through email is becoming much more.
Prevalence and there's less friction the biggest friction points in this is from data that we did several months ago the biggest Russian points are really around the size,
I love the picture of you will see what you're shopping for so you will not see as many higher-end device things not just general you know gifts
to the mobile device but it isn't necessarily affecting every kind of retailer the same.

[20:57] Shop retailers have super high-end luxury goods and
people want to see those maybe a little bigger and that's that's one of the big challenges
has gotten much easier and being able to zoom in you know at least a c
text larger it's gotten easier,
and I should point out that none of this information includes mobile app shopping because that isn't coming through to Adobe analytics in the same way.
And I can be a very big percentage especially for large large retailers.

[21:41] Got its that could be maybe if we included mobile app we could be kind of over 50% on a consistent basis I guess.

[21:47] Yeah and mobile apps would research shows us that what happens when the holidays sometimes people will install a retailer app and then uninstall it in January or Adele really keep you recharge staffs but not very many.

[22:04] So sounds like holiday at least from a top line perspective is doing well can you tell how promotional it is so anecdotally you know I'm finding the Shoppers in my family are finding,
it just feels like better deals this year which implies you no more of a percent off and could be a worse bottom line is as this kind of is revealed if you want you have any.
Directional guidance.

[22:31] Well I'm looking at the discounts televisions were at about an 18.9% discount computers were about 17.9 and Toys R Us 30.9.
What word seeing overall look very similar to what we saw last year toys have a little bit more discount this year than they did last year last year but overall the discount percentages
look very similar maybe what you're seeing is a particular,
decline in prices overall and so they don't need to Discount to television as much because it's it's list price was lower than it was last year.

[23:09] Interesting well that that's potentially good news is I was sort of the line with with Scott antidote Ali it felt like a very promotional season but I will be glad to find out.
That we didn't give away too much margin I think you guys also look at the percentage of free shipping and is that pretty consistent this year from last year are we giving away more shipping.

[23:30] We look at free shipping in our production and it is a factor but it is looks like it's very similar tablet has been in them in the past with the exception of the click and collect
to be the more elegant European term is is helping retailers to not have to give away as much free shipping and so
I think that will will see is that the shipping expense will start to decline overall as resellers find a way to avoid
a lot or express shipping.

[24:05] Yeah for sure related to my earlier mobile question I'm I'm also kind of curious if so.
One of the things I think as a lot of friction on mobile as it's not very much fun to take your credit card information into a mobile phone.
But increasingly there's better Utilities in North America for digital wallets like there's more users on PayPal
Apple pay is getting more traction you mentioned Apple users are spending a lot more than Android users are you able to see,
any data around payment methods and are there any interesting friends coming up this holiday season in terms of payment method.

[24:40] You know that is a part of the data said that we could look at it but we tend to stay away from looking at anything close to
how people are paying just know we don't have any personal identifiable or any six your data in the system so it's really very Anonymous but we feel that if we kind of start putting out a lot of information around how people are paying and might feel creepy and so what we're doing is just kind of,
taking that piece the data out of all of what we look at.

[25:10] . so you're saying even if I turn off the mic you can't tell me what Scott's credit card number is.

[25:16] If I did I would have gone shopping with myself that's a joke friends.

[25:25] I'm right there with you we.
Heavy not your data set is like one of my favorite datasets around this holiday because I sort of feel like.
You guys are at the broadest view the widest range of different different.
Types of retailers that use your products and therefore you see their data there are a bunch of vendors that published their own data and some of it's interesting because they show me niches like I'm always curious.
Like what Shopify says they're doing this year because I think of them and started a long tail,
11 manner that published by the date of this year is a Salesforce what used to be the old demandware,
Commerce platform in one of the things that surprised me about their data set over this holiday is
you have sort of them obituaries me to expect Cyber Monday to be the biggest day and Black Friday to be a big day but not as big and it sounds like a customer.
Black Friday outsold Cyber Monday when I was just curious if that surprises you or what like what how you interpret that.

[26:36] Yeah well LOL just say this about.
They know what their methodology is I can't speak to their methodology but,
astrology with 80 of the top 100 retailers I feel like it,
very large dataset it does maardata said does tend to skew towards the larger Enterprise retailers and so,
is possible that for smaller retailers that there might be a different pattern but.
I don't think that that represents the actual true dollar spending because of the large retailers way outperforming smaller retailers in the gap between large and small is getting larger and larger as digital.
Digital experiences require quite a bit of investment and it's getting harder for smaller businesses to keep up with that level investment that's part of the reason why some of them have closed down and also.
Acquired by the larger Enterprises so that they can get their experiences online to be as good as what needs to be that's cuz you're expecting more.

[27:50] Wrinkled so we're getting right up to time so I wanted to ask kind of a three-part question I'll sneak in their number one.

[27:57] Spider-Man.

[28:00] Is there trick once we get.

[28:02] Fish now.

[28:04] One more push up one more push up.

[28:06] So parte you talk about email as kind of a referral for mobile any interesting referral trends like social up or down or PVC up or down like that,
number to anything else you want to highlight the data and then number three maybe we wrap with any punches case should you have about the rest of holiday.

[28:29] Okay so as far as the demand sales drivers what we saw was just typing it and going directly to a retailer was the most
and by the way that also includes jumping in from an email that looks like you typed it in directly,
and paid search was at 21.6% of the traffic
and that is up 6.2% year-over-year interesting made from another report that I did that
isn't related to this it was a survey report I asked people where they like to find out about new things so we're still.
Using search we don't really like it if you tell her she don't really like it and I really like it but it's kind of
where we are the other thing natural search was down social media is about the same.
At about 1.3% at the flicks coming from social media so
not a whole lot of change a little bit more potential earnings power for our friends at Google
other than that I can't really nothing nothing super shocking about that.

[29:47] Second question was was raining in the data that we haven't asked about where you you said I really need to talk to Jason and see.

[29:54] Warriors are something that I think is interesting on the toys on that on area toys and this isn't maybe you guys you know we all have kids so maybe you can help figure out why this is a
surprise gifts,
things that come in little packages like you know those toys you get like one or two time at the counter and you don't really know what's going to be in it but it's.
Something bad,
those types of things and the LOL surprise kind of packages r r a trend.
I don't understand why kids today want not only a gift which is a surprise in and of itself,
to be a surprise even after they open it I just crave getting surprised nowadays.

[30:55] Yes it's on the Big Star Wars fan and this is been in the collectible world forever and we can blind boxes that usually
vinyl blind boxes and is collector you like it cuz it's kind of a fun game to try to collect them all and I think it's kind of leaked out of the collective world and into the mainstream.
I'm so see you at the the law surprise is probably going to be you know,
this year's last year they had the finger links was in the hatchlings were hard to get this year you see him everywhere and you can't find the loss of so so I just think it's kind of moved into the mainstream in it it's just going to add some onion and.
You know surprise to Holiday.

[31:33] I just wonder what that whole Collectibles mindset amongst gen Z or the guy like to call them crackers are creators because I hate
it's so boring but I just wonder if that's going to change their generation in some way and they will change the whole idea of.
Collectibles as being a much bigger thing as they go into adulthood I don't know.

[31:59] Yeah I think instead of going and buying them all to get them I think that Generations more into kind of like trading and so I think it's going to be kind of like
it's collectors you don't really trade him unless you get extras cuz you're trying to
all inclusive and get a full set so but I bet you know it'll be interesting to see I think they're designed with more of a trading angle versus a you got to get them all have an angle.

[32:21] Yeah I know I do. I do think that the notion for these kids of scarcity,
is going to be very different than previous generations right so you know it in Scottsdale he only had to be the person in his circle of friends that got the cool Star Wars thing out of the blind box and there weren't like perfectly efficient markets
if in one one pool of of Star Wars collectors there were too many of something in another pool at something was super scared now all these markets,
super efficient and you know when you have something you need it has to be unique amongst your ten thousand friends on Instagram not just your,
your 50 friends in real life in so that you know I do think.
Unique and scarce is going to equal like through limited editions of things and you know more personalized things.
For this generation in past but it's going to be interesting to watch.

[33:16] You know I just thought of a new business idea we need to sell parents and sort of x-ray machine that they can take to the store and see which of the surprise boxes are the
unique ones that their kid really want.

[33:31] Unblind box Tech.

[33:33] Is the unwinding Jewel.

[33:37] That's a sad thing is of course kids would figure out how to use it way before the parents would so.
The defeating factor and that's probably going to be a good place to leave it because we have used up our lot of time for this holiday quick-hit edition,
but it was hers have any follow-up questions or want to continue the discussion as always jump on her Facebook page and will continue the dialogue there.
And of course if you enjoy this show we sure would appreciate it if you jump on iTunes and is a holiday gift us Cotton-Eye you can give us that five star review.

[34:10] Two are thanks for joining us working folks find you online if they want to come and follow things through the rest of the holiday.

[34:16] Well I'm Twitter I'm at tomorrow G wish I had I got in pretty early on that name
and you can actually find us on
sorry to shut up because you guys look like you're having way too much fun and so I wanted to have more fun and have a little podcast you so I'm not a podcast is call J & T data talk and that's on Android and on iTunes and so I'll be a good way to to keep track of
what's going on but you can always contact me on Twitter message.

[34:48] Awesome so after you listen to episode 155 switch on over to that podcast and check it out.

[34:56] Thanks again for coming on the show and until next time happy commercing.

Nov 28, 2018

EP154 - Turkey-5 2018 Recap

Episode 154 is a quick recap of all the retail and e-commerce activity over the Turkey-5 weekend (Thanksgiving through CyberMonday).

Jason interviewed by eMarketer about AmazonGo stores

Jason article in Forbes "The Future of Brick-And-Mortar Retail is Mobile"

  Revenue YoY Growth
Thurs $3,700,000,000 28.00%
Friday $6,200,000,000 23.60%
Sat $3,200,000,000 25.00%
Sun $3,200,000,000 25.00%
Monday $7,900,000,000 29.00%
Turkey 5 $24,200,000,000 26.41%
Nov-Dec $124,100,000,000* 14.8%*
* Adobe Forecast  

Amazon Cyber-5 Press Release

Salesforce Holiday Insights Hub

Adobe Holiday 2018 predictions, actuals, and analysis

IBM Analytics Outage

J Crew Website Outage

Google and Facebook Outages

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

Episode 154 of the Jason & Scot show was recorded on Tuesday, November 27, 2018.

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.


[0:25] Welcome to the Jason and Scott show this is episode 154 being recorded on Tuesday November 27th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your Cohoes Scot Wingo.

[0:40] Hey Jason welcome back Jason Scott show listeners we sincerely hope you had a great Thanksgiving an awesome profitable Black Friday and a record shattering Cyber Monday Jason did you get enough turkey over the break.

[0:55] I did indeed it's my favorite time of the year my two favorite things shopping and eating.

[1:01] I have been dying to ask you two questions what's your favorite pie if pies are the favorite Thanksgiving dessert which pie and if not what's your favorite Thanksgiving dessert.

[1:13] Do you like I'm a traditionalist I go with a pumpkin pie with whipped cream on it what about yourself.

[1:18] I am a southerner so it has to be pecan pie with a little scoop of ice cream.

[1:28] So my grandmother's family my grandma Daisy who's no longer with us is also a southerner and we always have followed her Thanksgiving Traditions but oddly
somehow somewhere along the line she added a German chocolate cake to the mix so full disclosure
I sort of Miss now that she's not with us anymore the grandma Daisy's German chocolate cake in addition to my pumpkin and pecan pies.

[1:54] Maybe she was Southern German.

[1:56] Exactly Daisy just was at a head of her time she was just a multicultural.

[2:02] And then I've been dying to know how you survive when Starbucks closed for a day.

[2:07] That is a great question there have been years when that was a challenge for me but I feel like at this Advanced stage of my life
I have pretty much mastered at so a Starbucks wasn't Starbucks strategically close early so I like to make a visit before they close
and then Abby as a back at the Starbucks I do have a super fancy automatic espresso machine that makes my Starbucks drinks at home.

[2:36] Call and I saw you have published couple articles before we jumped into the meat of the show toast us what you been putting out there into the interwebs.

[2:43] Yeah I was prolific the time off I give me a chance to catch up on a few things I've been meaning to do so you and I are both Ford's contributor so I published a Forbes article today
and it's about a topic we first started broke on the the podcast it's called the future brick-and-mortar is Mobile in its talking about all these new
store Concepts that are opening up and and how the customers mobile phone is increasingly becoming a mandatory
part of the in-store shopping experience in an increasingly you need a mobile phone to get into the store so that that was
interesting to me and then I did do an interview in emarketer all about the Amazon go store soap again probably not any,
opinions that would be new or surprising to Jason and Scott show listeners but nice concise article of sort of every swear I think the the Amazon go stores are going so I'll I'll post a link to both of those in the show note.

[3:46] Cool this is kind of a the first of a Trilogy of shows were put together that really are looking at kind of the halftime report of where we are as far as holiday 18th concerned
we're recording this the day after Cyber Monday so we've got those key 5 days out there and some data starting to roll in
then our next to Gaston the show or going to come with some more proprietary data someday we're going to do kind of a hot take on what we're seeing out there from Publix results
from all kinds of sources that that will try to slip note as we go through and we want to jump into that
and it wouldn't be a Jason Scott show without some Amazon used to kick it off.

[4:34] Amazon news new your margin is there opportunity.

[4:42] So Amazon is one of the most secretive companies you'll ever come across and holiday is no exception typically they did Issue a press release which was
some of it was interesting and revealing and others of it was frustrating leak looked so I just wanted to walk through some of the highlights there.
First highlight is a tortoise a new term where Amazon is calling it instead of I like the Cyber 5 they're calling it The turkey-5.
Jason what you think about this rebranding of the five days from Black Friday to Cyber Monday.

[5:13] So I think I don't consider rebranding I think both terms are important so
you were actually the first person I heard you cyber 5 and it was quite some time ago way before the podcast and so I've embraced that when I'm talking about e-commerce sales over those five day. But when I'm talking about omni-channel sales and brick-and-mortar sales then I feel like we need to talk about the turkey-5.

[5:36] Okay well next time they can both look together so.
What are some of the highlights of wood Amazon announced they announce the Cyber Monday was their biggest day ever and they sold millions quote-unquote millions which you know I think.
Is a range between 1 and 100000.
I don't know how to arrange that I know it starts at 1 and goes
Tenpenny so millions and millions of Amazon devices were sold the new Echo dot was the top Amazon device,
they sold Millions more this turkey-5 versus last over 18 million toys and then over 39 fashion items and I always find it interesting to Think Through.
And some of this is probably much mind-reading but
herbal Tea Leaf reading that goes on here you know why do they pick out these two categories I think
21 is kind of like Hey we're picking up that Toys R Us business that evaporated out there and then fashion everyone there's been a lot of negative kind of Amazon Fashion Stories where people are saying
Yep they're not really doing well they're fashion designers aren't embracing Amazon so this one I thought was just a little bit of hay.
Fashion industry check us out.

[7:05] This is the most revealing data point they said in total and I believe this is a u.s. number over a hundred eighty million items were sold over the turkey five
and when I try to do the math on that if we assume, $50 average order value that comes in kind of 9 billion
now sometimes Amazon average order value is tricky because
sometimes they include didn't see if this was paid or unpaid items as soon as paid items unpaid items would be free books to Kindle stuff there free apps on stuff like that.
So this could be as high of us as a $75 ASP 1213 billion dollars.

[7:48] So I wasn't ashamed actually kind of put a number out there that I could actually anchor off of and get to a real number that's the first time.

[7:56] It's a third party sales grew 20% year-over-year Which is pretty good you know I would expect so so you know.
E-commerce is going around 15% according to the US Census and Cubs score.
Amazon has been growing in the mid-to-high 20s so it's actually little loaf I felt for this third-party datapoint if I understood the metric right
I've only grow 20% year-over-year and then couple of highlights they said Black Friday alone or million toys and electronics are sold through the mobile app
so I think they're they're highlighting you know I think there were talking a little bit about showrooming where I think they're trying to
hints that people are out in the stores shopping toys Electronics on Amazon from their phones while they're out
couple other highlights of the top sellers.
Obviously Amazon devices everywhere you go you see that mentioned so this is Nivea.
Echo Christmas there should be a lot more Echo devices out the world after this holiday looks like instapot the classic is a top seller I am now seeing it everywhere so around
Prime day you only saw it at Amazon and now I can't run into a store without
Nintendo switch is hot this year.

[9:20] Such a platform has been around awhile but has, new Breath of Life Jason what did what did you think of Amazon's results on Turkey 5.

[9:28] Yeah it's always interesting to try to parse anything out of their press releases because that you know they're the pretty expert of giving you these numbers.
That we don't have any frame of reference for a right like everything's the biggest ever but you know they said all these records last year so if they were .1% growth it would be,
it would still be the biggest ever and they let you know they give you this many items in these big categories you know it's obvious they're trying to paint
a Rosy picture without disclosing too much real information but to me some of the things that jump out like your math is super interesting if we take that $50 aov and say they're like.
You know it will you don't 9 billion to 12 billion that puts them at a third to about a half of what a Dobby predicted.
Overall e-commerce sales were for the the December 5 so.
Normally we think of Amazon as being about half of e-commerce so if they're only a third to a half of cyber 5 e-commerce that actually means.
Other retailers are doing a better job of of grabbing a little bit of that traffic so that to me is interesting.

[10:38] It does make sense to me that 3-piece sales would it be growing as fast on Cyber 5 because I think
Amazon promotes the bejesus out of the Amazon owned products particular The Echoes In fires and the Rings were heavily promoted and so you know when they're selling.
Not even just one p items but Amazon owned Brands so heavily and kind of crowds out that the three p a little bit.
And it is interesting to me you know this these guys are increasingly becoming the largest retailer in North America
get on the biggest sales days of the year the things they're able to sell the most of our the things they own which is like completely unique like you know prior to Amazon you know
Craftsman was not the number one selling item at Sears on Black Friday for example so that feels like a.
That's sort of interesting Trend and you know it'll be interesting when we get some of the other guests on that have some datasets to kind of get their point of view about all that.

[11:39] Now Adobe has been probably the most prolific this holiday with getting their data out which is interesting because I haven't seen last couple years IBM made of
big push but I didn't see them out there really pushing hard on the data so it's almost like a one kind of company show now with Adobe and I know you gathered some of the highlights what what did you see there.
You don't want to spoil it for 4 we have us be coming on the next shows we don't want to spoil too much but what were some highlights.

[12:11] Just a quick primer on data sources the route to write like the the most ubiquitous best data source out there that I use the most of it kind of track it is Adobe there's three big
analytics platforms that e-commerce lights tend to use Adobe IBM and Google Google
you know his never liked had an evangelist kind of you know posting real-time data out there IDM some years does some of your doesn't they actually had a very meaningful outage on their analytics platform this year which will talk about a little later so even if they're planning on it I suspect they
they bailed when they started having problems and Adobe did a phenomenal job so it will hear specifically from Adobe tomorrow but just so listeners have sort of a frame of reference.
Adobe is heavily used by the largest.
Brick-and-mortar retailers in in North America so I feel like they're their data ranges a very broad set of retailers from.
Serta medium size two very big you know they don't have much data from Amazon who doesn't use any of these platforms for their main main site.
So to me Adobe is kind of the broadest and definitely best representation of the biggest sites that are most meaningful.

[13:27] I do have some data from Shopify which I think of a sort of the long tail so it's interesting to see what's going on there and then we do get some data from Salesforce which is.
Salesforce Commerce cloud is the old demandware e-commerce platform and to meet a man where is a little more than itchy it's kind of in the middle between.
The really big sites and the long tail it's these like pretty darn big predominately apparel sites for example.
And so it just it's interesting to see where the date of matches between those different sets and where it's different but that kind of.

[14:04] Key things up adobe gives us a number for every day of cyber 5 so Thursday was 33.7 billion.
Which is up 28% Friday with 6.2 billion which is up 23.6% Saturday was 3.2 billion.
Which is up 25% Sunday was 3.2 billion which was up 25% Monday the biggest day ever for.
Ecommerce with 7-point not in North America is 7.9 billion which was up 29% so.
Hopefully you're not doing math while you're driving in the car you add up those 5 days and there were 23.1 billion dollars worth of sales during those.
Those 5 days.

[14:53] I just realized I had a slight air in my spreadsheet so we'll actually see Liam and then I caught 24.1 billion in in sales over those 5 days.
And the gross for all 5 days was about 26% and what's interesting about that is Adobe predicts.
124 billion for the entire November December. And a growth I would like 14.8% which is.
Kind of similar to all the other e-commerce estimates we see you in that 10 to 15 to 16% and so you go wait.
These five days grew 26% they represent about 15% of the whole holiday right there.
You know about 19% of the holiday right there so it's it's it's interesting that that it seems like these days are getting the disproportionate amount of the.
The grout sensor you sometimes your talks about how promotions are stretching out longer and in that stretching out sales but the data makes it seem like people are still very habituated to shop on these Amy's 5 cyber 5 days.

[15:58] So yeah.

[16:01] I was just going to add to it in Shopify doesn't provide super granny or data.
But they did give us an Insight that on the the four days between Thanksgiving in and
Cyber Monday they sold about 1.6 billion and about 1.8 billion over the Cyber 5 so if that's true
again Adobe says 24 billion sold all over the Cyber five and Shopify alone sold 1.8 billion that would put Shopify at about 7.5% of all.
Cyber 5 sales witch.
I kind of doubt year-round that they have that big market share again that we don't have good data to know for sure.
It's believable to me that more shopping shift to do some of the Shopify sites over holiday so I don't know what what's your initial reaction on that Scott could you.

[16:53] Kills High you know but.
It's hard to say the thing that always confounds me about some of these things is when you add up the pie slices I always get up to like 130% so no matter
whether it's holiday data or quarterly data or annual data I always get a little confused by how all the stuff adds up.
The number to supposed to.

[17:18] Incident
if you compare that so again and that the Dobies kind of this broad look if you look at like Salesforce you see like more like a 16% growth for e-commerce to see traffic going 9% what what's interesting to me about salesforce's they share some of their mobile numbers
and sales for says that like 62% of all there traffic was mobile.
And a 45% of all their sales was Mobile on Cyber Monday for example and on.
Black Friday mobile actually Pete that slightly over 50% of all of all sale so so you know.

[18:03] In the demandware Echo System the majority
a strong majority of traffic is mobile and almost half of all orders is of of Revenue is mobile
orders are actually number of orders is actually even a little higher so if you think about like you got dollars in sales you got number of orders and you got traffic.
The the Salesforce number to look kind of like the Shopify numbers from mobile so we have a couple of vendors
that share their data that mainly live on the Shopify platform and swim it was one that talked to you on Twitter and they were claiming 73% of their Shoppers were mobile and 62% of their shop
their purchases were mobile those mobile numbers are way higher than what we see from Adobe where
it's going to be something like 45% of traffic was mobile and only like 30 or 30.
5% of of orders were mobile so it's going to be interesting to talk to Adobe about about that if it is.
In their mind true that this a longer tail is more mobile than than their whole user base or what were missing their.

[19:09] And I also wonder if it Dobie is including any Magento data because historically it was mostly kind of that omniture
I did it right that they were effectively tapping into so I wonder if they're able to pull in the Magento data analysis.

[19:26] Yeah that will be interesting I'm going to Mike Hess is going to be no for this year the murderer wasn't that long ago and remember.
Magento can't see the majority of their data so most people are running the gento on-prem they they have the software but magenta wouldn't necessarily know whether the revenue was unless they happen to be either one of the the minority of Magento customers that's hosted.

[19:50] I forgot that they were more of an assault versus has.
Bottom line this it feels like online were definitely kind of more in the
20 to 30% Reigns versus kind of the traditional 15 so that feels good and then it feels like a brick-and-mortar is a little slow.

[20:10] Yep so well it depends on what you mean by slow so.

[20:18] They have been drawn at kind of like three or four percent right kind of mid single-digit.

[20:22] Some MasterCard says that like on Black Friday brick-and-mortar sales were up 9%

[20:32] What's good.

[20:33] Yeah that sounds great MasterCard is predicting that November December sales will be up.
5% right and of course you know you can imagine what MasterCards dataset is they have like like a 1/3 of all the credit card sales.

[20:47] So so those are good numbers there's a couple companies that
rent Hardware to retailers that gets installed on the front door to the store to measure traffic in the store so one of those companies is called shoppertrak and the other is called retailnext they aggregate all their data
as traffic data shoppertrak says that traffic was down 1% over the holiday over by Friday retail next said the traffic was down five to 9%.

[21:20] They do tend to attract slightly different customer so as I sit here I can't tell you exactly what categories they tend to be strong in butt
that sounds to me like fewer people are
going to the store then they have in years past and yet we still see higher sales in the store and we have in your
past which just means the conversion rate of Shoppers to buyers is higher and the amount they're spending when they're in the store is higher and so you add all that up
I think before the holiday started people were kind of forecasting they're like 16% e-commerce growth
like in a three to 4% brick-and-mortar gross
I think it's possible we're going to see like 5% he, brick-and-mortar drugs which would be the biggest year since 2011 so we may see some big numbers on the revenue side when I'm more worried about is that it
it potentially was super promotional revenue and said the earnings may may suffer that that commonly is the yin and yang of of holiday sales.

[22:23] Yeah unfortunately won't have a read on that until some of the January did I start to come out right before results.

[22:29] Exactly it mostly shows up in earnings where people are like oh we had our Revenue goals but we missed our earnings goals Adobe does
get to see some interesting promotional data so when they're on we will definitely get their perspective about whether the holiday felt online more.
Lesser the same promotional is past years.

[22:49] Call a couple other seems I saw out there there was this kind of is Black Friday dead a lot of this circles around somatic Mall while getting your everyone is there's a whole controversy around the opening on Thanksgiving Day itself and.
Some retailers like REI stand on that
others are kind of messaging that up even more and more and they're doing their doorbusters around that so there's a dinner I had some day.

[23:20] Where they actually had several buckets of Shoppers they reported on so they said 41.4 million people shot
online only from Thanksgiving to Cyber Monday so the I guess I'll call that cyber 5 and that 6.4 million more
who's been shot exclusively in stores so they have an online exclusive bucket
stories lusive bucket and then they have an omni-channel bucket and then the omni-channel bucket they say 89.7 million hour Shoppers.
So I'll see you in a day or calling a reference so
so that was interesting and there's an article that was kind of saying because more people shopped online than offline during that. It was kind of the end of the traditional Black Friday.
Brick-and-mortar holiday discount Holiday in your reaction to that.

[24:22] Yeah it was it yummy you here to Reasons by Friday is going away because people are shifting online and because black Fridays
you know keeping earlier tough to Thursday night it didn't feel like,
more stores open on Thursdays then did years pass so I don't think that really affected by Friday I do think / that interested anymore
yeah if you're only going to do one of the other there more people that are opting for the convenience of online shopping and that
that seems reflected in the the few datasets we had that show store traffic was down so I could lie but honestly it doesn't feel like.

[25:03] A dramatic shift to me over your you know it seems very windy or change versus sort of an exponential change and I think all this is happening in a climate in which
like most of the consumer macroeconomic factors are really favorable and particularly for the first time in a long time the macroeconomic factors for low-income Shoppers are favorable in those are the Shoppers that are least likely to shop online right like so that's the
the low-income Walmart Shopper probably feels like they have more money in their pockets and they have the last several holidays
and until I feel like you know some of that the trends that we try to predict do I get office gated by the fact that there
probably just are more people shopping and more people spending money this year than they then we've seen in the last couple years
so that's that's a good problem but it makes it hard to really.

[25:59] Really have a strong opinion I have I will say one of their data points from UW data is that buy online pickup in-store orders were up
50% over your past so I think like driving with an RF data what we're seeing is that the
this notion of these being separate channels is going away and people are increasingly using digital tools whether they.
Go to the store or not and you know you tease me for talking too much about grocery on the show I feel like this is the first year when people could
potentially buy online curbside pickup their their ingredients for their Thanksgiving dinner and so I haven't seen any data on that yet but I but I know as an amenity digital grocery shopping was available to many more consumers this year than ever before and so I'm going to be really interested to see
if Shoppers take advantage of that and if that you know changes behavior and all of those are two things so I think there's going to be a lot of fun
fall out to follow from this holiday. For the next several months we should keep doing the podcast.

[27:01] We we will
another theme that was interesting and you kind of touched on this little bit with outages Amazon seems to be pretty robust Facebook had an outage kind of like right around Thanksgiving so happy for freaking out.
It was kind of a yeah that was interesting
and then you would mention coremetrics an outage Amazon I've been kind of rough for Prime day then they did Cyber Monday and end so that's interesting it seems like they must have
tweet whatever they had some lips on on Prime day good warm-up for Cyber Monday.
I did see some articles that highlighted some other stuff it's hard in today's news climate to know kind of what exactly is going on and how bad it is with what did you see as far as I was just.

[27:47] Yeah I think there were some partial out I mean the number retard saw some partial added outages for you know for some subset of all the people that tried to get to the site for some small. Of time during the day and it's really hard
size how significant those are I would slide side note on the Facebook one when Facebook has an outage it has an impact on e-commerce in an unexpected way there's a fair amount of eCommerce sites that let you use your Facebook credential
as the keys to your eCommerce account in your stored payment information so it is possible when Facebook's down
that the people can't log into their account on an e-commerce site and and Shop so it has the potential to have that impact
and Facebook tags are all over these e-commerce sites so even.
If the outage and I don't think this was such an outage causes those tags to not respond it can really have a material impact on the page load speed on all these e-commerce side so there's.

[28:46] Town of best practices that site should do to mitigate those risks and and frankly wait way too many sites do do to those best practices so it's always surprising to me.
But you reference IBM and their analytics package which I think officially is now called IBM Analytics
all ice Old-Timers would know it is coremetrics and from my perspective they had a pretty catastrophic outage so I think they were out for most of Black Friday and then,
I were able to resolve the issues and then they have another significant outage for most of.

[29:24] Cyber Monday so that's a huge deal if you're running a site in your using the analytics to make decisions about
you know whether you should get more less promotional you know what what marketing you should be doing on the side how much additional email you should send you know that.
Data from that from your analytics platform is critical and you know some heavy rain Deluxe platform out is a huge deal
I will tell you I had several clients that that had an outage and the only reason that they weren't Furious is
because many of them are now using more than one analytics package so pretty, and that you had a IBM and Google which meant you were exclusively.
Using Google for the holiday and it probably is not going to bode well the next time you know IBM comes to have Yuri up your your contract
and you had this outage in the most important time and you were forced to use Google and probably found out that that that Google Map most your needs so I think from a business standpoint
that that IBM analytics at outage is going to be pretty catastrophic I think they were probably struggling to maintain market share against Adobe and Google anyway and so this is probably going to be a.
Another black eye to them in that regard.

[30:42] Quick question did this.
So I know that mosites almost every page of a site while will reference to the underlying analytic system and there's a lost tag and stuff did this cause the retailer sites to either go down or be sluggish or to those guys.
All currently have that kind of asynchronous so that if it's down it doesn't really.

[31:02] Exactly so what you want and what the
in finished all these vendors at least the analects vendors sort of beg you to do is have these tags load asynchronous way which essentially means it doesn't block anything from happening lower on the page from still happening while that tag loads and so
it's still even when you load it asynchronously there still you know some ways in which its
it's hurt hurting your rendering budget but but the impact is much lower than having the screen be white while you wait for that tag to fail and so
for analytics most people have them well implemented and I didn't hear about any anyone that had coremetrics tags blocking the whole site.
You do like to also put all these vendors at the end of the page but for Analytics.

[31:50] That means you miss out on a lot more analytics if someone like interrupt a page from completely loading or their clicks away from the page before for renters and so you know the analytics vendors like to have their their tags at the very top of the page so when there's an outage.
It's even a little more prominent so.
Bad deal all around but to my knowledge there were no there were no sites that were like literally WhitePages while they're waiting to find out that the idiom tags didn't work.
I don't think Google analytics had any problems but Google had a problem with her at platform over the holiday and I know that impacted a lot of people's promotional plans that you know I felt like the number of clients that had.
Plan spins and open the spins that they you know we're going to make over holiday depending on how things went and they literally were like locked out of their AdWords account and weren't able to make some of the adjustments that they intended to make.

[32:46] Yeah that the Facebook ad platform was down during their outages well so it could be some pretty material.

[32:54] Yep that digital marketing tends to be about the third-highest
source of traffic to the site so that's a big deal and then the retailer that I think at the most news for having a complete outage unfortunately it was at J crew
had a very aggressive sale they were they were offering 50% off on everything and I think they were there down for like the majority of of.
Black Black Friday so that's a pretty tough outage I know that they probably offered to extend that sale.
Extra days to try to catch that that Revenue but in most cases you know a shopper.
Likely move to some other other site and spent that money somewhere else so so you know that that's.
Pretty material impact to be down that long on this holiday so sorry for my friends at J.Crew
and that's probably going to be a perfect place to wrap it we promise to keep this is a short concise show just about the holiday
folks have any comments or questions as always we encourage you to jump on her Facebook page and will continue the dialogue there as always if you found the show useful we'd love it if you jump on the iTunes and give us that 5-star review.

[34:10] Makes everyone we hope that you're cyber 5 / turkey-5 crushed all your expectations and that you are going to finish strong in Holiday 18.

[34:23] Absolutely and then till next time happy commercing.

Nov 21, 2018

EP153 - Pre-Thanksgiving Industry News and Listener Questions

Thanksgiving road trips with Jason & Scot have become a tradition in the digital shopper marketing industry.  Here is an hour of new and listener questions, to get you ready for the Turkey-5 holiday!

Spiffy announces connected car initiative.  The first connected car feature grants limited access to vehicles through OEM (Original Equipment Manufacturer) connected car capabilities. Eliminating the step of handing off keys prior to a service makes Spiffy's on-demand services even easier for customers.

Amazon News

Other News

  • 11.11 Recap
  • Walmart earnings (e-com up 43%)
  • Walmart CEO Doug McMillon on Tim Ferris podcast
  • New store concepts dominated by mobile experiences
    • 7Fresh (JD Grocery)
    • New Nike NY Store "House of Innovation 000"
    • 7-11 scan and go
    • Sams Club Now
    • Amazon Go / 4-Star / Books

Listener Questions

  • Sri Rajagopalan
    • Is the Amazon business in consumables really growing?
    • Why are we not embracing Alibaba in the USA?
  • Anonymous
    • Anker rose to be a powerhouse of an Amazon business. Can you analyze their changes to highlight the overall marketplace transition to differentiated product development?

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

Episode 153 of the Jason & Scot show was recorded on Sunday, November 18, 2018.

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.


[0:25] Welcome to the Jason and Scott show this is episode 153 being recorded on Sunday November 18th 2018 I'm your host Jason retailgeek,
and as usual I'm here with your co-host. Wingo.

[0:41] Hey Jason and welcome back Jason Scott show listeners.
Tonight we are sitting here on the cusp of Thanksgiving which is the official kickoff of holiday 18 we got some great guests on as we get into the thick of that
but we thought we'd take this kind of opportunity here before at everything hits to go over some industry news and we
I had some listeners that were really dying to ask some questions so we have some listener questions
and we have hopefully if our sound engineer is doing his job we should have this out before you do your travel for Thanksgiving so hopefully this gives you something to you
get the folks in the car asleep so that you can pick about some e-commerce and get really super hungry as you ride to that,
great turkey dinner that you're going to enjoy.

[1:34] That's a lot of pressure you just put on the audio engineer thanks a lot.

[1:38] Well we have a we have a big team and I'm confident they can they can get it done.
Before we dig into news and Lester questions Jason you were at something to deal with a bonfire so tell me about this big block party with you.

[1:55] Sorry I did not get to light anything on fire.
Loyal listeners will have heard of last week show where we talked a little bit about some joint research that my employer poop assisted with and so we did this.
Speak study called The Shopper first study and you can listen to episode 152 if you want to learn more about the study but one of the things we
we've done is leverage pieces of that study in various social events around the country so one of these
we called the retail retail bonfire was in Manhattan a couple weeks ago we had three or four hundred clients in.
To the Dream Hotel put on a cool event and shared some of the research but I also got to,
talk a little bit about one of my favorite topics which is personalization and I I got to share this story that I enjoy sharing that I call hashtag United you don't know me and it's essentially this.
This tragic story about how I'm United's best customer and I'm in their Secret customer Infinity program and I travel millions of miles with him and I.
Do all my spending with a very expensive United credit card and so imprimis they should know everything about me and they should have tons of data.
Dramatically reduce friction and make my my experiences with them easy and.

[3:23] There's just numerous touchpoint I have with them every day where they missed that opportunity and so.
I used that story to sort of underscore the point that at the moment in the industry were talking off a lot about personalization but in reality,
nobody's doing a very good job yet and we we have all that the data and insight to treat customers much better than we in fact actually are and so that's kind of.
The kind of said my my talk which seems like it was well-received I got some good feedback at the retail bonfire.

[3:57] Yeah there was a video posted in I couldn't hear what you were saying because it was from the audience there and but there was a lot of laughter I thought you were doing your quit this whole e-commerce retail gig and doing stand-up.

[4:09] So you may have busted me I'm a little Overexposed I flew straight from the retail bonfire to the Home Improvement Aerie tail summer
in Chicago which was that show
for the Home Improvement industry at talking about digital disruption and so I think the video you're referring to is actually a little bit of my my sort of omni-channel presentation at the retail bonfire and I always.
Put some jokes in there and occasionally one of them lands.

[4:38] I don't know you're saying but those people were very rolling in the aisles.

[4:43] I got super lucky that they accidentally recorded the one one segment where where they thought it was funny and they didn't record what I said so you will never know that they just don't have a very good sense of humor.

[4:56] I was guessing that maybe you would like you're like the 9 p.m. and then going to dinner and had like 45 drinks or something.

[5:04] Yeah well that for folks that are interest in having me speak to your event you should know I do have a two drink minimum so I only accept it and swear people are likely in that state already.
But yeah so I've been traveling a lot since grocery shop doing a bunch of fun events and I've been trying to keep up on stuff,
I feel like everytime I open my newsfeed all I see is a big giant picture of Scot Wingo,
doing something with speed and I think there was some pretty cool news this week if I'm not mistaken.

[5:35] Yeah it's kind of you know you would think that my car washing world would not intersect with our digital world that much but the increasingly dense and so one of the things we've been working on it's 50 for a long time is
a fair number of Manufacturers have connected car initiatives
big Tesla do so I've been in Connected car world since 2013
and what would connect the car is essentially is your vehicle has a 3G or 4G or an LTE connection,
that essentially connects your car to the cloud and then usually the manufacturer will give you a nap and I'll let you do a lot of cool stuff so for example with the Tesla app you can lock and unlock the car to put it in the valet mode
you can now actually.

[6:23] It has a mode where will we will come to you that's pretty cool kind of Tony Stark mode and then so various other manufacturers have other features in addition to the app haven't connected car
it in the vehicle you will have Wi-Fi and then you can
have just like over the air updates you can have better Maps so there's a lot of really great reasons to do this from a consumer Behavior perspective so 2015 people started in it
and it was kind of spotty because a lot of them would charge you extra a lot of consumers didn't sign up for it within the last 2 or 3 years OEM zarchive including it in the
the first three to five years of the vehicle ownership so we're that ties in with our world is 50 is for doing
Car Care car wash and oil changes those kinds of things and we're having watched Amazon for 20 years
yeah I think they think they get right as a musician is being really obsessed with with customers so we.

[7:24] I'm thinking how can we make that customer experience better and one of the painful things,
drives us crazy is we have to get our customers keys and that can be kind of an arduous process so this allows us for those customers that you have connected cars they can give us permission
and then the day of service we can come in and our technician can walk in the black car and get the keys to our service without having them involved.
Inet School transparency in mission control of that so that was really well received a lot of good press and thanks for bringing up it's it's it's fun to see how these things overlap.

[8:00] Yeah it's that's kind of cool. It reminds me a lot of sort of it's the carwash equivalent of the Holy Grail of Amazon or Walmart delivering the groceries right through my refrigerator.

[8:12] Yeah Amazon does have a program So within the Amazon key there's two flavors to key there's that home one where they can you can grab them permission with a Wi-Fi lock that come in or out and then you have a camera to watch Lily person
I've been else have a car delivery system within tea and they're using a lot of the same technology that we are in the connected car to do that.

[8:33] I will say I know you.
Joke about there being a lot of overlap but it's kind of annoying for me because I feel like I'll go to visit a car client and you don't be talking that e-commerce and.
You know if you start to feel like you've moved on from e-commerce the car and then they're still out yet we're sick of Jason can we meet Scott.

[8:54] Funny Cooks so it would not be the Jason Scott show without a little bit of.

[9:07] Your margin.

[9:16] Cool well the big amazon news that that has happened since our last news podcast is they they did make the final hq2 decision.
Good news is it lined up the rumors reported on so this is kind of like old news in a way but I guess we should say.

[9:33] So what Amazon did I is they did kind of did the proverbial the Old Testament splitting of the baby and instead of announcing they decided to split it into two so,
New York's and Virginian were the winners so specifically New York City somewhere around Queens called Long Island City which is maybe you can explain this list I don't understand this particular thing.
It in Crystal City and they're actually,
asking people to kind of create a new names there's a whole new name there that they're going to kind of call where they're going to be,
something like National Landing so that's interesting and so there was a lot of controversy after Nelson super small lot of people were upset they split it.
I and our cock will this isn't really another headquarters is just two things.
You know dr. Holloway was right he had predicted this and so he was indicated in his whole thing about you know it's convener to abduct businesses houses and their political influence.
The light people of observed that now Amazon has data from sunlight 240 cities and Metro areas about.

[10:50] All this data they had them put together for Amazon is now sitting somewhere in a database
I hopes Amazon in the variety of different ways young next time they build a building center or a Dana Center they can kind of go and say well you know for hq2 you said this,
certainly give us portion of whatever you promise,
and then the other big one is now that it's public the subsidies have been released and it turns out we add up New York in Virginia it's over 2 billion dollars and subsidies,
so this creates a lot of consternation from citizens who were like wow why are we paying so much and then company exist,
okay we've been here forever when are we going to get our tax credits and it's just really kind of,
yeah I probably read 5 articles a date so kind of from the aftershocks this that's been and,
you're so that's good be interesting to watch and see where they they plant more flights would you think about it all Jason.

[11:59] I'm a little over at my wife asked me today and I she pointed out that I kind of snapped at her in the answer.
Cuz I'm a little tired of talking about it out of course I want to share my myhumboldt pod with our listeners.

[12:20] So they're opening a new headquarters in a suburb New York and they're going to 25,000 employees Google already has close to 25,000 employees in New York and there was no year long.
Contest or you know this constant drumbeat of news Amazon set.
Nothing's up by calling at hq2 and having this kind of formal contest and all of us to follow the industry and in the media.

[12:51] I feel like sort of overreacted and bought into it too much because it's in some ways it's it's not a heck of a lot different than.
Then the way every other company behaves I mean all all companies you know try to extort these business development funds from cities when they moved new infrastructure there I mean.
Towing threatened to move their headquarters from Seattle to Chicago McDonald's and moving their headquarters like they're all these things that happen all the time.
And it's it's kind of annoying that the Amazon one stayed in the new cycle for a year and then had this anti-climatic ending right so.
They split it up between two City so it clearly isn't that co-equal headquarters like I'm sure the center of gravity for Amazon is going to stay squarely in Seattle so people that like that or going to be happy people that don't like Amazon's presents in Seattle and probably.
Going to be disappointed they're going to hire a bunch of people in New York and compete with with Google and the agencies protect tires in New York but that's not.

[13:53] I think a game changer you know it's.
I feel like it's a little overhyped I will tell you that Steve Carell was the host of Saturday Night Live this week and he played Jeff Bezos.
In the opening and he had a bunch of funny lines but one of them he's like we are excited to announce hq2 last week and everyone was really excited with our result.
What are the people in one of the cities that we selected as hq2 or any of the people that live in anywhere that is not hq2.

[14:25] Spring Arbor.

[14:30] Pretty funny and summed it up pretty well side note.
Anytime a city cut these Economic Development projects with employers one controversial thing is right.
How much input you gave the citizenry in this and what you know sort of checking balance process were followed and obviously.
Particularly in New York Amazon negotiated for these things and the governing politicians a largely.
Agreed to them without any public discourse and so now that they're revealed there's there's a lot of folks on City councils and Andreas capacities that are sort of.
Outraged and obviously the Optics to Amazon probably look pretty bad because they're.
There you know compared to many companies there they're doing very economically well now these these.
Subsidies that they're getting our are publicly revealed there was no there was no sort of public comment.

[15:33] And it looks a little shady that they promise this whole hq2 thing and then they they split the baby and you know we all assume that the subsidies they got are not half of what was offered because they split the headquarters in half they probably.
Got most or all of the the offered subsidies even for the the half the jobs that they promised and as you kind of pointed out.
Every single time they open up a filming center from now on they're probably going to remind that municipality what kind of.
Program was off and you know the try to get as much as they can and I think they even announced a big new facility in Nashville the same time they announce these two headquarters.
I'm not I don't think they're behaving that much different than any other employer but I feel like.
Some of the overhyped pr maybe sort of backfiring on them at the moment because there is a big backlash.
And it almost even feels like Amazon recognized it again overboard cuz I feel like they they'll eat the announcement on Election Day in that like I assume that was to try to.
Can I sneak it in and a busy new Psycho.

[16:40] So another interesting one that I was following this week is there's been kind of a fun arms race on what retailers would do for their free shipping program for holiday.
So Target.

[16:57] Several weeks ago and asked that they would drop all minimum thresholds on their free shipping so you know if you want to shop from Black Friday to Christmas it Target no matter what you buy what volume you get free 2-day shipping.
Walmart normally has free 2-day shipping with a $35 threshold so we are all curious to see if Walmart would respond to targets.
Offer in Walmart did not respond they announced that they were going to keep their $35 threshold and so at the time I thought that was kind of interesting Walmart didn't feel like they had to chase.
Target in this particularly expensive to offer promotion over holidays I thought that was kind of fascinating and that in a way I,
I sort of admired Walmart's position there and then the totally unexpected thing happened Amazon came in and said,
oh and by the way we're offering free shipping with no threshold whether you're a Prime member or not for the holidays Inn in effect matching targets offer and undercutting Walmart and well haven't been in Walmart was comfortable,
not matching Target I suspect they they did not anticipate that that,
Amazon would have a significantly more generous shipping offer than they did.

[18:14] Yeah I had some people tweet at me in there like what why I would even pay for Prime and you know I think what those folks are missing is this is the Super Saver quickly a program that used to be you had a minimum car that you have to get to get Super Saver but it's still the Super Saver service-level just
Hard series things to say but essentially
you know that's kind of the slow boat and it's a 4 5 6 day kind of a shipping window not a not a two-day so Prime Sole is the thing that makes sense in my mind to pay for it because now you're getting free 2-day shipping
for pain description so that's the difference in yiay Prime and Super Saver can still co-exist even when Super Saver is free.

[18:58] One thing I noticed it was interesting is there's been a lot of kind of friction between Apple and Amazon over the years and then also Facebook their Style
lot of drama going on with with all these companies fit specifically between Apple and Amazon you know there's been no love lost there they had,
what example is Prime video for the longest time wasn't available on Apple TV devices you know I don't think apple is ever available on Amazon Fire devices and then
I'll dig up that resolved and then one of the ones that got resolved that was kind of nursing is is Apple app that apple is going to really increase its listings on Amazon with kind of
bring that the main product lines up there with iPhones iPads and that kind of stuff so it was actually Apple selling on Amazon,
I thought the timing was interesting it feels like if your Apple you want to do that for the holiday,
the water of Wall Street on Judith at the new iPhones aren't selling it, the pace ever thought they should be and suppliers are swimming in inventory so that was interesting
you know what is the quid pro quo if I'm if I'm.

[20:15] Amazon and I say alright I'll let you somewhere your stuff here you know obviously you're getting it cuz of that,
but then you got it feels like there's something else going there and one of the big friction points as a Kindle reader so I use my Kindle app on my iPad
is can't really buy from the Kindle app you have to go to the Amazon website you can buy to the Amazon
apps Can't Buy Kindle content website order it and then download it and what they're doing is it getting around the 20 to 30% take right at the store level not selling right from the iTunes Store.
So I would love to see you know that is a big friction point that with the Amazon ecosystem I'd love to see kind of hopefully as he's guys get along better let's see that go away.

[21:07] I totally agree you know I assume one of the things that that Apple's getting in the short run is that by being on on the.
The popcorn formula that they're going to get more brand protection help in more policing with all the the counterfeit product and because am is Apple so popular.
You know there's a lot of speculation that there's a ton of counterfeit fit product and I'm I'm thinking mainly like Chargers and cables and things like that that that.
Probably part of the quid pro quo of Apple being on their formally is that they'll get more help with their brand protection and so in some ways it felt not too dissimilar from the like the deal Nike cut earlier for example.

[21:52] But I will throw one thing out,
I share your frustration I can browse for books on the Kindle app but I can't buy them I have to go to the website and prove your point it's because when you buy something through an app you pay a commission to the app store owner right and so.
Amazon doesn't want to pay Google and iTunes the big Commission on those.
So they make you go to the web there is now a traffic solution for this Amazon should release a Kindle Progressive web app.
An answer that that essentially like would be.
Functionality that you don't get from the the App Store and therefore don't have to pay a commission and so they could basically have all the same offline capabilities that they have in their app that can let you put an icon on there on on the.
The homescreen let you read books offline and all those sorts of things and they could sell you books which without having to pay on iTunes or Google Play.
Commissioned so regardless of whether this deal makes apple and Amazon more friendly in that way if you like Amazon needs to get off the dime and embraced pwa.

[23:04] So then how do you it's so I'm going to do it for dummies question if they're not in the app store which everyone's been trained as a way to get this stuff how do you do discovery.

[23:15] So that still is the that is the problem with pwa today.

[23:21] Never trying to con in Discovery they're not discovered in the App Store but they are much more discoverable in Google then amps are in so.
I if I were a Amazon I would certainly still have.
My app in the app store for Discovery but I would give them an alternative which is this pwa version so instead of throwing someone to the Amazon website to buy.
The book and then having them come back to the app to read it I would throw them to the pwa version of my sight to both by the book and read them going forward and it will see if the App Store.
Track down on this pain at the moment there's no restriction against having an app in the app store if you get that app away for free by the way you pay nothing to the App Store have utility in that app.
In that app you can totally promote your pwa and even had a direct link for someone to download the PJ pwa version,
as having greater capability than the App Store version so.
You can kind of use the app store version of the Trojan Horse for your pwa version but at the very least the pwa version would be a good would be a better alternative than.
Send him to the website to buy and then having them come back to the Kindle app.

[24:46] So we'll see how that all plays out.

[24:48] Search Jeff listens I'm sure he's taking care of since Jeff call Jason if you want details.

[24:53] Or I'll just send an email you can add a? In forward it off to someone to ruin their life on Thanksgiving.
We you did not record a show directly adjacent to it but.
Of course singles Day November 11th was happened since the last time we did a new show and it's kind of a big milestone it's the 10th anniversary of double eleven day.
Did you were you up late buying some stuff from Hong Kong.

[25:29] Wasn't you know I think it's been interesting over the 10-year Ark where you know I feel like the last first nine years there was all this hey this is going to spill into the US and then feels like this year
there's finally capitulation and I didn't even get a single email I think
from us retailer promoting it like last year I got a couple of your before I got a lot and you before you a lot so it feels like,
we kind of given up on the spilling over in the US
and then Prime day is kind of become are on the singles day. And now everyone is anchoring on that and offering their own kind of deals around that time for 11:11.

[26:10] The number of years where singles they grew dramatically and Jack ma would threaten next year.
We're coming to the west and mostly what that meant and this has definitely been true.
Every year alibaba's done a great job of recruiting more Western Brands to participate in singles day,
in Asia and definitely singles day has expanded Beyond China so Alibaba now you don't has a presence in other cities are other countries rather,
they have is it was Zada.
In Singapore did they extended it too so it's it's definitely become a bigger Regional event and there's a ton of Western Brands I have a ton of clients that are excited about it as an opportunity to sell to.
The indigenous populations in those countries but I would agree with you right there was always some type that there might be some play for for us consumers and it most there's like a kind of soft play for.

[27:14] Like a kind of soft play for.

[27:17] But I definitely know I haven't seen any any traction with with Western Choppers.
Just what happened they sold 30 billion the equivalent of 30 billion dollars in US 30.8 billion so huge day.
Compare do I cut prime day that might be 4 billion or a Black Friday or Cyber Monday they could maybe hit 6030000000 the normous number,
that's up from Mike 25.3 billion last year so,
in a superficial you look at that and go man this this thing continuing a crank it does seem like the rate of growth is starting to slow down so that represented a 27% growth over last year to put things in perspective
last year was a 39% growth over the year before that and I'm pretty sure every year other than those two has been over 50%.

[28:14] Feels like the growth rate is decelerating a little bit and.
In some ways even though was the 10th anniversary it felt a little bit Mewtwo
number one Jack ma who played at the super prominent role in the first nine was was there but had like a much less significant role as he sort of stepping back from the company a little bit.
I think Alibaba issued some guidance either right before or right after,
singles day that they sort of downgraded their the revenue guidance for the year and there's a lot of talk about how the Chinese economy is slowing down a little bit so.
You know it's it's one of those things like objectively.
It did really well but against expectations it was a little bit of the year if you will.

[29:06] Yeah absolutely and dumb
Alibaba stock is spelled it so even after you know what kind of a crazy number like 31 billion essentially if you around up a tad which is crazy to do in a 24-hour period the stock is trading kind of New Year Of Glow and it's that pressure
up lowering the forecast China economy slowing down the tariffs you know everyone is thinking.
Is, assuming the worst with this tariff environment that were in so yeah it's going to be a little bit of a rough time there yeah I did see another article that to your point about brands
that they had the most semi 200 Western Brands sold pretty considerable amounts on there and it it's funny it's kind of like you know
everyone goes to China and tries to set up to give up and they essentially saw Auntie mall to you're looking at,
even Amazon who runs their own Chinese store they sell a lot of candles and devices over there which be like let's see if you like Amazon selling on eBay which you would never have so
it is interesting to see it even though they're slowing down there quite dominant and huge portion of e-commerce goes to Ali.

[30:24] For sure what one of the thing that seems
what is containing attractions every year they make significant progress in trying to turn this into a omni-channel event
so Alibaba owns a bunch of stores they only like a hundred of these fancy digital-first grocery stores they don't like 500 convenience stores.
Increasingly there their soliciting other retailers that they don't,
direct Lyon to participate in double eleven day in so what that usually means is some kind of digital enablement so maybe they have a digital sign in the front of the store with the deals and you can.
Activate the deals in the store you might take the goods with you or had the good ship from home but you don't really trying to expand from being a pure e-commerce holiday to being an omni-channel holiday.

[31:15] E-commerce is bigger in in China than is in u.s. it still is true that it's like e-commerce is like 15% of the total.
Retail spend in China and that's.
More true in a lot of the West develop cities so you know it.
Yeah you got a really big tier-1 cities there's kind of a premise that they're they're getting saturated with e-commerce and that you know everybody knows about it and use it as much as they want to and that really is driving the.
The swelling growth rates in China.
There's a huge untapped Market in China which are all these West develop cities that you are more likely to have like real farmers in them and to one of those you get singles day to reach him or them is you.
Enable that one physical store that's in that City to sell stuff from.
From that singles day in that store and so it seems like there was something like 200,000 stores that participated in singles Day this year so so that to me is is.
Kind of interesting and you know frankly that's going to have to be the future of the growth story in China right like you.

[32:30] It's already bigger than the US that the addressable Market is even way bigger,
but they increasingly have to get these not digital Shoppers to to get in online before they are able to get them to become e-commerce shop.

[32:47] Yeah so pooping so we've covered Amazon Ali Baba and now another large Global retailer is Walmart they announce their quarterly earnings and this was weird once were they that came out in and you exceeded.
Expectations and it seems like they raised him in the stock went down and I'm not exactly sure what went on there I bet you made his watch that little bit closer than I did the headline that caught my attention was they announce that e-commerce group 43%,
I think that's a pretty good acceleration for these guys and Baseline
about kind of 15% growth rate that's the top scorer number and
government is a lot of people that anchor on this 15% growth number so it feels like Walmart's e-commerce is growing 3x Amazon's quarterly earnings were more in the mid-20s range so feels like they're growing faster than
congratulations to our friends at Walmart there sounds like.

[33:49] And kind of put it in a frame it a little bit if the investor Day last year mark Glory promise 40% annual growth in e-commerce and then the next quarter out they slightly miss that at 39% and,
a 1% misses apparently enough that they took a pretty big beating in the in the.
Financial press and in their stock market in their in their market cap so the next couple quarter since then they basically hit that,
percent exactly in fact it almost seems suspicious cuz I hit that exactly so this quarter getting 43%.
With big holiday quarter up is pretty favorable and good news for Walmart,
you know I do like to remind people in my mind a big driver that huge number so you know what we're doing a lot of things to grow e-commerce they really turned up the heat on the marketplace and they've dramatically expanded their selection so I think.
Not very long ago that they were selling about a million rescues online and today they're more like 40 or 60 million skus online so making huge progress on the assortment.
But one of the big drivers of e-commerce at Walmart is.

[35:03] Selling groceries online in the way Walmart predominantly sells groceries online is you order them online in there for field from the store so either curbside pickup.
Or home delivery and.
You know you can add a new skew to your eCommerce site and it instantly available to everyone in the US but to grow grocery sales.

[35:26] You have to make more stores available to fulfill that order so Walmart has like 4,000 stores in the US.
As of this quarter they had 2100 stores that did curbside pickup and 800 stores that did.
Home delivery that's twice as many curbside pickup stores that they had last year so.
In a way they've doubled their capacity to sell groceries online in the last year and they're promising another thousand next year and so a lot of this e-commerce growth is be coming from.
Like this this significant investment the Walmarts making in grocery.

[36:04] When will that be in every story like when will they laughed that that whole thing.

[36:10] Yeah they haven't said yet but like if you.
Last year 2000 stores next to a thousand stores if we if they keep up that linear progression they have two more years before they max out and so then it's another year after that before they really lap the.
The 4000 store number so there's there you know could easily be two or three more years of.
Benefit from this kind of digital same Source Tails phenomenon that's playing out at Walmart.

[36:39] What's going on with our friends in Bendel.

[36:43] I want a few things but the other one I would have just hit on right now it's kind of fun to Doug mcmillon's the CEO of Walmart impressive guy started out as in
internal Walmart work in the stores and is now I think according to Fortune Magazine like the 40th most powerful man in the world
which I remind myself every time I've been meeting with him he did an hour-long podcast on the Tim Ferriss show so,
like you know he speaks a lot but
not really long form like that and so it's kind of fun to hear him and he got to share a little more personal stories then then he's normally known for so if you're interested in Walmart I'd encourage you to
listen to that podcast on the Tim Ferriss show and frequently the Tim Ferriss show is kind of a feeder
for this show so we watch that show carefully if a guest as well there then we might consider having him on our show so you know maybe that bodes well for Doug's chances of getting on the Jason and Scott show one day soon.

[37:44] Tim doesn't have the reach we do so we try to help me out by by mentioning his podcasr once in awhile.

[37:55] So there was a lot of brick-and-mortar stuff announced involving phones and I wanted to pick your brain on that one I saw was 7-Eleven they have this kind of Scan & Go technology what's interesting is kind of pivoting from from Walmart there
Walmart had this functionality I think they've actually kind of liked it so you could kind of self checkout at Walmart so now you can't do that but everyone else is trying it so,
what the heck's going on with that.

[38:25] So what we kind of genetic I'll scan and go is the ability to pull out your phone scan a product yourself in the store and then pay for it on your phone on and therefore not have to go to a cashier
to pay for it and that the expressive been around for a while they weren't the first ones but actually Apple Store is offered this for quite a while so you can walk in and grab your accessories scan them in the Apple app,
pay with Apple pay or whatever payment methods you have on file and walk out of the store never have to get help from anyone.

[39:00] And we're seeing that increasingly being used Macy's is rolling that out one of the big complaints and these big department stores is that it's hard to find a cashier to check out.
So that,
potentially attacking the number one complaint at Macy's is you mentioned they rolled it they piloted it in Walmart and Sam's Club and they should have turned off that pilot in Walmart they've doubled down on that pilot in Sam's Club
we haven't officially heard from Walmart what what's going on but,
my suspicion is in this is kind of a funny side note about anything you do in retail.
I'm willing to bet that a bunch of the clerks in Walmart did not love promoting Scan & go because it peten,
the potential to reduce the number of shifts they have for cashiers in Walmart so you can imagine this labor force that's responsible for educating customers about this feature.

[39:59] It feels like that picture is competing with their livelihood and so,
wouldn't surprise me if Walmart is having a retrench How They Roll that out in the Walmart stores but they definitely have embraced it in the Sam's Club stores and in fact Sam's just announced a new.
Concept store called Sam's Club now and not only
can you scan & Go in Sam's Club now it's the only way to check out so you absolutely have to have a phone and you have to have the Sam's Club app installed before you're even allowed in the store you scan all your items as you put them in your car.
And you you self checkout before you leave the store that's a interesting pilot.

[40:44] At the same time since they now know every customer is using the phone in the app in the store they've added a bunch of features to the app so they actually have one of my favorite features they've added an augmented reality feature so you can name your phone camera.
Add a shelf in the store it recognizes the products on the store and it gives you supplemental information about this product.
So you can do the like kind of product comparison where you compare two products and see how the attributes are different than what the pricing is.
With why products in the store you can also see ratings and reviews and things that were used to an e-commerce,
Sam's is now enabling in the Sam's now store but using the the phone that they're forcing the customer to use and to me that's a big Trend in brick-and-mortar so I'm calling this Tran the future brick-and-mortar is mobile.
Because we're increasingly sting same-store Concepts where you literally can't shop the store without using your mobile phone so.
We talked a lot about Amazon go and this show can't get in the Amazon go store,
without using the mobile app Amazon has book stores in these four star stores in if you want to know the price of any book in the bookstore you need to use the app
if you want to pay in the stores are highly encouraged to use the app in those Amazon stores.

[42:05] that the second biggest e-commerce site in China has just rolled out this new digital grocery format called 7 fresh and they're requiring customers to use their,
the phone to get in the store and to do scan and go and have all these features in the store excuse me.
And Nike just opened a new,
flagship store in on Fifth Avenue in New York it's a cool store for variety of reasons but most of the cool new features are digitally enabled features that require you to have your phone in the store that day,
stores geofence the app so when you watch the Nike app near the store the app goes in the in-store mode and it gives you all these unique capabilities.
Help you shop the store better so we could eat that in the future episode on any of the specific store formats but to me the big takeaway is.

[43:00] 15 to 20% of all e-commerce sales sales happen in e-commerce the rest happen in stores,
throw these things people are getting used to online like Dynamic pricing and ratings and reviews in more detailed product information and,
the very consistent answer that we're seeing to solve all those problems for brick-and-mortar Shoppers is to have that experience on the phone.
Perfect sense because.
Customer bring the super expensive phone with a big brilliant screen with him to the store that's a lot more appealing than putting thousands of super expensive screens in the store at the store would have to pay for so I think there's a train we're going to continue to see play out.

[43:41] Yeah and judging from your voice to get pretty you're pretty emotional about the stuff man.

[43:48] I love me some mobile brick and mortar shop.

[43:50] Cool that's the all the News That's fit to chat about any Commerce in retail with that let's move over to listener questions.

[44:08] Question question question question.

[44:14] Our first question comes from,
Patrick and he says we're a small retailer with about 30 or 40 employees and we're transitioning from selling other people's stuff.
To developing in manufacturing our own brand of products any suggestions on building a team within a retailer that is responsible for manufacturing your own.
Brand of products does seems to require a new skill set of employees that we have not traditionally hired for for example Engineers product Developers osetra,
Jason had any advice for Patrick on how to counter if swivel maybe not pivot is Right work but too kind of
gradually go from selling other people's stuff to developing your own products and sign this.

[44:56] That will sew a congratulations on leaning in that direction I absolutely
the dad is a important part of the future of Commerce is more more companies are going to be selling their own stuff it's going to be increasingly harder to make a living selling other people's stuff
and I do think you're right like I.
You need a lot of different skills to be a product developer manufacturer and marketer,
then you do to be a wholesaler or retailer in so I do think you want to think about.
Adding those new capabilities via VIA dedicated teams.

[45:39] A picture of the things I really want you to think about in the places I would start thinking about investing in in shifting my labor force the most are the successful products that people watch today.
Are based on.
An intimate understanding of the Target customer and their needs wants and desires and so like all the companies we've seen their been really successful launching new products have a direct relationship in some way or another with a customer,
and they use that relationship to test launch new products and quickly iterate and that is Maybe,
not best done on platforms like Amazon where's your.
Pretty heavily disintermediated from the customer and so you know one of the things I encourage companies to do is they pivot part of their business from from wholesale to to being a brand of manufacture.

[46:34] Thinking about how you can develop a direct-to-consumer Channel or some way to have meaningful intimacy directly with customers so that you can get.

[46:44] Feedback from from customers and so you can more quickly iterate on five development and by all means once you have a great product.
Use all those other channels to sell the heck out of it so I have no problem with you selling that new product you invented.
On Amazon but I think you need another Channel besides Amazon to test and learn and really develop those those product quickly.
The other thing I would remind you is when you're selling someone else's stuff someone else is invested a lot of money in creating awareness and demand for that product when you're making your own product.
You really need to have a marketing strategy around how you're going to treat that awareness and brand and usually the,
different skills the dirty secret is when you're selling someone else's stuff the Big Marketing skill you need is actually B2B marketing skills,
you build a relationship with those retailers but when you start making products that you want consumers to buy,
because they recognize that your unique value proposition you really need true b2c marketing skills and said yeah you need to start thinking about,
having the right people with the right skills and the the appropriate budgets to do that and so you know those are all some of the things I would.
I think about as I made that transition Scott any important stuff I miss.

[48:04] Yeah we're going to have a question in a little bit about anchor spoiler alert and so listen.
Don't stop listening. Here at this point Patrick Patrick didn't tell us the categories in so sometimes this works or doesn't but one
what area is kind of July feedback like you talked about is Kickstarter or Indiegogo and a lot of the biggest campaign to see on there already pretty well put together so but there's this kind of,
level down or maybe two levels down if you kind of Explorer to there and companies are using those platforms to do a lot of experimentation around features
so let's say you're going to come up with a widget and I kind of want to find out if people want feature 1 2 3 or some combination of those use those platforms for that what you do is you put the basic product out there
then as you date they have different terminology for this but it's actually there's these different levels that that people can commit to.
I'm going to vote with their dollars so let's say your base product is $30 and then you can add these features and.
You can use that that feature set on those platforms to kind of let people vote with their wallet for different features that you may or may not want associated with your widget.
So if you still a little time poking around there you'll see what I mean but that's kind of a cool way of of kind of.

[49:29] Killing three birds with one stone so you're getting dressed feedback from consumers you're getting people to pay for YouTube product which is always nice,
I did the third one is your building that direct channel so that those platforms can be really useful way that I don't think a lot of Amazon sellers may think about leveraging those platforms for for for doing that.
Okay our next question is from Street,
and we'll do kind of lightning round here so his first question Jason is is the Amazon business in consumables really growing.

[50:06] All right.

[50:08] But clearly there's categories like the Amazon basic battery famously has.
31 market share which is 10% bigger market share than Duracell tons of brands are seeing huge growth on Amazon subscribe and Save.
I think it's fair to say that like Dash replenishment well super interesting and potentially the future.
Isn't huge yet but absolutely Amazon's having I think very meaningful success in in consumable type product.

[50:39] Are there any consumables that aren't doing well.
Like maybe razors like me up Dollar Shave Club and doesn't seem like Amazon's really directly address to that that market that seems to be where razors are going just going to rain in my pickle.

[50:55] That so you know we're going to do is we have to invite one of our data friends like 10 10 data onto maybe share that but I would not be shocked if Amazon sells more razors than Dollar Shave Club or Harry's.
So I haven't I'm guessing I haven't specifically seeing the data on razors obviously there are a lot of people buying razors as a single order from Amazon.
What's the mixture make a note and we will find out from from some folks that might know in the future shop.
I think one of the other questions that tree ask got was why are we not embracing Alibaba in the US.

[51:37] Yeah we kind of talked a little bit about this on the singles day coverage and there's just kind of an interesting little history lesson here,
not a lot of people may know so
Alibaba acquired a eBay selling platform full disclosure this is a kind of small competitor of Channel advisors called Activa in August of 2010 and then one of the things that Activa team did it and I'm
good friends this guy's name is Jeff
they pitched Ali Baba on building a Marketplace so essentially aggregating the products from those eBay sellers that now we're kind of
also buying a lot of products from Alibaba to sell in the US and they came up the little Marketplace called 11 mean that never got traction
a lot of people kind of a room you'll see felt like that was Ali Baba's
bet on the US and that's not true and it was just kind of experiment Within
that ended up getting caught wound down in 2015. Combined with a bunch of other marketplaces and then.

[52:47] Alibaba you know where they're investing heavily is so special to have a very large US presence in New York and their they seem to be expanding that AliExpress is,
have a B2B site where you can buy in bulk you know products and then resell them so lot of these Marketplace sellers Source from AliExpress
I don't think Alibaba disclose exactly how big that is in the US but I I know it to be quite large so that's a big Market Place a lot of people don't know about because it's kind of weird B2B
and then the other kind of technical of Alibaba that reaches into the u.s. today is they invest in a lot of companies.
So let's see I always get some of this mixed up with Racket and who's the other company that kind of comes in and buys a lot of our companies so alibaba's a big investor in ShopRunner
and then they see today by some The Flash show cat is or was that.

[53:48] I know for fact rocket on about a few but it wouldn't shock me a volume also has.

[53:55] So it seems like most of their their plays in the US have been to really kind of,
invest in things and keep an eye on it where you know where I think they're
they're doing a lot of the US is more China in so we mentioned earlier the show getting large Brands sell into China that have done some experiments we're trying to get Chinese Francis on the US yep that hasn't really
play doubt busiek Park is flowing through Amazon right now or through AliExpress or from Alibaba which you know
back to the first question how do you start building questions how do you your seller of other people stuff how do you start the Liam one thing we didn't talk about is finding a Chinese manufacturer is great for that so you can go on there and literally find a factory to make you any.

[54:45] So those are the ways that there is some connective tissue between kind of the the China Alibaba world and the US so
yep there's always been speculation to sew on eBay and PayPal split up there's rules around this I think we're past the time frame around these rules there's a lot of speculation that it was being done so that the eBay asset could be sold off mom and the number one company admission does find that would be Ali Papa so that would become an interesting way for Alibaba to
really get serious about the US market is by eBay retool it and kind of what's worked in China which is splitting the
people kind of oriented auctions from any of the B2B sotol Ballentine mall and
and then taking a run at the US with some combination of putting a lot of Chinese sellers in the mix so so we'll see the jury still out on that I think it's definitely something Ali Baba has it keeps an eye on and want to the kind of in a weekend position right now like we mentioned earlier so out so I don't think it's you know if I was there I would do that right now,
but you know it is something to keep an eye on and we will report any news there on the Jason Scott show.

[55:56] Nice.
We're starting stats for Tom little bit that you dirty tease this question so I want to make sure we get it in I think it came from an anonymous listener but it sent you the question was anchor which is a nktr which is the.
The accessory mobile and PC accessories manufacturer anchor Rose to be a power
a power house on Amazon business can you analyze their changes to highlight the overall Marketplace transition to differentiated product development.

[56:28] Yeah and so my knowledge I've never works directly with these guys but I've read a lot of articles about him and I know people that have worked with him so it's all second-hand knowledge so Jason you may have more knowledge but
urban legend at least on this is Anchor started as just kind of in one of these companies that sells a lot of accessories
and then they started to see a hole in the market not and I think one of their.
As they started to get their know their customer a lot of them are Travelers like like you and I and the one of the first things they noticed or heard from their customers was,
hey you know I want,
more USB ports on my power supply so that I don't have to buy as many of the Scituate of the bricks so one of their first products that came out with was a multi USB
plug-in kind of power supply that was wildly popular and now they've taken that and really run with it and you know they have a whole,
Kohl Mansion whole group that that innovates around these kinds of things talks to people and understands you know what what is their next gadgets need look like,
I'm I'm sitting here and.

[57:43] I got 30 or 40 different anchor thinks I have a thousand Jason and it's one of my favorite things to buy on Prime day because they are pretty aggressive song
and to my knowledge they pivoted from Simply a Marketplace seller all the way to a top manufacturer I've read articles that kind of put their sales well north of of several hundred million dollars would surprise me
I bet they're probably three to five hundred billion dollar company at this point so,
back to that first question this is a really good example of how they do it but I also know,
it's been a lot of time looking at Amazon search results there's various services that give you Amazon searches and the results,
so for example we have a customer channelizer that spoke at a conference so I don't feel bad saying this
they you know there's just this classic Han Solo in carbonite image there in the Star Wars world shockingly so I know a lot about them and
they kept seeing people look for that in different ways and they came out with a beach towel that had it on it so it looks really funny the beach towel is just like.

[58:50] The exact Han Solo in carbonite so
it looks kind of funny when she was sitting there on the beach and they discovered that two looking at Search terms so people are actually looking in towels for Han Solo Carbonite not finding it and they saw the no search results there and decide,
and I've heard danger guys talk about they spent a lot of time looking at the Amazon Marketplace in these inequities between Supply and man and then they figure out how to be the supply that meets that again.

[59:18] Yeah it's an awesome tactic if your own e-commerce site it's one of the most valuable,
places to mine are those zero results found on your own site but for sure using tools to get disability in the like what's happening on Amazon searches super valuable the other area that they
they tend to farm a lot for good Insight is the reviews on the.
Amazon so you you can actually learn a lot about the attributes people are looking for and products by reading the reviews of people that actually bought the.
The previous versions of products which is another good tactic,
and you did correctly surmise I feel like I am a little bit of an anchor hoarder I have some weird wait in fear that someone's going to come to my house with a weird device that they need charged and I'm going to be a bad host,
and not have the right the right stuff so I feel like I I buy way too much of that stuff and every new Gadget that comes out open the door to replace it all right so.
Now are our latest iPhones can be charged by 18 watt Chargers and they charge a little faster so I had to replace all the the
the older usb chargers with USB C Chargers and one of the things you'll find from a company like anchors they have now moved in a differentiated products is.

[1:00:36] Actually have competitive advantages over the ocean of of generic products that are there on the market so you can find,
18 watt USB C charger from anchor that are much smaller,
that have like nice usability features like folding plugs and all these things then almost in the other sellers on Amazon so it it it are a little tip of my hat.
It's always surprising to me when you can offer a differentiated product on Amazon where they now have like 600 million.
Million skews and so that's going to be a great way to leave it hopefully you're listening to this show,
in your car on the way to.
Your relatives for for Thanksgiving and when you jump on your phone to look for some of those Black Friday deals make sure you check out some cool new usb chargers,
from our friends and anchor and so,
if I'm wrong or you have another paper product or there's anything else you want to discuss from the show we did encourage you to jump on a Facebook and leave us a question we do try to get to all of them we can.
What is a good enjoy the show we sure would appreciate it if you would jump on to iTunes and give us that 5-star review.

[1:01:48] Thanks for listening when we hope you have a great Thanksgiving and we're thankful here at the Jason and Scott show for you listening to these crazy ramblings through over a hundred 50 episodes
we have no idea why you do it but we really appreciate it.

[1:02:05] Absolutely and so until next time happy turkeying and happy commercing.

Nov 19, 2018

EP152 - Shopper First Research with Rick Kenney 

Rick Kenney (@rickkenney) is Head of Consumer Insights at Salesforce. Rick recently completed a "Shopper First Retailing" study in conjunction with Publicis.Sapient.

The study included data from:

Shopper activity: Digital shopping behavior of 500+ million shoppers

Consumer survey: Preferences of 6,000 global consumers

Mystery shopping: 70 brick-and-mortar stores evaluated for consumer experience

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

Episode 152 of the Jason & Scot show was recorded on Monday November 12th 2018.

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.


[0:25] Welcome to the Jason and Scott show this is episode 152 being recorded on Monday November 12th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scot Wingo.

Scot & Rick:
[0:40] Hey Jason and welcome back Jason Scott show listeners
Jason all the trade shows going on in travel that you have been plugging in over the last month's we took a little bit of time out and haven't had some guests on the show they don't like it when you're like well we could do 1 a.m. or 3 a.m.
I'm so not the good news is continuing here with episode 152 and through the holiday season we have a really strong slate of guess they're coming on the show
is a theme they have one thing in common they are bringing to the Jason Scott shows some really awesome data and insights around consumer paper.
And kick off that thing we're excited to have on the show Rick any and he is the head of consumer insights at
Salesforce in publicist Sapien and full disclosure that's Jason's company and he played a role he would say pivotal I think Rick would say minor so what.
You played a role in the project and it was recently completed and has some really comprehensive research and Retail consumer Behavior
Jason I Jason's kind of been talking about this a lot Rick and we are really excited to have you on the show welcome.

[1:50] I am thrilled to be here I'm a long time listener first-time guest so thanks for carrying the torch on Commerce podcast and
let's let's talk about it.
Yeah I think any good geographies interesting I am in my home state of North Carolina Jason's in Atlanta and you're in Seattle so I think we got kind of the you know by coasts and covered here
Coast to Coast.

[2:14] Exactly it's pouring rain here are you guys going to do some weather.

Scot & Rick:
[2:18] It's beautiful outside in Seattle today we are rainy here as well.

[2:23] So the West Coast wins this week so you will know we always like to get things started by getting a little background about our guest and how they came into their role so can you you share your your story with.

Scot & Rick:
[2:38] Yeah so so as you know I'm I'm in a sales Force uniform now but it all started with the boy and a dream about e-commerce back in the early 2000s when the
what I said a company called Zildjian so is Elgin mini know as symbols and drumsticks and that's a very entry-level.
Participant in the marketing department I figured I'd hitch my wagon to e-commerce.
And I found my way into email marketing and then threw some acquisitions.
And it has been a time since I'm just really been infatuated with all things Commerce and Performance Marketing since early 2000 so that means.
Carly Salesforce in prior to that company called to man where was e-commerce ranks and then GSI Commerce.
Which was a another e-commerce provider back in the early 2000.

[3:36] Lucy got some GS either I'll have to ask her are you a musician is that why you went to cymbals and drums.
Yeah you know I thought early on in life that I was going to go pro in in the Rockstar thing but.
Change of plans went pro in e-commerce and look back but.

[3:59] Rickles so then see you were at GSI and then demand and then.
That's that's the exact one in Gs I came in through an acquisition of a company called the dialogue which folks may remember from the.
Earlier days of email on the 2006 well
Brickell and then the sales force is obviously a huge company and after acquiring demandware it became part of their
what are there many clouds have Like A Thousand Clowns so maybe just for folks that aren't familiar with that 100% maybe give a little high level overview of of that cloud and then tell us about your role.

[4:37] Yeah so so Salesforce many know is the number one CRM provider in the world
in particular to folks who are listening in now on the e-commerce space you may know Salesforce Commerce Cloud so Salesforce Commerce cloud is
B Enterprise leader for all things Commerce providing
and so we are my team particular we are part of our retail team so I've got a really fun group but really fun jobs at our aim is to tell that true story of shopping.

[5:07] And the other super Advantage build in that we get to look at the actual shop activity of half-a-billion Shoppers globally and that's.
Direct-to-consumer Enterprise Brands and retailers in inside all those quicksand all those Taps UC the
change in retailing to the pace of that change and really how Shoppers are acting today and it provides really a great canvas to tell a whole lot of cool stories
I don't really wear retailer should be putting their Investments and working towards these days
cool well we're all here for the data so let's jump in I think the
the name of the the program here is chakra first couldn't go shopping first so let's lay a foundation tell us about
how did this come about sounds like you want them part of this you have all the stator I'm through the demandware system it's based so obviously you can
see all the analytics and things that your your aggregate.
Retail and brands are generating their and you said something like half a billion so tell us a bit more about the research and what was the goal.

[6:17] Yeah and this is really this is my favorite piece that we've done over the past 10:05 or 6 years of doing this and we had first some some great call authorization mention heike Young from Salesforce
and he'll be Anderson from pupusas. Safety and then there were three of us and we also did this three-dimensional data said I talked about that shopping activity
we look at a half billion Shoppers a recorder
and inside that we see a whole lot of really great things to devices that use the thracian they stand box that they by Cecile a lot about the Shopper activity.
When will you want to look into Shopper preferences we added some survey data and then we also had this really fun mystery shopping expedition across 70 stores in the US and London as well.
What are the three things together and we created this what we we consider this blueprint of retailing success sends
who tells the story of what it takes to succeed in retail given the climate that certainly we all know about of some really interesting macro pressures that are facing the retail Market overall.

[7:21] Did you guys to 501 Shoppers is a lot do you guys just close
the GMB going to the Wyndham and where was Private or a public separate they did disclose I can't remember the number but you have any idea.
Dollar amount of transactions work we're talking about here.
Yeah we disclosed last year for 2017 calendar year we had more than 25 billion
in gmv across the across the sales work on her class about that is sore
retailers for retailing brands are those gray lines exist now they're really looking to see how they compare with other Enterprise Brands to retailers.
Direct-to-consumer space nut is the Wheelhouse of All Things Early Salesforce but to the state of set as well.

[8:12] And then again I remember so in demand where was Independence the the set of customers kind of skewed have the fashion I would say you're or apparel
did you guys do anything in the data to kind of normalize it against kind of a categories drinking like that.
Yeah there's some really good depth in a few of those vertical sea mentioned so all things apparel General
active luxurious three different flavors of apparel overall there's a really healthy component of Health and Beauty inside of theirs as well so that that spans from high-end Beauty all the way down to something more cosmetics.

[8:54] Epgi felonies and then
as well as Electronics there's well this really cool view of a really strong Brands and retailers for this year's report this actually the second year that we ran it last year we gets the splits based on those different verticals
we do have some other assets where we look at those verticals in particular and and see how they compare with each other but the I think we tried to get out and in this report was how do you tell the story of all the Shoppers and.
What's interesting though we see differences that exist between Francis Health and Beauty
and apparel we do see is the general shopping at tivity thanks for the foundational items like
what device they use when are very similar average order value certainly be different for luxury apparel then more of a fast-fashion set but overall for this predictive group that spans of kind of file,
specialty Branson retailers we see a lot of similarities across those.

[10:01] That's awesome Rick I am sort of a geek on the data set I ask you questions all the time and.
I'm trying to avoid the temptation to go down a rat hole and get into Super.
The new show level stuff but so in addition to that data what you have all the time you did this one time survey and remind me how many consumers were in the survey.

Scot & Rick:
[10:27] Yes we had half a billion inside of this the particular data set for it's generally we looked at for this one egg quarters worth of data
against the year of your peers you before so 2018 you won against 2017 QR codes.
Half a billion little bit more than 500 million Shoppers voice.

[10:50] Call n&s on the survey data haven't how many consumers did we talk to.

Scot & Rick:
[10:55] Yes the survey was 6000 consumers that Global across six Market split evenly US and Canada
UK Germany France and A&Z as well 4,000 from each of those those Cheetos.

[11:11] Cool and then we visited some stores and how many store visits do we do.

Scot & Rick:
[11:16] So Physical stores you visited more than 70 stores it was for in San Francisco New York and London as well.

[11:24] Perfect in so one of the fun things is the story you can tell by by seeing the the sort of.
Intersection of those three data sets together and so.
Like I know that you came out with these like three big categories of insides as a result of what.

[11:44] The things and we named them make it fresh be where I am and give it meaning so I'm hoping we can do a little bit of a dive into
each one of those and explain to the listeners what we mean and and what some of the key takeaways were but did you have a favorite of the three buckets.

Scot & Rick:
[12:03] Absolutely that the first one and we we share this together last week but her on stage together my favorite of the mandates and again we consider this the blueprint he do these three three things really well you're able to can be
Pete Wentz the first one though make it freshers is my favorite other couple really interesting things that jump out at me
with naked fresh we like to look at
what is that product catalog look like how important throughout the year at the very top of the catalog what does that contribute to what we found is that the top 5% of your very best Frost the top 5%.

[12:40] Driving 48% of Revenue and a lot of folks talking about the Pareto rule here at the 25%.
Is driving 48% of Revenue what's interesting though is when he compounds that.
With what's happening with 5% those those top products are changing really rapidly 59% all of the top 5%,
are changing.
So we're entering the Sarah where you're God or these days of Evergreen products that you have to make it fresh you have to be fast and fresh with your Shoppers and this is really a nod to what happened or rather
what fast-fashion did to all of retail that it has
Inspire The Shopper to expect to see new whenever they come to a site or stored back when surveyed,
they say 69% a shop or so yeah I expect to see something new whenever I get to the site or store in the catalog data saying the exact same thing
you need to be fast you need to move quickly and you can't just
Sand by the old the old guard of products that may have gotten you somewhere previously.

[13:48] Yeah and that that like it's pretty well with the data like Google typically shares on search right like that.
An overwhelming majority of the the search volume is on these head terms but still something like 80% of the searches Google Seas
have never been searched before I write like so it you know there's there's this constant churning of what people are thinking about and what they're doing or not when I saw your data on the catalog.

[14:19] It was very similar to that white people are coming to these sites with different problems different challenges different occasions and contacts every single time and they expect the retail to beat the
meet the needs of that particular occasion in contact.

Scot & Rick:
[14:37] And I love that you brought up that Google example because I've seen that day. I think I heard it from you from one of your tweets right back went and we decide to look at the same thing of what we look at our site search the Google
data is all about SEO and what they're singing in their box
when we look at site search so when you go to the top right-hand corner of your phone or to recite you want to see that
how often is that changing as well and we know that site search is extremely important extremely productive what does it look like a cross
Shopper in turns out that 75% of site search queries are new every month.
So this is the hardest part of e-commerce iste the plane
simple basic active merchandising is really hard because there's constantly new things than these Shoppers are looking for and if you don't really.
Yes I sent you a lot of different topics about merchandising help or is it is but just that number always jumps out of you need always be fresh you need to not just
showing freshmen also responding to all this activity is happening all this change the chopper.

[15:50] Yeah for sure it's super easy to do too so that's the good news the wheat we said this a bunch of times.
At 75% of queries being new every month totally underscores one of those
my one of my favorite Tools in analytics Platforms in my mind when the most valuable.
Analytics views we get our these Zerorez search results found right and so you know I'm always encouraging Merchants like there's gold in.

[16:21] Typing in your search you're on site search and expecting to get results for an arms and you know that.
Telling you all those new items that could be part of next month 59% on your site if only you were able to respond quickly to the to these new emerging demands and to me that.
No results found search queries are kind of the canary in the coal mine is as trans and interests and indications are shifting.

Scot & Rick:
[16:48] Yeah site site search is an endless waterfall of just great things that can happen if you take care of it
if you are seeing no results coming to 1518 20% you're starting to get invite big trouble at that point we actually have a a benchmark that we've run for number of years for our customers which is
how good are you at site search and looking at conversion on site search no results search and it is always a source of found money for retailers of.

[17:17] Cultivate your side search always go back to it the good news
today and now is that they're a lot better tools and then just the analyze how much stronger and.
Utility trucks the applied intelligence artificial intelligence into merchandising is much more of a chore today that was gosh 5 or 7 years ago.
I want more manual orbis extreme rules rules ribbon that is today.

[17:45] For sure and it turns out those this hoax using site search have very high buying intent so so there are good cohort to take care of.

Scot & Rick:
[17:51] Absolutely.

[17:52] I know that the next foundational thing was called be where I am can you tell us a little bit about about what you meant by that.

Scot & Rick:
[18:01] Happy where I am just as it sounds this is about making sure that you are surrounding that shop or wherever she or he may be but also maybe more importantly is reducing friction in that experience and Jason you rightfully so bad on your soapbox about
things like mobile buying how much friction that has the still in that process the books of not getting rid of them we look at beer I am is that opportunity to inject
or rather reject friction and inject a lot of that seamless opportunity
what are the easy things we we jump into is the use of mobile wallets and it might seem like a basic and and maybe even in Alyssa is here and and and the three of us
we're somewhat tired of talking about mobile but there's still so much opportunity with it and you know we look at
where we are today that's as of Q3 2018.
We see 65% of traffic is just coming through phone and we need to get better at converting that one of the ways that books are starting to do that night I look at Johnston Murphy Footwear retail job.
Bringing Apple pay into their experience and I love the story of Southern Marsh who runs Commerce
Johnston Murphy that they actually launched Apple pay last October so over 2017 on a Friday.

[19:23] Soft launch no promotion and LSU folks know you don't typically like to launch features on a Friday but they weren't
if we're not there they came in the office on Monday and already Apple pay accounted for 15% of all their mobile orders.
It made me more over what was really impressive and they were glad to see at the speed.

[19:47] At which folks were actually getting through that shop attorney that folks who use Apple pay
would 90 seconds faster than someone else who bought with a credit card so that bottom half of the funnel essentially has been sliced off.
Buy Mobile balls in particular Apple pay for their example and we're just seeing that when you can reduce friction and be with that Chopper is in their context really great things can happen.

[20:14] Yeah that's that's an awesome example and you see similar results with other mobile wallets like PayPal or Android.

Scot & Rick:
[20:24] I'm glad you brought PayPal everyone forgets the PayPal at least in the states is still farther away than a number one mobile wallet that sits PayPal.
Apple pays doing well for those that are inclined to use and have Amazon payments that is performing well in those really the three that in the states are carrying some real Cher.
Last holiday season we saw just the last couple of days we let up to Christmas than 40% of mobile orders were using one of those three.
Mobile Wallet site PayPal Apple pay or Amazon his and
what we expect to see this season is actually very similar so
there was three absolutely Carrie Carrie the share we haven't yet seen evidence of the other ones that are out there
we're starting to see more discussion and more information of some of the financing options for the VA.
Says all after pair but right now it was three wallets just by themselves are really caring you all the share of.
Mobile Wallet.

[21:36] Nice and one of the other things that's really interesting me in be what I am is something it's kind of talked about a long time on the show and you ordered two is is what we call this mobile Gap that essentially you know
traffic's increasingly shifting to the mobile device which is great news but bad news the conversion rate you know
tends to be you know a half or third on the mobile device what it was on the desktop so that's if you follow that Trend out that's not a very favorable trend.
And a year 2 years ago Scott and I would debate like what the causes of the mobile Gap was and if it's something that would abide over time as people got.
More used to mobile and is the mobile checkout experience got better or whether there's something endemic and in phones versus.
Apps that was causing it and most of the data source I do sort of show that while there still is a mobile Gap it is starting to close.

Scot & Rick:
[22:37] It is an indoor really interesting things about Mobile in end the story because a couple years ago I got to go to stage and it's actually did my big convert speech
it was welcomed with open arms because what's happened.
Overall in Commerce in the past bunch of years is that no way back when if you go back to the earlier days of when we're all doing this we were trying to educate our boards of directors to start a conversion rate online at.
2 or 3% is it okay that's that's where we're all at is an industry and the folks who had a store back bro we're pause right there
30% of folks who who crossed the threshold goodbye and condition them.
Digital reality of to 3% when we did that as it as a group of of e-commerce leaders
we also decided that we would put our bonus against increasing conversion rate so soon the practice of conversion rate optimization was born and
we pindar are bonuses against that in and we saw this nice Rising tide of conversion right or wrong
a bunch of traffic went there but no conversions went there so I'm sending the birth rate started to fall.

[23:58] And we had folks coming to us saying hey Mike anniversary it's falling what's going on and it was pretty easy to point out that mobile Gap that you talk about.
It was causing this is decreasing conversary you could still have higher orders per Shopper which is a really cool metric to look at us just a look at all your Shoppers look at the orders and walleye you have
a nice healthy message to look at compared to this old star geometric.

[24:26] And if we start to get their folks are disabled how can I actually Benchmark myself.
Permobil in as you may know we have a benchmark and practice in Salesforce but we have one super easy metric that anyone can use and put themselves against now we talked to her.
And you take your order share on a device so today that order share on phones is 45%.
And if you divide that by the traffic share which today is 65% you get a decimal it's like .67
metric conversion indexed by definition that showing that you have a lower conversion on your phone than your overall conversion rate in the other devices
always gives you the sense of what the Benchmark is.
That leads me to is the mobile Gap is still there they're still friction we need to get rid of but.

[25:24] The goal should not be part we're not trying to be 65% or 65% traffic because the intention mobile Shopper is very different.
Attention is when you're in a store and you still want to bother the associate or don't want to be bothered by this so if you take care of your phone into research.
And we found that in the research they already uses their phone illegal to walk into your laptop and start checking something out you walk into the phone
83% of those score 18 to 44 year old Chopper are using a phone when they're in the store generally speaking those folks are not buying
on their phone while they're probably going to check out through that store and actually buy with a credit card on the way out so the
the actual potential of buying on the phone is lower set intent is just naturally going to be crazy so while we haven't figured out the exact value we do know that the Benchmark of what mobile looks like today
has risen nicely in the past 40 years we have been monitoring that conversion indexed the past 3 or 4 years and we see that it was
33 if you go back to 2014 reptile that point 67.7 rage now so we are seeing good things happening,
we still have that mobile gap insurance the traffic Sharon or share.

[26:46] Yeah I know it makes perfect sense and I love your point that you like we're not the goal isn't conversion parody because
all of these are our different circumstances I would like to remind people conversion is a metric not a kpi.
There's a lot we can learn from it but it it on its own is a very poor goal and to your point.
A 50% conversion rate might be great for a store
because there's a heck of a lot of friction to get to that store people only get to that store that had a very strong buying intent you had to drive 5 miles at the park in the scary parking lot yet she weapon in the store
you know people were pretty committed before they got through the front door that store in the further away your story is from the the customer the higher the conversion rate of that store is going to be because only more committed customers will do it.
The closer the store is to the customer of the worst the conversion rate gets and of course there's way less friction to jump on your laptop then there is to get in your car and drive to a store and there's.
Even weigh less friction to hop on your phone while you're standing in line at the bank then there is to hop on your laptop so these are all sort of.

[27:56] Different situations then um you know the goal isn't parody I'm embarrassed to say I still have clients that you know come to me with it.
Jason we just want to improve conversion rate and frankly more often than you would expect they're even willing to do a performance agreement when I get paid based on how well I can prove right now I have to tell him.
Will totally accept that contract but just so you know the first thing I'm going to do is only allow previous purchase orders to to visit your website.

Scot & Rick:
[28:28] I love it yeah I didn't I love that point about the friction that it's involved with the digital environment compared to the friction involved in the.
Is a teaser we have to put this research out but some point early in 2019 will have an analysis of location-based Uber traded in.
Eat the spoiler is the geographies that have lower population density
which generally have less access to store tend to have a better conversion rate in digital because that is the channel they have to go to.
There's a really assuming top of that when you look at the metric.
We use the term you always be careful data because it's Dana and other lies you can be really careful and what day that you accept
what day does that you need to focus and say I don't know if I believe what's underneath that lets get into it and any any retailer worth their salt knows that they can't take anything at face value and what are you actually measuring.

[29:26] Yeah your ear point about previous purchasers making sure that it's true there's reason why when you think about
old school direct marketing based on our FM right recency frequency monetary reasons why the are Whispers because recency wins and you can predict
who is going to actually be a good shopper based on how they bought from you before and if so how frequently rather are they grow the business.

[29:59] That that's terrific advice in an attention to the third pillar give it meaning can you tell us a little bit about that.

Scot & Rick:
[30:08] Yeah give it to me anyway we want to do a lot of a lot of diving into really that relationship between the Shopper and the brand of the Shopper and retailer we can have some really into three pieces within this one that
there's a side of giving meeting in the it there is the relationship.
There's a side about values in about how you as a brand stand for something I hope to connect with the shopper because of that and there's there's some evidence that shows that yes shoppers
do and will be more likely to buy from you if you have something that you stand for and they connect you there's is 45% Shopper said that they
are more likely to buy someone we also saw a lot of
evidence to say yes loyalty programs matter to Shoppers we didn't we didn't ask particularly which types of oil favorite within to give it needs that give it meaning section.
It's all about how do you connect Shopper with product and the Art of retailing is doing just that.

[31:12] And one of the best way to do that is by using recommendations it's not a new tactic in fact it's one of the oldest and we've had a digital Amazon years ago.
Absolutely astounding numbers on what's happening with.
Product recommendations next Shoppers then click or tap on a recommendation account for about 6% of all visits.
But that group of Shoppers is driving 37% of all revenue.
And when you talk about connecting Shopper product there to foundational things on product find ability got to be great at.

[31:51] We talked about one earlier which is site search.
Site search is always going to be massively overweight in a good way that you'll have 10% of visits and will yield 25.6% of Revenue.
This product recommendation finding of 6% of Shoppers and 37% of Revenue is just.
And just goes to show you how the power of suggestion the power of connection in a relevance is driving outside results and in there should be other couple folks are still run a nice day is generally the luxury space that.
Art ready to rest her or give control over to to some of the algorithms that make up those recommendations bide relevant product recommendations good things happen,
With Your Shopper cool some kind of sitting here and that's these are all insightful,
what's landed plane for listener so keep it fresh if I'm in fast fashion I'm already doing that but let's say someone is not in that category are there any any tips or tricks for keeping it fresh outside of the national.

[33:04] Yeah I know I'm sure the store last week when I was in Stockholm about this time last year
I tried to broach the topic of fast fashion with a premium apparel brand and it was it's really what I once I said the words out loud and Fast fashion
just the visceral reaction of we are we are not disposable
I think it was lost in that it is the baggage attached fast fashion but what the concept has brought us
is this the Snead inability to be.
Fast in terms of how you turn inventory how you release product how you get away from the know by fashion Seasons into season list and into micro seasons.

[33:48] We see more evidence of folks and Jason actually bring up the example of Woodbury launch just less than a month ago that now they've started to actually have these monthly.
Drop Cadence's limited edition 24 hours available only through social social channels or least new newer media channel and they started that series and we see.
More and more evidence of folks that aren't in the fast faster that might be premium.
Or might be entirely different sector that there. Pretty nice limited edition products that are only available for
a particular holiday or sees it and the other side of that is expressly bringing customize good maybe the hottest
topic that applies not just to retail but also into
supply chain components of retail light is who you bring those customized products they made for me just for me.
Over to a larger set of your Shoppers and that we see countless points of evidence of some success in there with a lot of the Footwear makers we see apparel brand even toy brand American girl who's doing some.
A customized it all inside make it your own this is a lot to be learned here.

[35:03] Yeah I think Doug from Fanatics voices like over half their goods or customize that that's definitely people love customization.
It's also you know not to take it back to the shop or but it's generally not promotional.
And it is insulated from Martin head because of that you not discounting it either so you you can put that van without usually the premium,
and not need to take the 30% off at the end of the season so if there's some really good things happen with.

[35:33] Payless returns as well.

Scot & Rick:
[35:35] We less returns yeah okay I think
I think that was the one kind of the pillars are that the make it fresh is probably the hardest to get your head around one question on be where I am used to talk a lot about mobile
you know we miss you a lot of Echoes out there and other voice assistance did you guys discover anything about that is that work somewhere retailers should be spending some time.
Data voice remains this curious beasts that we we haven't seen shopping activity evidence 2.2 here's how well is performing at its 8
is it difficult to measure this point because of what's coming through from the players the survey evidence supports that.

[36:17] There's some interest and activity in terms of shopping related activities the folks.
Only one these devices are taking that number was 70% of owners of one of these smart speakers
are doing something Commerce related within the past 3 months and realize there's a lot of caveats on top of that I think that's that's kind of where we are right now that there's there's not a whole heck of it is 22.
Massive success of this and honestly this this coming season
don't expect it either will get more of these devices in homes will see a lot more
use of them for basic activities but we're not ready especially in the break the world into wants and needs especially in those those kind of wants of products that might have some.
The Peril in the Shoppers that are looking for the technical Goods inside or performance Fabrics not yet
just reorder your replenishing through a device that actually researching and getting himself excited and inspired by those goods
your little while until voice catches up and maybe you can meet us at team up.
With some other elements of behavior trashley when that Chopper through that.

[37:35] Put it wouldn't be a Jason Scott Schofield and talk about Amazon a little bit too can I take the B where I am to the extreme and say well you know there's a lot of people on Amazon and.
I put that in the bucket of marketplaces and your eBay is in there and even the Walmart marketplace essentially if I follow be where I am to The Logical conclusion is the Dana telling you to sell on Amazon another Marketplace.
Yeah I know they were say maybe are our most important finding regardless of what Mandy that lives in is really what's happening in terms of how that how did The Shopper is relating to these
different models of retail like that on one side you have a Marketplace if you fall the Spectrum to the bar other end you have the brands and in the middle
you have your retailer and what was really interesting was when asking shoppers.
Where they choose to buy they said won't of course I go to the marketplace for pricing convenience and access to products.

[38:40] And then when it comes to product Innovation and authenticity and just a cool fact of course it's the Brand's because you are able to go dressed as friends to buy now and what's
what it shows then is the only reason the chopper said I will go to a retailer in this is where we talk about the squeeze.
Only reason that someone will go to a retailers for customer service,
CBC the squeeze and bird with brands on one side of the retailer Market places on the other
and what is really interesting to me is thinking about the the winners in retail in the past.
Five or so years and you'll get folks like Nordstrom in REI and even Stitch fix at putting that list of just really good retailers that had and have a service proposition.
Compared with the folks will be there falling or failed you can certainly look at Oakland Toys R Us and pennies have intelligence.
I think what the what the retailing world has become as you got to be good at that way that you attracted to shop with it.
Brands are great at showing how great they are at being your friend.

[39:55] Marketplaces are winning in being so successful because they have access meat provide such value that access.
And then if you happen to get stuck in the middle you better have a way you can actually serve your Shoppers and for those that have hooked on the service they're doing well for folks that,
so no one we think about what it takes to compete alongside folks like Amazon these days
it might very well be that you need to be there that you need to be on that Marketplace but you also as a brand should we consider it well what do you think about me that will actually bring Shoppers back to me.
And that's where all those things about make it fresh about limited edition products about collaboration about customized Goods
but that could be a real differentiator for you sure put some of your Evergreen product on Amazon that's a great way to meet some of those Shoppers first time but you better have something unique.
They actually get to your shingle that you had to hang up your own.

[40:57] Rick one of the points.
One of the things is really interesting to me in the research that related directly to marketplaces was this whole notion of how important it is to get the second purchase from that customer can you talk a little bit about that.

Scot & Rick:
[41:14] Yeah that the wanting to jumped out we we put it into the to make it fresh because there's this sense of needing to act with urgency and we talked about our FM early on about this.
What we found is that when Shoppers see that first purchase that sure they're they're going to retailer or brat but when they want to buy something again.

[41:36] They go straight to the marketplace and it's actually rather concerning if you look at what's happening that your first purchase you might win.
But your second purchase is essentially a shopper at writing and going towards at Marketplace the challenges that we see in this is end for for smart press retailers that are you driving their acquisition cost based on,
their lifetime value of a customer and lifetime value the function of how many purchases generally more than a couple.
Then your challenge the Beretta retailer is if you only get that first purchase and you lose that shop in the marketplace your economics are totally upside down.
Add this we think about acting with urgency the need to anticipate
right and immediately after they buy for that first time where you need to take that Shopper and where she wants to be so she does not at right and no chores that Marketplace
it's something you've got to be really really good at and side and we just it's it's astounding how many folks are not yet prepared,
to do that and not yet prepared to participate that second action.
And some bad news is you will lose your Shoppers to the marketplace and the second or bad news is it might not be your exact product the next time I feel better.

[43:00] Another interesting output of the research you guys did are what you called for quote on quote foundational retail truths and they are lead with mobile
the power of the store Infuse intelligent and connect experiences summer obviously Mobile in empower the store.
No maybe it was some highlights you like curious about the last two because on their surface at school. Harder for me to understand what there.

[43:28] Yeah you know what we talked about using intelligence it really comes down to what are you doing to really Drive value from the date of that you know and can access and
now there's a very basic kind of hierarchy piece around boy talk to her live person you got to be really good at personalization or at least be able to start those recommendations in place
increasingly it work or maybe better put the standard is the bottom of your product detail page you have to have recommendation.
The challenges a lot of people stop their most folks say alright check I've got recommendations on site
what we're seeing is this this new Renaissance that I actually using
personalization to create recommendations and create better experiences in whole bunch of other places throughout the shop or Journey not just
Aldi shopping for that so yes you need to have.

[44:26] Throughout those two site experiences go beyond the product detail page that means having more relevant search results that might not just be rules driven or rather you can service product.
The shop will be more interested in because of what you know about their last Clicker.
So text me if using personalization site search or even sorting the category Pages based on based on the things that you know about that shower so that's kind of level to it's it's just barely above the product recommendation.

[44:59] But now we're seeing this evidence of better mortality experiences like in customer service that we're seeing this will be the year that when we're all shopping will see a whole lot more.
The folks at Adidas at the 34% of their inbound increase are generally some of those basic and a wizmo type pieces
that a chat box you just take the bottom off of your service increase for though so you're going to see a lot more uses in service.
And then finally I think we're finally at that spot and I say finally because I heard it on a commercial last week that Home Depot is advertising.
Hey you can take a snap of a product and you can no search our product catalog based on that so you know when the big boxes are doing something like that
and there is good investment in good technology around visual search and we seen this for a few months with Pinterest
and with Asos we have just one of our customers Rebecca Taylor is actually a piloting some visual search elements right now as well so we're starting to see the intelligence
it was beyond sodiq reporting personalization into this in a higher level of actually connecting Shoppers with products in more unique ways that.
Can we have not been done before the last few months.

[46:25] Yeah if I'm not mistaken right I think there are two or maybe even three National advertisers that are prominently featuring visual search in their in their television advertising right now so that that
definitely tells you at the rabies it's at the top of the hype cycle or or maybe it's it's starting to really add value.

Scot & Rick:
[46:44] Why I think that's it was just one of those funny moments of I was half listening to the TV in the background when I heard
the commercial and it referred to you take steps that way I'm glad I got to DVR and record show that live in a week or two
is real Oaks or actually implementing it and that's good news because you know this is this is one of those areas that.
Who is Kenna beyond the basics into something is a little bit higher.
More compelling for Shoppers and it's actually use case this is a real use case it's good to see that
what's happening.

[47:23] Yeah I know you don't need the DVR anymore to capture the interesting commercials much every Advertiser upload their commercials to YouTube now so you can usually find it.

Scot & Rick:
[47:33] That sounds like a fun day activities at sifting through commercials.

[47:36] Don't bonus tip there yeah anything come out of the research that that struck you as counterintuitive or there was like sort of a fun surprise for you who you know who's been looking at this stuff for a long time.

Scot & Rick:
[47:49] Yeah I know it's funny one of the one piece of advice when I started doing a lot of this was he never be surprised by a result
weather still thinks it did jump off the page
I need one of those for me we talked about the Amazon second purchase thing which was may be jarring Morrison surprising because we put that together with
the speed at which we see Shoppers terminating as well so if you run a termination to see when your Shoppers mites
actually leave you what we found this that.

[48:24] Half of your repeat buyers will make that second purchase within 16 days and I think it would
when you talk about it talk with retailers of what do you need to change what do you need to do differently.
One of the most important things that we found in the surveyor in the in the research overall is that notion of anticipating because.
Now you are your butt respite of toothaches Amazon her once I was going to
Take Your Shopper if you don't stay tight or going to put a bubble around a shopper and then
even for those that stay you only have a couple weeks before you start to lose a whole bunch of your Shoppers so just the speed of which are retailers Brands need to operate today to eat
is I think it needs to be jarring to to all bran to retell it today because.
Your clock is literally taking on you and making sure that you bring that Shopper back is maybe the most important activity that you can get into.

[49:27] So we spent a lot of time talking kind of in the in the present
when you look at the data can you extrapolate it and give us kind of your thoughts on and feel free to mix in your own personal lease obviously where do you see the future of e-commerce.

[49:42] Yeah I know one of the one of the things that I think is most important today is that we've cut forgotten what we
we've been wanting to do that for years in I'll go back to marketing we moved from batch and blast
into segmentation and then have been injecting marketing with more personalization recently.
Ed in Commerce we spent so much time trying to get those recommendations on the side and if I knew areas of bit of the
experience that can be more relevant in meanwhile on the side we had customer service which is really need the true one to one channel.
The entire time and it's been largely ignored and looked at as a cost center in silver profit Center and if there's one area that we're learning
and I think we'll take a lot from is next couple years is that will start to see this service LED retailing model starts really take shape and take take effect across retail in.
I mentioned the datapoint earlier that retailers are successful retailers are ones who do have a service proposition I think it goes deeper than that in the success that we seen from and I can point to stitch fix because
their approach has been a service letter
the fact that they have a box to get sent to you because there's there's there's a lot of hype around subscription models.

[51:09] And it just like any Eddie hot treasury hype cycle topic.

[51:15] Those things will will at some point fall and get quieter just like if you go back five or seven years when we saw the flash cell model but,
every one of these friends leave something behind in the flash sale model turned us on to the concept of emergency in Access and it even rate ethically showing the word sold out
on the website which knowing in the early 2000s something wrong
product next Leona Group HST sold out it changed after that after the plastic model to be over this about brand heat look you should have come here earlier this time
what we will see from all of these box models that have happened isn't the infusion of this relevance alongside this notion of service and it created just for you and curated just for you
will start to be something that retailers and Brands need to differentiate on actually relate to their Shoppers in a much more 1 ton weigh it and
to be honest it's an asset that brand retailers have and it's one that the other competition i e Market places,
might not yet have holder might not be using so for those that want to succeed try to play the advantages and it said of just fighting the swamp take him out of it.

[52:40] That is a a great piece of advice and that's going to be a great please
place to leave it because it's happening again we've used up all our a lot of time so folks if you were eager to get one last question in with Rick or you want to follow up.

[52:55] During the show feel free to leave us a note on our Facebook page and what will continue the dialogue there
I will put a link in the show notes for where folks can go to download a digital copy of the research we've been.
Talking about on Today Show and as always if this show is valuable to you the best way you can repay us is by jumping on the iTunes and finally giving us that five star of you that you've been holding out on I know you're still out.
This week would be a great week to do it.

Scot & Rick:
[53:28] Rick we really appreciate you coming on and spending about an hour with us while you're traveling I know that's never a fun thing if books want to follow follow you on social media and learn more about what you're up to where should I go.
Yeah on Twitter you can find me at Red Kenny and I think Jason like you mention you'll drop their link into show notes but if you want to find this Shopper first retailing report it will be a test for stucco
get Shopper first and really hard to take a race.

[54:00] Are you guys going to be doing any holiday Updates this year to the demand play the band work platform.
Absolutely we will have our flash reporting so every morning after those big days you'll have a nice blog post of flash report results from us so
your Friday morning after Thanksgiving your Saturday after Black Friday and your Tuesday after Cyber Monday.
Will be glad to pick up your inbox with some really cool findings of what happened the day before.
And I'm assuming if people follow you on Twitter you'll be throwing this out there absolutely.

[54:37] Awesome Lil Rick thanks very much for joining us and until next time happy commercing.

Nov 14, 2018

EP151 - Tyson Food E-Commerce VP Tim Madigan and Samir Bhavnani of 1010data

Tim Madigan is the Vice President of eCommerce at Tyson Foods.  Samir Bhavnani is the Vice President Consumer Insights at 1010data.  We caught up with Tim and Samir at the 2018 GroceryShop tradeshow in Las Vegas.  

"The State of Grocery" PDF Report from 1010data

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

Episode 151 of the Jason & Scot show was recorded on Monday, October 29th, 2018.

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.


[0:25] Welcome to the Jason and Scott show this episode is being recorded live from the grocery shop trade show in Las Vegas on Monday October 29th 2018 I'm your host Jason retailgeek Goldberg,
unfortunately Scott is unavailable for this episode so you get twice the Jason for half the usual cost but to make up for it
we have some great news we have two great guest for this episode returning to the show
third timer Samir bhavani is the vice president of consumer insights at 10:10 data welcome back to the show Samir.

[0:58] Thanks for having me Jason it's good to be back for the third time.

[1:01] It's a it's a rare full of people that have made it three times so we expect you to continue to be a,
bassador for the shows you've been and then joining us is a first-time guest Tim Madigan is the vice president of e-commerce Commerce at Tyson Foods.

[1:19] Thanks for.

[1:21] Sofa,
books that are not listening to every episode of the show and shame on the three of you that are doing that Sammy was on show 103 which was our Amazon private label show and then you came back for one,
talk shows if I'm not mistaken which I think was episode 125 and so folks would probably hurt a little bit,
background but remind everyone exactly what it is that 1010data.

[1:48] Yeah sure so I think many of you guys are familiar with tents and we've been around for over 20 years now what we do is,
we help companies take big data and turn them into basically smart insights using a very powerful cloud-based analytical platform.

[2:05] They go in like more specifically you have visibility into like how consumers make purchases consumers make on some of the big platforms that are not very open themselves.

[2:18] ESO a great way to kind of distill things down is that we have a very nice lens into how consumers are spending their discretionary income so it's things like you are people buying Huggies or Pampers right Fiji or hints are they taking Uber or Lyft.

[2:33] Very cool and so we will hear more about that throughout the show and then Tim of 1 ways we always like to start the show is share a little bit of background about how you how you sort of matriculated in your career to this current role.

[2:46] Sure yeah I started my career with Procter & Gamble and kind of came up with your traditional sales marketing and did that for about 12 years and while at P&G I done had the opportunity to,
work with Walmart as they were trying to figure out consumables e-commerce they wanted to sell diapers and beauty products online was becoming a thing Amazon was getting into the space so Walmart realize they needed to,
going to start selling products and I was tasked with the opportunity to leave that relationship for Procter & Gamble and so over the course of five years,
and we built the team I built a business from United basically zero to a hundred million dollars and just really learned,
from the very early stages and consumers e-commerce what the effective ways to do e-commerce online wear for consumables then had the opportunity to go to SC Johnson.

[3:43] And work with us in Johnson and creating an overall strategy build out a team going to put the foundational elements in place to,
do e-commerce across a company it was a really great learning experience for me and also really help icj kind of take that first step into digital income,
in about 2 years ago had the opportunity to come to Tyson at that time grocery e-commerce was just beginning to be a thing,
and I'm Krogers in Walmart and Amazon Raw,
looking to Tyson as a major food supplier to understand you know how to how is the space going to evolve unfold online and expected Tyson to really have a seat at the table to be as strong,
partner in that and so I was asked to come Tyson to help create that capability for the company.

[4:32] Very cool,
so am I'm so jealous I feel like every place you've ever worked at Super familiar you never have to explain what your company does,
the people in an elevator when you work for a goofy agency that changes his name every week you don't necessarily have that luxury,
in your P&G days was that sort of like that,
business units or was it like winning a particular product family.

[5:14] So gay a straight question so it was very early and that,
we had an team which was probably to three people and Seattle and then we had one e-commerce person that was sitting in Cincinnati banging on the brand managers door saying there's a thing called e-commerce coming we better figure out how to do it,
so I was one of the very first teams outside of that we didn't really have a corporate approach yet,
I'm so very early days I was sitting on the couch typing out content forms and really figure out merchandising marketing strategies cuz we just didn't have a Playbook yet,
within about 2 years though doesn't take PNG long they very quickly created at centralized capability and brought in the central team,
created at corporate strategy and capabilities so that other folks like myself out in the field we're working with retailers had that sort of enabling Center of expertise that were supporting.

[6:15] It is funny one of the things I have observed in a lot of companies is like that initial Amazon team like they almost always they started out as the interns right.

[6:25] Yes.

[6:27] Let you know most Junior people in the organization got assigned to this like relatively meaning less account and then obviously like as it's it's grown in prominence it's now,
like one of the most significant roles in all these companies and so it's a it's an interesting Evolution to see those interns grow up to rule the world and then,
sort of fun I want to dive into your rolling your scope at Tyson but before I do that I want to jump back to Sammy and I know you guys just published this
size of digital grocery report and not I think you can download it for me website so I'll put a link to that in the notes but I'm wondering if you can tell us a little bit,
like what that report was an and maybe share some of the cool insights.

[7:07] Yes sir so I'll finish for some of the insides as we're talking and says to bring some things up but,
one of our one of our analysts her name is Julia Mello author author the report and it's just Fantastic look into will work on the rise of online grocery and it's very time we obviously right being here at 8,
grocery shop talk to grocery shop show and some of the things that that we looked at were,
how successful are places like Peapod or Walmart grocery right versus some of the other more traditional players and you know some of the stats that popped out one is like just the growth of it is,
outlandish Rye were seeing over 30% year-on-year growth and in specifically in the online grocery space,
and we Define that is in a different than buying something from you know or you know it has a lot to do with,
cooking class with places like instacart Etc and one of the findings that was kind of unique is that people who do shop,
online grocery 10:10 to spend a lot more money than the general populace,
which is certainly good news I found some of those like as the touchpoint changes the behavior change.

[8:22] Changes the behavior changes.

[8:25] So fascinating just around Orlando but it's been really into.

[8:30] Interesting to me to see you like foods that don't sell as well in store.

[8:33] Yeah it was not obvious.

[8:38] Up to me but like sometimes these in.

[8:39] Is there a shopping cart around the store with a giant.

[8:46] NBC.

[8:46] And be seen by their neighbors but that but when it comes to having nothing loaded right in your trunk.

[8:51] It's get.

[8:52] Get the big thing I've been in,
so that point is very important right the ice cream thing and dodging items the other thing to is the ability for people to discover items if they wouldn't ordinarily purchase,
partially for the same reasons also because online gives you an opportunity to be marketed to write whether it's like a vegan burger for example,
yeah I think there's dent above a challenge and an opportunity in the different marketing vehicles that are available.

[9:17] Digital Lake but let's.

[9:18] Zoom in a little bit on.

[9:21] I want to think I was interesting to me.

[9:23] Ecommerce in your title which is very near and dear to my heart so I was like that but I thought you can have very different scope a different company.

[9:32] So can you talk maybe a little bit about what what it means in texting.

[9:35] Yeah so are primary go to market is through retailers and so the key for us is you know we've spent,
decades in creating category management and Shopper Marketing in all of these other,
analytics and skills on how do we optimize the in-store experience in a what are those right tactics and tools to to really make our business performance.

[10:01] I look at my job and my team's job is doing the same thing but for online,
through those retailer so it's now it's no longer and I all but it's now a screen that we've got to figure out how to optimize our portfolio for,
so that's everything from the basic content to merchandising marketing to understanding you know what's working and optimizing across those three on a letter,
and then you know I think Sam made a great Point around the the portfolio in understanding the portfolio that performs well and store isn't necessarily the same one at the forms while I'm lying so,
as a company we need to send to rethink and reprioritize what we're focused on,
I'm at work think about online that said we are also considering the drive to Consumer and we have several brands in our portfolio that do some direct-to-consumer today Adele's premium sausages one,
where there's a really big fan following for it and it's not available everywhere,
and so that's a great product that you know is pretty pretty Nick pretty Gourmet,
we want to make sure all call the consumers who want to have access to the brain can find it.

[11:10] Very cool and send me a little bit earlier to like this notion of hey you have different tools for digital marketing than we did in traditional Shopper marketing.

[11:19] Shopper marketing once one of the two.

[11:22] It was weird I allowed on Shopper marketing is like Shelf adjacency.

[11:26] Want to launch a new product one of the best ways to get eyeballs in from the new product is that new brother.

[11:31] On the Shelf next to a popular existing.

[11:32] Will pop your existing product.

[11:35] Use all the traditional instrument in vehicles to drive tension to it in.

[11:39] In digital it like I feel like we have a lot more spearfishing people are searching then go you no right to.

[11:42] Fishing people are searching then go you no right to a search result and then do a product listing page.

[11:49] Or you know God forbid there.

[11:50] Lowe's customer they start shopping off a recurring list.

[11:54] It's a one of the things I always worry a little bit about is we lose some of the Opera.

[11:55] The things I always worry a little bit about is we lose some of the opportunities for those impulse sales and for what I like to call serendipitous Discovery just cuz it's super fun to say Serendip.

[12:06] I mean you at now that later in the hall when you're just saying.

[12:10] I'm just saying serendipitous you're going to think of me so.

[12:14] Like is like part of that challenge.

[12:15] Part of that challenges the onus is going to be on the Retailer's to figure out but is that a conversation you have with retailers and is that something you guys think about or worried.

[12:24] An app for sure special on new innovation right and that's our company's life like it is you know we want a significant amount of our growth and our sales every year to come from new innovation so,
definitely something we spend a lot of time thinking about your point,
where sometimes a limited to the tools and capabilities of the Retailer's platforms,
so it's starting there and also bringing ideas and I'll right now especially in grocery the shopping experience is different you're very much at a shelf view versus you know item-by-item at like you having a. Com you so,
the platforms involving for sure in a different way so we've got a partner on intestinal are no way there little bit,
but I will say you don't know the area that we're really trying to think through is what are the,
opportunities we can bring outside of the retailer platforms that enable that Discovery so we are spending any time we launched a new Initiative for spending money on driving awareness,
Across the Universe online digital in other other kind of places and so that that question is how do we connect,
I'm not point of awareness or inspiration directly to the cart and saw things like recipe to car is a great example,
have a capability that you know is it's pretty new but really unlocks that opportunity to say,
I found us they are interested in us let's just kind of try to close the deal and put a ride into the car.

[13:52] That one is fascinated by that use case tell me if I'm wrong but this is the first year of grocery shopping show dedicated to digital.

[13:53] Fascinated by dad use case tell me if I'm wrong but this is the first year grocery shopping show dedicated to digital online.

[14:01] And regular listeners will know I spent a lot of time in line and Starbucks I'm pretty sure.

[14:06] Second person in that Starbucks online.

[14:07] Second person in that Starbucks online is somehow involved in a recipe to carts business.

[14:14] Like that I ran into to today.

[14:20] When people are are at experimenting and pilot.

[14:24] Absolutely it's funny you say that but you're right and it and it went within a year,
it's it happen like that and I think you know it's in there are several different approaches they're taking everything from you know I'll be a widget within your media to know know I'm going to be the media platform and you got to work through me,
which puts and calls for each of those I think you know the more you can I think that's this is true across most of what we're dealing with,
you got to be able to play within an ecosystem,
and so if you're going to be a supplier in a survey new piece of innovation you've got to be able to work with an existing Partnerships and and relationships that are out there,
I'm guessing it's too hard to just come in and sort of kick out an existing agency relationship and partnership media investment it's been really challenging.

[15:14] So when you have a lot more experience and cpg than I do but in my observation it like traditional mod.

[15:21] There were two Big Marketing budgets in in.

[15:24] It's in in most most I mean probably more.

[15:26] That I mean probably more marketing budget that earmarked for specific retail accounts right.

[15:31] For specific retail accounts right and get spent on various activities that are mutually beneficial and then there is a brand marketing function usually what you know run by some see him know that's famous for going to South by Southwest in.

[15:40] Usually what you know run by some zmo that's famous for going to South by Southwest and and doing some of those.

[15:47] Does Advanced Khan and Davos and all that crazy stuff as we moved to digital I feel like,
to me is sort of digital Shopper marketing like summer.

[15:59] Shopper marketing,
Sears on the Shelf in front of content but in a way that's analogous to the original account Bay Shopper marketing but then some of those other activities you just mentioned like the the recipe.

[16:15] 2p stuffing and some of those other activities.

[16:19] Digital versions of traditional.

[16:20] Digital versions of traditional brand marketing.

[16:24] Do you feel like digit by it sounds like something booked.

[16:25] Do you feel like digit like it sounds like something booked of some of those functions are in your scope and that maybe wouldn't have been true in the old world.

[16:32] Shopper Market.

[16:34] Stars and brand marketers.

[16:35] No it's really interesting so I'd say neither one of my scope
and that's been the challenging part right we we grew up in the silos and we're going to figure it out over the course of decades this is how I play this is where you play and we wrote the rules so that nobody would,
you know step on each others toes and,
budgets could be really clearly defined and blame could be a sign when things didn't go so well but this is absolutely disrupted that and I think,
going to be a,
we've got to figure out new ways of working together and so literally at Tyson in the last six months we've created a digital Innovation group,
which is the combination of a brand marketing organization going to lead our Shopper marketing myself and our technology guys and so we've created so this,
that's really focused on understanding and what are those emerging spaces recipe to cart being one voice being another and how we are going to go play in those spaces and who's going to take point,
but it's much more of a collaborative effort and we were going to do this in conjunction with one another versus lots of one-offs you're doing this over here and I'm not aware of it because unless unless we coordinate we're not going to do this. Going to go swell.

[17:55] Interesting so am I.

[17:56] So he my mind like you guys are evolving to sort of in a boat organizationally figure out the right up.

[17:59] Going to sort of in a boat organizationally figure out the right approach and then we have to figure out what the right digital tactics are.

[18:06] At the same time.

[18:07] Most of these activations require some partnership with a retailer and it feels.

[18:10] Partnership with a retailer and it feels probably like.

[18:13] The retailer silos are also involved.

[18:16] And I think it's sort of.

[18:19] Early days at Walmart.

[18:19] Walmart labs in San Bruno or still is in and most most of the merchants are in Bensenville in,
yeah you did yesterday had a lot of collaboration between the digital arm and and traditional arm of the retailers are you.

[18:36] Of the retailers are you seeing the functions at various retailers.

[18:40] Evolved.

[18:43] With you on these more integrated programs or is that still a challenge.

[18:48] What's funny because I I started and cpg and shelf-stable world through that, I felt like,
it was definitely that Dynamic you were talking about but over the course of several years especially as diapers as an example some of these categories became meaningful businesses that really impacted the store Merchants bottom line they,
forced that collaboration between the two and integrates between the two groceries back to where that was 8 years ago,
so it still feels very much like you have a lot of digital teams,
responsible for the interface and then the merchants who you know because he's our store pick models by and large,
their decisions for what's happening in the store is reflected online but there's really no coordination between the two around you know I'm going to choose this assortment because,
you know it could work in both our I'm going to add this item that may not be a big store seller but could be bigger there's none of those types of conversations happening right now and it's much more you know I'm going to focus on my store I know it's going to do something over here online,
adult digital guys that are part of my company are going to go figure that out.

[19:59] So for sure.

[20:02] It seems funny.

[20:03] You're jumping from as as Industries material you're jumping to the last mature markets that are having to reinvent the Roundup.

[20:07] Two less mature markets that are having to reinvent their own approaches and stuff which is week we talked about before the show there's there's no play but for that it's kind of fun cuz you get to.

[20:17] It's kind of fun cuz you get that to figure it out.

[20:21] The it was my thoughts I'm just going to put enough.

[20:29] Pause.

[20:31] The awkward pause 2009.

[20:36] Everybody doing alright,

[20:47] Retailer is also evolving.

[20:48] Evolving I just want to work with you like in this New World by any.

[20:54] Any particular best practices or tips you.

[20:59] Have a branch of you thinking about.

[21:00] How Branch should be thinking about partnering with retailers in in this sort of new integrated digital world.

[21:07] The first the first thing we had to do was reassessed the landscape,
one when I got to Tyson we had decided that we were going to make a big investment in Amazon,
what course you did right Amazon's the underground gorilla that dynamic in our world is in grocery specifically online is there not quite there yet,
Sammy I don't know if you want to come to speak to who is there right now.

[21:39] Yeah I mean that's that is that is such a big piece because like if you look at what the general consumers going to think you think Amazon is winning,
everything and the reality is is that Amazon is still very much in its infancy and just finding its feet in grocery right so,
if you look at online grocery on Amazon's not even the fastest growing right so Walmart's the fastest growing right instacart one of the fastest-growing,
and while Amazon is growing it's nowhere near the,
for the scale of of what some of these others so that Walmart has that over a third of a share of online,
and amazonfresh is under 10.

[22:22] And says so is we reimagine our structure you know that the structure that a lot of cpg companies started with was we're going to build this little e-commerce team,
that's going to fix own care play build the capabilities to enable pure clay and then eventually those capabilities will sort of,
go out to these in a brick-and-mortar brick and click stores as they start to accelerate,
we've almost got a flip it a little bit and grocery because of that point RR Walmart team is feeling the impact already of grocery,
online and some of those stores are doing between 5 and 10% of their business through online grocery and Walmarts in wow and that's really changing then that Walmart customer team that grew up and built all there,
skill sets and functionality around in-store execution,
they need some support now they need capacity expertise now to focus on line and so that really part of what we've had to Pivot on over the last year too,
it's a-okay yep it was important we're going to work on instacart so that's part of the eye space that we own Cuoco pure-play,
big enabler for us now is how do we go and really focus on the Krogers in the Walmart because that's really where the size of the businesses today and a growth is happening.

[23:43] I don't know what the data is.

[23:43] Is granular nuts about this or not but in my mind.

[23:49] Part of the secret to Walmart success in and also.

[23:52] Kroger is curbside pickup.

[23:55] And in.

[23:56] That's one of the like differentiators between Walmart and Kroger and Amazon.

[24:00] Amazon is like Walmart has 4,000 store.

[24:02] Walmart has 4,000 stores over 2,000 of them are now in.

[24:06] Free pick up Kroger I think has like 800.

[24:08] Flag store and you know Amazon wasn't in the pickup game at all until they bought Whole Foods.

[24:15] And to their credit I feel like they've.

[24:16] If you've all of that I've been very quickly but it's in.

[24:21] 400 stores and it's in the.

[24:22] Stores in it in the stores in the markets that are most friendly to delivery versus pick up in a half of them so Whole Foods is a really fun little sandbox that Amazon's experiment thinking today,
and it gets a lot of new lot of press a lot of people talk about it the Whole Foods is not a very big retailer right that's the fact of the matter,
and when you look at scale when you look across the country right it's the Kroger's and the Walmarts were people are shopping and which have the ability to do,
curbside pickup right at a much broader scale so let's change topics a little bit from.

[25:01] Thinking about the retail side to.

[25:03] Decide to evolution of bran.

[25:07] Nights are you you are now sitting at.

[25:08] Sitting at top of the dream well-established brand is trying to figure out.

[25:13] It feels like increasingly your competition are these new startup brands that don't have near you.

[25:15] Play your competition are these new startup brands that don't have near your scale but they also don't have any of.

[25:25] Impediments are infested,
they have to carry three ways,
circassian like shelf-stable cpg are you are you seeing that in in food as well.

[25:36] Yeah you know I'm reminded of when I was down on the Walmart team with Procter & Gamble we were looking at our shave business and it started to decline pretty quickly,
and we couldn't see where it was going typically are,
reports would say while we're seeing some Camel shift it's going to Dollar General or you know it's moving over to Target and then,
the but we didn't see we just saw the category declining and we saw our brand declining,
I couldn't understand why we look around the office and we saw some scruffy looking guys and so maybe they just not shaving is much in this mode ever November thing is really,
well know we were listening every morning on our ESPN Drive in hearing about this company called Dollar Shave Club and how funny they were great.

[26:25] And all the sudden they took 300 million out of the category and out of the stores but are classic data and Analysis didn't have any way to account for that anyway to show us that shifting and so as far as we were concerned,
it wasn't happening we just until we were caught very flat-footed that's my fear an obsession right now in food,
there's a lot of these companies you're talking about the grass wet grass pads in the locals in the Organics that are you know they're 10:50 million dollar type companies but they're all live,
and there's some of them that are scaling pretty quickly,
and so the dishes we just don't have the visibility the data and to how fast or how many of them are are out there and so,
absolutely an area that we've just got to get better at and it's actually we worked a little bit with Sammy and Tenten and that's one of the challenges I put forth to him is how do we understand where,
these new up and comers that we just don't have on our radar where it where are they who are they and how fast do they run.

[27:30] So I will turn the question like are you.

[27:32] Like are you starting to see some of those like new brands Emergen captures and market share online and.

[27:40] Yes and that's the that's the challenge right where everyone's been dealing with this weather your Nielsen or NPD or iri or 1010data Rakuten or never is,
catching hold of of one of these companies that's all the sudden going to start hockey stick me in becoming a really big company and what what Tim brought up is a really good point is,
is when you're looking at the data sometimes on an individual on one DTC,
it that individuals you to see maybe maybe just too small to report on and maybe insignificance report on,
but if there's 80 or 90 of them right that are that are growing very quickly all of a sudden you've got this thing and,
right in the last thing you want to do is to be Dollar Shave Club again right live through it once you don't want that to happen again and so what we do from the,
in the day the world is were constantly working with our data providers to ensure that we have visibility to anything new that comes forth,
I'm in a great example of that is we very recently were able to split out the Walmart grocery piece from the Walmart piece once it got to a point where the scale is big enough,
that we had sufficient sample to make Market estimates,
that's going to become increasingly important a lot of retailers in Walmart so perfect example in in grocery is a hundred percent,
I can tell you different.

[29:05] They're trying to promote skus that are available in the store.

[29:07] Use that are available in the store and the capability gets drones for by store so I've been talking a little bit I feel like something I should be thinking about,
sales metric for online.

[29:19] Because Walmart.

[29:21] Walmart reporting this huge e-commerce,
is there a tracking more more customers to the website and whatnot but a lot this because they just added the grocery capability to a bunch of more stores than they had the year before.

[29:35] So you know in some ways you almost have to think of it like a.

[29:39] Storm Atronach Forge a merchandising I might argue that Walmart has sort of the opposite merchandising strategy that they're really trying to focus on having a long day.

[29:49] They put a lot of emphasis on the marketplace.

[29:50] If a lot of emphasis on the marketplace and you know they're trying to get,
use most of which are getting fulfilled by third-party providers or from a fulfillment center in so I do really need to think about them as,
different business that's another good example so with Amazon right people look at Amazon 1 p.m. Amazon 3 p.m.
sufficient data to split those in to see what's happening Amazon direct and what's happening with the marketplace,
Walmart even though they're making this push towards Marketplace,
candidly just doesn't have the volume in those traditional Goods to Warrant us breaking that out at this point in time it might be another couple of years before we able to see what's Walmart third-party doing compared to Walmart first party,
a side note one thing that is different from the Heyday of Dollar Shave Club you you mentioned what they have would like.

[30:41] You mentioned you would have had would like all those ESPN ads.

[30:46] Today of course if people are driving a word.

[31:01] So one of the things.

[31:02] One of the thing that's interesting to me thinking of.

[31:05] About the emerging Brands and did you need a brand purses.

[31:08] And did you need a Brands versus a new products and Innovations in existing companies as they.

[31:16] Exact opposite so if I start a new come.

[31:17] Opposite problems so if I start a new company today the world is made it much easier right.

[31:22] Made it much easier right I can go,
Shopify side and you know I can hire you know 99designs to do my marketing and I can do all these things with my credit card on the weekend.

[31:30] Things to do my marketing and I can do all these things with my credit card on the weekend.

[31:35] Company pretty quickly find a group of loyal customers wants a product to them and get real-time feedback and so I can innovate and iterate really quickly in it.

[31:44] Expensively which is.

[31:45] Great most of this man's are really struggling to hit some peeps kale and in your organization I suspect when there's a new idea.

[31:50] And in your organization I suspect when there's a new idea.

[31:55] What can this idea be big enough to be financially,
why I'm always curious how big companies that are the Cavs Gail think about.

[32:03] Bunnies that already have scale think about Innovation and how do you sort of you know instill some of those advantages of the little company in your big company.

[32:12] Yeah it's a it's a really great question and you know it as a company I think we several years ago came to that conclusion that you know Innovation gets washed if it's,
you know if it feels cortical too small of an idea,
yeah we just still wouldn't let it play out if you would see a trend and it might be too early,
by the time you react it's also going to be little bit late so as a company what we've done is created a couple different entities internally,
we have one or innovation team which we've had for a while is really focused on call 12 to 18 months out.

[32:49] Fairly close in animation new flavors new forms some adjacent categories and so that there's that group focused though but we also then recently created a new products the lab,
which is really kind of taking off the,
Elders of this is what we do today to where are some interesting protein spaces coming from so where can we innovate in a great example that is our God,
that is essentially comes in a tennis ball kind of a can and instead of being a potato chip or like a pringle chip it so it's a protein shake,
so it's brand new initiative brand new idea,
and we're launching it in a very sort of small pilot but scale up kind of way that would not have happened before this team.

[33:42] And then the other area that we brought on is our new Ventures team,
and so that is allowing us to find a new companies that are,
testing kind of smaller nitty spaces and I'll give an example of going to be on me,
vegetable proteins Memphis meat is another company that we've invested in which is sort of lab-grown protein,
and these are early days for the four especially Memphis meat but what we're seeing is this is an opportunity space,
and as a company we want to be able to be the world's best producer of protein and we're raising the world's expectation for what good food can do,
and that means we're going to have to go beyond just land-based animal proteins,
and so by investing early on and some of these companies we get to learn a lot and we get to see them scale,
and then you know continue to think through down the line how do we integrate you know they're there Prada.

[34:47] Oh so you can actually also help them scale right that's a really big deal to cuz a lot of these companies have no idea how to get on a store a store shelf,
I want to follow up on that a little bit but you I had one.

[35:02] Not a little bit but you I had one terrifying thought while you were saying that but I just want you to make me comfortable about.

[35:06] About we're not all.

[35:09] Just drinking Soylent to Prairie me.

[35:11] It's pretty tasty I never have one,
not you know and I think you look as we look out just eating 20 years the challenges of feeding the world they're pretty daunting,
and Tyson we believe is one of the handful of entities out there that can help find a solution,
and that's going to require a range of offerings so hopefully we can still have our steak dinners when you come to Vegas,
yeah there's going to be new forms of protein that will have to be you know brought in in order to see the world.

[35:48] Personally I'm banking on us all dying of dehydration before we run out of protein but I know it's a it's a race so well.

[35:54] See how that plays out going going back to the investment side of innovation like what.

[36:00] Nations like what's the out the best outcome for you there like would you ultimate.

[36:06] Taken like a.

[36:08] A hundred percent ownership position in some of those like his are you investing primarily with the hope of getting a financial return is it to incubate companies where you didn't have an exclusive like what it what is.

[36:18] Winning.

[36:20] I think it's all the above I mean the intent really right now is to learn is the weather is against some of these new product spaces at Armor,
or even capabilities so companies that do things particularly well that we want to learn more about,
it's an interesting way to go do that is by becoming part of,
owner of that company and then hopefully ingest that learning a 10in skillet across organization.

[36:53] And are you finding that it's difficult,
you know at a company with Good Financial rigor that used to sort of focusing on quarter-to-quarter results to think like a longer-term investor on some of the light you know BC's think about a very different pay back her eyes and.

[37:04] I think like a longer-term investor on some of the Viking BC's think about a very different pay back her eyes and then you know I would come.

[37:12] Companies that are trying to keep shareholders have.

[37:14] Yeah I know it's right and it's so this company this group was purpose-built to pretty much avoid that so they've been given an investment,
amount and how to ring-fence that amount and so they act very much like a VC company and then we're going to go,
we're going to look for this portfolio of companies that either from a product or capability Sandpoint look interesting and then you diligence up through our leadership team with the recommendation.

[37:45] Very cool.

[37:46] Well we're at work.

[37:47] Coming up against time I want to do one last question I know we're halfway through this show and I know.

[37:51] We're halfway through the show and I know we don't have.

[37:54] Navigation so I don't think anyone's got a chance to sort of absorb everything going on.

[37:57] Everything going on in the show but.

[37:59] Do I get there any trender theme or vendor that like has emerged in that you know that was interesting to you that you either came here looking for or maybe surprised you.

[38:11] It's interesting for me that the conversations that happened seem to be where for me a lot of the value starts to come out a meeting with peers were having some more challenges and brainstorming together I think one of the biggest themes though,
is wow this is happening really fast 2 years ago this wasn't a thing you know and so,
that speed in Pace that's happened I think even our leadership at back at home and Company,
don't necessarily appreciate it it's a part of you know what I have you as my job is still going to bring that urgency back with a bit of a game plan as well for what we need to be doing.

[38:51] For sure. Could you imagine trying to talk more more senior leadership into coming.

[38:53] Trying to talk more more senior leadership into coming to an event like.

[38:56] I think that's a great idea you know again it's it's kind of palpable you walk the floor you see some of these speakers,
you really do get a sense for the Earth the pace and urgency that's out there and so I think it's a great suggestion of bringing in some more high-profile execs and not just having them send their econ guy out to this conference.

[39:17] I'm sure an ant as a me and in all your conversations anyting jump out of.

[39:20] Jump out at you or surprised by the new data competitors or anything like that.

[39:24] Got the data competitors are great I love seeing you did it competitors right and it's just it's it's great the more the better,
the one thing that I've noticed and I've noticed since the last the last shop talk show in March I'm coming into this one is,
it appears to me that the companies that,
are sort of weathering the storm or taking the most advantage of this shift to online grocery are actually indeed those companies that have formed or in the process of forming Innovation teams are there in Seattle near Amazon,
and the ones that have not are the ones that clearly in the data show up as kind of ligers,
so you know kind of the advice is if you will if you are a grocer or a traditional brand,
if you don't have some kind of innovation team together that has its own budget and actually has a seat at the table you're going to be in big trouble.

[40:23] Very cool that is an interesting insight and that's going to be a great place to leave it because it's.

[40:26] Because it happen again weave.

[40:29] Used up all our a lot of time but before we go Sammy of those aren't real.

[40:31] But before we go Sammy of those are intrigued by the rise of grocery report or just want to.

[40:37] I just want to get in touch with you what's where do you hang out in the intern.

[40:40] You can reach me on LinkedIn or on Twitter music to find them both of those places.

[40:44] Links to both of those in the show notes and Tim.

[40:48] Are you an active guy on LinkedIn can I.

[40:52] Yeah that's fine.

[40:53] Cool again again PlayStation Network with Tim and soul.

[40:54] Tim and so you know thanks to both you guys for taking time out of their busy show to come speak with our listeners as all.

[40:59] Busy show to come speak with our listeners as always listeners if you have any questions or you.

[41:04] Want to follow up on any of the topic.

[41:06] Play some the show you can join us on our Facebook page and leave a question.

[41:10] As always if this was the.

[41:11] Please if this was the the show that you know was finally worth it to you do with the big favor of jumping over to iTunes and getting us.

[41:16] I'm getting us at 5.

[41:19] And until next time happy commercing.

Nov 7, 2018

Amazon plans to split HQ2 to two cities

GroceryShop Recap

GroceryShop is the first year of a new show focused on disruptive trends, technologies and
business models in grocery & CPG that includes both established and startup CPG brands, supermarkets, c-stores, drug stores, discount stores, ecommerce players, warehouse clubs, grocerants and non-traditional grocery retailers.  The show took place October 28-31 in Las Vegas, at the Aria Hotel and Convention Center.

Jason's Activities

  • Jason interviewed Sanjiv Mehra, co-founder and CEO EOS products for a keynote fireside chat
  • Jason moderated a panel "Evolving CPG Retailer relationships" with Constellation Brands, e.l.f. Beauty, and Fairway Market
  • Jason moderated a panel "Using product content to build brands" with Boston Beer Company, Chobani, and The Wonderful Company


  • Yael Cosset, Chief Digital Officer, The Kroger Co.
  • Andy Katz-Mayfield, Co-Founder & CEO, Harry's
  • Sanjiv Mehra, Co-Founder & Co-CEO, eos Products
  • Apoorva Mehta, Founder & CEO, Instacart
  • Chieh Huang, CEO, Boxed
  • Nina Barton, President, Global Growth, Kraft Heinz
  • Luke Jensen, CEO, Ocado Solutions
  • Narayan Iyengar, SVP, Digital & eCommerce, Albertsons Companies
  • Nick Green, Co-Founder & CEO, Thrive Market

Key Themes

  • Digital Disruption of Grocery
  • Store picking vs. Dedicated Fulfillment Center  
  • Startup Brands vs. New products from established Companies
  • Private Label/Owned Brands

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

Episode 150 of the Jason & Scot show was recorded on Monday, November 5th, 2018.

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.


[0:25] Welcome to the Jason and Scott show this is episode 150 being recorded on Monday November 5th 2018 I'm your host Jason retailgeek host Scott Wingo.

[0:41] Jason welcome back Jason Scott show listeners.
Jason you just recently got back from sunny and blazing hot Las Vegas Nevada for the first annual grocery store.
And that's what really to see what today show is going to be is a grocery shop recap but before we jump into that we did want to cover some breaking.

[1:03] Amazon news your margin is there a opportunity alright well we've been talking about this on the chauffeur
about a year ago Amazon announced that they are going to look for a second headquarters that would has 50000 employees.
I am if it was kind of this huge process and we're coming down to the end of it and there's two I'm confirmed reports out today,
one from the Washington Post one from your times and it looks like Amazon is first of all going to split this is also not confirmed us the Wall Street Journal says Amazon's actually going to do two cities instead of one
so it's kind of like HQ one and a half and hq2 and they're splitting the jobs pretty even Lisa 25,000 jobs in to eat City.
The two cities that seem to be most rumored are Crystal City which is a suburb of the DC area and Northern Virginia.
The other one is a suburb of New York City called Long Island City Jason what do you think about this result if it's true and how true do you think it is.

[2:17] Yeah well it does sound pretty true there's a lot of rumors earlier in the week and it seem like Amazon was actively.
In some cases refuting them and or scolding the leakers and they they seem completely silent about this which makes me feel like.
It is on the markings pretty credible news organizations that are setting multiple sources so seems pretty credible and if it's true it.
It reaffirms a lot of people's hypothesis that this was,
sort of largely a marketing stunt in it it makes me feel like Seattle is actually the big winner because.
Like these this would definitely would not be co-equal headquarters now that they're dividing up the jobs and I'm going to assume that that the center of gravity and most of the senior leadership are going to continue to put on in Italy live in the,
in the Seattle area in this scenario.

[3:18] Yeah yeah it's my Logic on this was.
It never made sense to me that they could hire 50,000 people cuz to my logic is the retail part of Amazon is pretty stacked up in packs you know robots replacing humans a lot of times in the,
Commerce part of Amazon so this feels like largely AWS engineers and you know it's very hard to go find
much less 2000 50,000 folks that can work on AWS so so I think they started kind of come to that same conclusion the dust splitting them up and I imagine those 25,000 10 years or something.
You could possibly hired that mud many AWS qualified people even in those dense text cities to to work on stuff so it'll be interesting to see how this lands.
So we just wanted to cover that really quickly because it's been the source of so much speculation but we want to spend the bulk of our time tonight on grocery shop
so it's Jason. I was not able to go but you went on for so how was House Las Vegas did you end up making money losing money.

[4:31] I go to Las Vegas too often so I am no longer much of a wager or so I I did lose some money but I lost it spending a week in Las Vegas not at the table.

[4:43] Visit your favorite Starbucks.

[4:46] I did not so
dedicated listeners or remember I spent like 18 days in a row in Las Vegas at the Venetian earlier this year which I wouldn't wish on my worst enemy this show was at the Aria so
I did not make it to the Venetian Starbucks but I I did get to reacquaint myself with a several Starbucks in the vicinity of the Aria.

[5:10] Awesome so so for the the grocery shop show maybe Orient for listeners you know how this show came to be who puts it on and how did this compare to kind of shot Talk Money 20/20.

[5:25] So that the show did the first year of the show is put on by the same folks.
It started shoptalk and money 20/20 as you mention money 20/20 was their first show and it started at the Aria as well.
And then it eventually it it felt like the show doubled in size every year and it eventually outgrew the Aria Convention Center and then had to move to the Venetian.
I'm in after 3 years of growth.
They actually sold the show to another event company and they started simultaneously they started the second show shop talk and Shop talk also started.
At the Aria and it also doubled every year last year it outgrew the Aria and moved to the Venetian.
And they this year they started to new shows or show I don't know a lot about this in the healthcare ligori and they started this show grocery shop which is all about digital grocery.

[6:19] And the show started the Aria it.
It felt very similar to the first year of money 20/20 or shoptalk and I mean that in a good way I feel like these guys have.
Have built a pretty good template for an event so they they do a really good job of recruiting.
Interesting speakers that people want to hear from and they're great digital marketers and they Market the heck out of their speakers which causes other people to want to go in network with those folks.
And you know at this point kind of three or four shows into their their progression.
I feel like they have a a really solid template eyes execution,
did they run and you know they invite me to speak at all of them because they use caricatures of you and I feel like I'm just cost-effective because they already paid to have my character children.

[7:10] I'm sure that's what it is.

[7:12] Yeah I think that's my main value-add a fun fact for speakers is that they.
Send you a coffee mugs with your charger on it so I have a complete collection of shop talk,
money 20/20 and now grocery shop mugs that my mother-in-law has claimed so if you ever get coffee at my mother-in-law's house be prepared for the jarring image of my face and this year they upped the ante they sent us a
cookie with my my characterture on the front of the cookie in frosting.

[7:48] I remember I had jokingly asked one of the folks at shoptalk who does the character in the show that's her that's her most closely held Secret.

[7:58] Yeah so you know what's funny about that I I believe they did say that to you if you went to an early money2020 that guy was working in a a shop a money 20/20 booth and you could stand in line to get your own character children.
And eventually apparently he became so so popular and beneficial to them that they they hit him behind the scenes but like there were attendees from those first money2020 is that actually got there,
their characters are drawn while they were attending the show but the big controversy among the speakers on Twitter earlier this year when the cookies went out was.
Can you infect eat your own face like is that is that weird.
And you know there was a lot of talk about that and I defended we solve the The Dilemma when I tweeted out a picture of my three-year-old gleefully.
Diving into my face to eat it.

[8:48] Eaton Trinidad face.

[8:53] So more than listeners want to know about the logistics from the show
but I feel like at a high level they picked a really good topic for a show I think they were hoping like a thousand people would attend in the show and they sold out the show
at 2200 people which is the capacity for the the convention center they had so already.
Don't be surprised if you see the show move from the Aria to the Venetian next year or I guess there is a rumor that the Aria is expanding their.
Their facility so maybe maybe I'll stay in this expanded facility but it definitely felt like there there was unmet demand
for folks in this industry to be able to get together and share some ideas and best practices and I feel like,
a lot of people were we're excited to come people are super engaged and all the feedback I got from people on the way out of town or from
from my own team after we got back was was super favorable that it was a good event and everyone wants to have a,
a bigger participation next year so congratulations to the the folks at grocery shop on on doing a great job for the first year.

[10:02] Awesome. Let's dig into some content first of all as mentioned you were quite busy so that I kind of thought they should have called it Jason talk
so you gave the keynote and you led to panel so it was kind of go through those and sequencing and not good to some highlights of what you learned there
I'll start with a keynote I saw on Twitter that a lot of people took this one picture where it looks like you were putting some lipstick on tell us about that one.

[10:29] Yeah I'm a very Metropolitan dude what can I say
so I feel like you're being slightly generous and calling into keynote so that it it it it was a keynote but I'm not sure I gave it so what this was a fireside chat format so I was interviewing,
gentleman named Sanjeev who was one of the founders,
I have this cool company that that listeners are probably familiar with that may not know called EOS products and it cos it actually is a acronym for the evolution of smooth.

[11:04] And,
little over 10 years ago they invented a new lip balm for women that was in this sort of round egg-shaped format in there now ubiquitous in super popular,
but anyways go sort of,
invented or was an early Pioneer in influencer marketing they they started out with her than affiliate program where you could earn credit and free product by getting your friends,
to share EOS products on social media and back then sponsored social media was not a thing,
and a bunch of celebrities sort of got in on the ACT in organically started promoting this product and so you know today the the the sort of early
eye doctors of this product it was like Miley Cyrus and Kim Kardashian and and all these
these people that would today would cost millions of dollars that they got to sort of endorse the product early which caused this product to,
completely take off in Skyrocket so one of the the very first sort of.

[12:15] Influencer viral product out there so it's interesting to talk to sanjiv about his.
His experiences with that and you know I just got a chance to interview him and I I did in fact apply some some EOS lip balm during during the talk so I think that's maybe the tweet that you saw.

[12:33] I can't right now in Las Vegas I never really need like chapstick type stuff but in Vegas I do the kisses so during dry out there.

[12:41] I'm 100% with you I normally would not use lip balm but I do always bring ChapStick and like to Saint jeans credit like.
Part of the genius of this product is whip-whip Bomb is predominately bought by women and all of the products were
not very women-centric right and so they're all convenient form factors for you and I to put in our pocket but a lot of women's apparel doesn't have pockets and so these things go in purses and so they designed
a product that was very well intentioned
to live in a woman's purse which ironically makes it super inconvenient for guys until I had to smuggle it onto the stage because it would have look silly in my pocket.

[13:20] Now that's kind of a healthcare item not something you'd find in a grocery store symbol surprise that's so
am I done for this kind of had also kind of the drug stores in the whole thing and the healthcare are the the beauty category as well.

[13:37] Yes I think they would characterize this is more Beauty than then Healthcare and it's it's sort of.
Affordable impulse Beauty and so it is so like actually at the cash wrap and a lot of grocery stores and also drug stores and convenience stores and I do think there was some overlap I think
that the show is primarily targeted at grocery which meant,
a lot of the retailers that attended where Grocers but then equal or more attendees were brands that View Grocery as a super important Channel,
and it just so happens that a lot of those brands also sell in,
mass and and the convenience and Drug so you had a lot of the the Wakulla food and non-food cpgs
and so yeah I definitely think that that many of the conversations and takeaways expanded Beyond pure grocery but grocery was sort of the epicenter.

[14:42] Cool and then you're so you let that keynote you Fireside chatted that up and then you had a panel called a balding cpg retailer relationships that sounds pretty intense.

[14:53] And so that panel was we had three panelists and they're talking all about the Dynamics of retailers and Brands and how they work together in a lot of the challenges in in the new world of digital marketing.
You know how there's there's a lot of frustration on both sides retailers generally feel like.
The brands are behind and aren't really ready to partner with the retailers digitally and retailers are asking for like a lot of support for e-commerce initiatives that Brands aren't always.
Well prepared to meet so there was a lot of talk from the retail side about Heather they expire for the brands to sort of catch up.
And on the brand side there's a lot of talk about like the lack of.
Of data and transparency and and you know it it not feeling like an equal partnership on the part of retailers to this panel was a lot about best practices and started making that relationship work and so we had.
Wingo on who's the VP of e-commerce at constellation Brands which is a well-known alcohol.

[16:00] Manufacturer with a bunch of popular brands.
The Wayne also had formerly been on the e-commerce team at Walgreens so he kind of talked about his experience at both places.
We had that the VP of brand from Elf Cosmetics which is another affordable Beauty brand that kind of represented the brands perspective in this.
In this a dynamic and elf 10 years ago started out as a direct-to-consumer brand then they they sort of got really popular and became like 90%.
Wholesale and now they're starting to shift the balance again and then we had a retailer whose.
A well-known Market in New York City called Fairway Market.
Well known local chain with a bunch of like really high-end Gourmet products as well as a full.
Call grocery store and so Jason is work there long time and talk about their overall perspective but today the portfolio he mainly owns is.
Private brands for Fairway and so he talked about some of the unique Dynamics with partnering with brands on on exclusive products so that was.
A good set of conversation in the audience that seem engaged and we got some nice feedback about that panel.

[17:18] Did you get to the so we talked up private label then you started using the term owned products have to have you as a cut on what's what's what's the difference between the two.

[17:31] Yeah they question if it's definitely one one of the themes at the show maybe we'll talk a little bit more about later but.

[17:38] In general I call private label sort of this hundred-year-old practice of a retailer offering a a,
more value oriented version of a national Brand Products what has the exact same product attributes as the national brand it just sold at a lower price point without the brand name on it,
generally a hundred percent of the marketing for the product is simply the fact that it's on the Shelf next to the National brand so you get a headache you go to Walgreens to get Advil and on the Shelf next to Advil as well bupropion.

[18:11] And it says right on the package compared to the active ingredient in Advil and it's a little cheaper right so to me that's private label and there's this show there's a lot of talk about private label and it's an important part of the mix for retailers in it obviously
has an impact on profitability and there's there's a bunch of good reasons why private label is important but to me,
the thing is getting more traction is this evolution of that idea,
where retailers actually wants their own unique products that are different from the national brands
in most cases the retailers using their intimacy with the customer to design a product that's in a gap that's not well met by the national Brands and in most cases retailers,
have to learn all of the skills that the brands have in terms of building a brand and marketing and advertising it and so to me owned brands are these,
all brands that just happened to be owned by a retailer versus private label are these sort of value-oriented alternatives to the National brand and there's a lot of talk about both of those at the show.

[19:13] And then your last panel was called using product content to build brands.

[19:20] Inside,
what you're not getting a lot of practitioners at the show so there a lot of like directors and VPS that are trying to learn best practices and I'm both sides of the fence like one of the primary areas were Brands and retailers really have to work together is on this digital Shelf.

[19:37] And so you know one of the ways this comes up most often is oh my god Amazon didn't used to be relevant in this category and now it's super relevant and.
You know increasingly searches are shifting from Google the Amazon and so how are we going to get our products to show up in the Amazon search engine like they used to show up in the Google search engine.
And once people find our products how are we going to get them to learn enough to decide to buy a product and send it alternative instead of the the that what we in e-commerce called that product detail page.
You know brands are thinking of is the digital equivalent of their retail shelf and so there's a lot of conversation amongst friends about what the best practices are in content.
For that digital shelf in the overwhelming majority of cases Brands create that content and then they syndicated to the retailer.
To show up on all these various e-commerce sites and so there's.

[20:32] Different retailers have different request and criterias and preferences about how to execute that content different brands have different philosophies about how much to invest in and what the best practices are so we had a really good rub us conversation about.
Like what what some of the the best practices are and what some of the new ideas are and what some of the pros and cons are tough.
The various approaches in investing in.
This content to you notes or to build a brand in a in a world in which a lot of purchase decisions are are substantially digitally influence.

[21:09] Are these guys struggle with just basic digital assets cuz you know in the traditional grocery store model them really had to provide much chaga tea or short long title or,
all that kind of stuff.

[21:24] Almost all of them have followed this way great like slow progression of maturity so when you're selling Oreos to Walmart like you you if it
at the base level needed to provide about six attributes about the about the Oreos bike how many cookies were in the bag with the net weight of the bag was like what you know a basic description that could show up in ER P&B printing on the on the Shelf label in the store,
it's always super simple and every brand new how to provide the six attributes that Walmart wanted as e-commerce really took off.
You know Amazon Walmart ask for for 60 and increasingly more attributes about the product is a gluten-free is it you know does it have any allergens in it.
You know what's all the nutrition information in the in the old world they just provided a picture of Ninja trition label to the store,
now they have to provide all this data and is you alluded to a super important attribute is images and how many to take and what should they be pictures of,
and is there any rich media going with that and you know any any comparison copy and they're off all of these.

[22:29] Evolutions of best practices and so you know his you kind of alluded to,
early on you know that's a Walmart sales guy like you know filling out an Excel spreadsheet and emailing it to his buyer at Walmart.
And frankly in the early days not caring very much because.
99.9% of sales were happening through the the Walmart by owner in Bentonville and only you know .1% of the sales were happening on and so you know.
It's in the guy with what he needs to go away.
You know that rapidly evolved and you became a very meaningful part of sales very quickly and eventually retailers you know sort of used the,
their store volume is leverage and said hey we're going to give you a shelf face in the store if you're not complying with all the the new digital content requirements we have and we want you to send the Kate ratings and reviews and want you to do all these other things inside of the kind of like.
Sales guy hiring some company to fill out a spreadsheet turned into.
These internal teams and centers of expertise creating all that content and and you know,
buying or building the kind of tools that they would use for product information management in
content syndication in all that and if I'm not mistaken I think Channel advisor plays this pretty significant role in in parts of that echo system for a lot of Brands as well.

[23:51] Yep yep you know we talked about the capability to take your eCommerce products and,
push me around and under the hood it's very similar to a set of capabilities
so those were the things you got to speak about and then did you tell if you were super busy between Starbucks runs applying lip balm and in all the stuff
did you get a chance to go to any other talks or can you summarize some other things that we should know about.

[24:26] I did I think I made it to all the Keynotes and I made it to as many of the other breakout sessions as I could and then of course there
we're a couple of friends of the show former guess that were also with the show by tweeting a lot of the sessions and so is pretty funny a lot of times I was in one session
you know trying to consume the content myself and I'm following
like Michelle who's been on the show from euromonitor who is doing a fabulous job of what I've tweeting the.
The session she was at and so so I feel like I got a pretty good feel for the overall show despite the fact that that.
There and she'll like this there is a fair amount of fear of missing out that you're going to go to one session and it's going to.
Not be what you hoped and and you'll miss some really good content in another.

[25:14] Yeah, so what were the highlights.

[25:17] So high level I kind of broke the show up into these for big themes and the biggest Theme by far is this overall digital disruption of grocery.
That essentially you know grocery ad in pretty stagnant for.
For a long time and that now digital shopping for groceries digital influencer sales in grocery and increasingly.
Delivery and curbside pickup of grocery is gaining huge traction it's going to be a meaningful part of grocery I think emarketer publishing data that it's like.
1.3% of grocery sales right now or digital the grocery same stories e-commerce groceries growing at like 2%.
But digital grocery is growing at like a 20% K Garceau.
You in the next five years that 1.3% is going to be more like 3 or 4% of all Grocery and it's
the overwhelming majority about growth in the grocery category so you know all the other themes and most of the content in the show is all about how Brands and retailers and consumers are responding to this,
this digital disruption of the traditional grocery model.

[26:34] So then the three sub themes under that that I felt like came up a lot is there's a lot of conversation and opinion and evolution of,
the idea of how you get all the groceries into the grocery bag right so there's a lot of traditional grocers that own a bunch of stores.
That you know feel like.

[26:59] Sending professional employees to pick groceries off the shelf and put them in the bag is the most cost-effective model because it leverages all this fixed assets that the retail already have it leverages all their existing inventory it shares the inventory between,
in-store customers and digital customers you know it's it's the Leverage is all these fixed assets that that that retailer already has
and so you think about like what Walmart curbside pickup and Kroger curbside pickup are both.

[27:30] Are both sort of in store picking models and you know most notably instacart which is now past like 3 billion dollars in sales is all
sort of in-store picking in so a lot of traditional grocery all feel like that's the preferred model but then there's a lot of digital startups that have said actually
that's super inefficient in the unit economics are really challenging there because
in a traditional general merchandise e-commerce site you know an average you're lucky if you sell two or three items per order and so the amount of picking
her order is pretty small but a typical grocery order might have 30 to 60 items in it and so the cost per item to pick is is a much bigger part of the overall cost.

[28:19] Of an e-commerce order and paying people to walk around stores that are not
efficiently assorted for Pickers but instead are designed for Discovery and browsing is really inefficient and so
you you have dedicated digital Grocers like Fresh Direct or Peapod or a super successful digital Grocer in the UK called or Colorado
that all have this model where they use dedicated automated.
Grocery up fulfillment centers that are much more optimized for picking costs and in one interesting case ocado which is based in the UK is partnered with Kroger and they're there.

[29:03] Opening fulfillment center using okada's technology and software in the US so Kroger is both doing store picking and there now piloting these microfilaments centers Albertsons which is like the second largest.
Dedicated Grocer in the u.s. made a big announcement that they were launching micro fulfillment centers and they felt that that was a superior more cost-effective model in the long run so they're like,
it's still early days but there's a lot of pros and cons on both sides in this whole whole conundrum of what's the efficient supply chain.
You know when you're dealing with perishables and fresh and and you know cold chain and all these these products that have to be kept at.
A particular temperature so that it was an interesting pros and cons from various practitioners around those picking models.
So that was kind of something one sub theme to is this whole debate about.

[30:02] New start-up Brands versus new products from existing brands in so you think about like a Harrys Razor which would be appear startup brand.
Or a new product being launched by Kraft.
And you know a lot of the buzz in the industry is all about these new digital native startup Brands we talked about a lot of them in general but there are also a lot of them that are in the grocery space.
And get a lot of buzz but also in the grocery space are more products.
That our new products that are either launched by big companies or.
New products that are launched by companies that are intended to be sold through wholesale versus.
Direct-to-consumer so you think about like Chobani yogurt for example like that emerged in quickly disrupted the industry and took a huge chunk of Dan and sales because,
Dan and didn't you know jump on the Greek yogurt trans quick enough in Chobani like became a very big company.
Shivani doesn't really focus on selling yogurt direct they sell it through all these grocery wholesalers.
It's a lot of interesting discussions about the pros and cons there and like my big takeaway is.

[31:16] All of these dedicated startups that are focused on direct to Consumer are making more Innovative products and they're iterating them faster and they're getting them out in the market and getting initial customer adoption much quicker.
Then that the big brands are or than the wholesale distributed products are but all of them seem to hit this plateau and really struggled the scale.
So I'm calling the the direct to Consumer startups really good at Innovation and product development and early launches,
but the really challenging to scale in on the big side the products that they get to Market are doing much better and scaling and becoming much more significant in the marketplace,
but in general are there's far fewer of them in there they're much slower to come to Market and there's in general that's innovation in them and so there's kind of this interesting thing that you had these two models that he.
Each have their pros and cons and you know how do you kind of get the best of both worlds and is is that.
Harry's launching is a direct-to-consumer brand and once they hit that plateau.
You know they they shifted to today the majority of their sales are now wholesale then and so you know there's kind of some of those those conversations.
Internet the third big trend is this whole private label owned Brands thing that we discussed earlier.

[32:40] But I would say both of those Trends are becoming increasingly prominent in so you think about like all the Keynotes at the show and like Kroger,
I have a huge private label it's the most successful,
organic food brand in the US called Simple Truth and Kroger's grocery store in the US but in China Kroger's a brand because they're selling simple truth on Alibaba,
in China we've talked a lot about boxed on this show which is an Innovative a retailer that started out selling wholesale Goods today a big chunk of all their sales are own products that they're developing.
One of the founders of Thrive Market which is sort of a online version of Whole Foods in a way talked about.
The overwhelming success of their own products and how you know they were differentiated in the marketplace so that that was a big Trend in those.
You know I think of you up there all the key notes in a lot of the breakouts you did see them like pretty neatly fall into those three big trim.

[33:43] How how do you nod out on jobs pick one so we talked a lot about delivery versus curbside was there any conclusive evidence on either of those.

[33:55] No I think the jury is still out I will say like I have in a pretty flippantly run around saying hey the big winner is going to be curbside that the unit economics really don't work.
For for home delivery for grocery in perishable and kind of the Reader's Digest on my Logic for that is.

[34:16] General merchandise e-commerce is generally what we call a route based delivery like you get 300 orders you put them all in the UPS truck the guy drives to 300 addresses,
and deliver them all and so you know each one of those delivery is paying for one 300 that trip.
And the UPS driver could show up at your house or work any place within kind of a 10 hour window and deliver the goods and it would be no problem.
And fresh and perishable if you order milk or you order ice cream.
You need to be home exactly when that delivery arrive so that you can put those products in a refrigerator or freezer.
And generally the way that that retailers have to do that for most of the country is that to do a point-based delivery which means a guy drive straight from the store or fulfillment center to your house,
and now that delivery has to pay for 100% of that trip instead of one 300th and so,
in general because of that the unit economics are much more favorable to curbside pickup.
And curbside pickup is good enough from a convenient standpoint like a lot of families fine,
super convenient to order their groceries digitally pick them up at their convenience maybe on the way home from soccer practice and they're stored in a climate controlled storage facility and they they get put in your trunk really efficiently.
And that's a really high customer satisfaction experience for most consumers so.

[35:40] Put all that together and curbside pickup is the big win and I still believe that's true but I got to express that point of you do some really smart operators that a bunch of these grocery stores,
and and they're kind of feedback which I do take the heart is hey Jason you're probably mostly right,
but you're actually under estimating the fact that the picking is way more expensive than the delivery and so you know that the unit economic problem is more around,
if you if you have a really expensive pic of 30 or 60 items you then can't afford to do a point delivery,
but that if you have a really efficient fulfillment center and you can get the picking cost down a low enough.
You can put those deliveries on a refrigerated truck and you may not be able to do the
the 300 deliveries that a UPS driver can make in a day but you still can make multiple deliveries,
guarantee tight delivery windows in a climate control truck from a dedicated fulfillment center and so they were arguing that that you know maybe there's more.

[36:47] Communities that have enough density to support delivery than I was originally thinking so I'm I'm starting to amend my thought process I think the clear answer is,
that the world is going to have all of these delivery modalities sometimes you're going to want to go to the store and pick the stuff out yourself and that's going to be your preference sometimes you're going to want to leverage curbside pickup and other times you were going to want delivery and so you know good good retailers
are going to have to figure out a way to support all those modality.

[37:16] And then in the whole kind of digitally native vertical brand startup versus brands from existing companies where where did Jeanette Allen.

[37:27] Yep that that is interesting so the it feels like then the.
Digitally native brands have more Tools in their their tool belt to overcome,
their deficiencies than the big brands do right now right like so you you go talk to the big cpgs and you talk about what their strategy is to infuse Innovation and have a you know a faster pace of new products
and have product that are better suited to the consumer and you frankly get a lot of blank stares and you get a lot of.

[38:03] Kind of the same unfulfilling answers that oh we're going to set up an innovation team or we're going to act as a venture capitalist in and go unifund a bunch of projects,
but you know these big brands have just not demonstrated the ability to get much faster and get much more Innovative and
these big brands that are exclusively selling through wholesale are fundamentally disintermediated from the customer so they do not have the customer preference data to use to
design and execute new products very well and I I just haven't seen any of them you know really like,
clearly articulated solution to some of those deficiencies whereas the the the native direct to Consumer products
have the ability to take advantage of all of the strengths of the direct to Consumer space and when they get to the point where they kind of max out on the scale they can reach direct-to-consumer they they have the option to them in pivot to a
a wholesale distribution model or a blended model or they're in a position to establish a reasonable valuation and get acquired by one of these big companies and so it,
you know why there are challenges on both sides it appears there's more ways to overcome the hurdles if you start out as a new digital native brand then there are
if you start out inside of one of these these big brands at least least for now that's that's how it seems to me.

[39:33] If I come pull the thread on that so we talked about so some of these grocery stores like Kroger creating their own private label or our own Brands but then if I'm a cpg
it it seems like.
That's another reason to go direct other than the channels kind of being complicated to navigate without a team so cpgs going director or is that just not happening in grocery.

[39:57] No no no it so it's often discuss there's not a ton of success stories right and so usually when a cpg tells you about their direct-to-consumer 6s they're going to be telling you about a direct-to-consumer brand.

[40:10] But they're all talking about it and frankly like I strongly advocated and I think you and I have talked.
In general I feel like developing a direct-to-consumer capability and strategy needs to be an important part of every one of these Brands because if yeah.
You you sort of look at this at the moment and you've got a bunch of brands,
dinner depending on on wholesale retailers and you look at the retailers and they're they're super distressed and have them bunch of head winds
their number one tactic for overcoming their head wins is in differentiating themselves from our our friends in Seattle or when I'm soon going to have to say our friends in,
Seattle New York Virginia.
Is to have exclusive products and have owned Brands and said the retailers and brands that used to be you know super synergistic have
are increasingly becoming Frenemies or direct competitors
and it and the retailers are frankly having a lot more success with that at the moment then the brands are so a bunch of retailers are becoming super successful at building Brands we talked about a couple in the groceries Facebook like.
Yeah oh my God I target has one strike three brands that sold over a billion dollars in their first year none of the digital native brands that we talked about on the show have and have done that right and so retailers are getting successful at making.

[41:39] The transition to build products,
and in that world there is a left there's less shelf space for the brands in a world that's increasingly becoming have a winner-take-all you kind of imagine some future when.
When you know we're all going to get the bulk of our purchases from.
In Amazon Monopoly in North America or maybe a Amazon Walmart duopoly there's a lot less points of presents to carry that brand product and so.

[42:07] That brand is going to lose all the leverage to the unit few set of aggregators at the top of the echo system on the less.
They're also able to sell the wrecked unless they can build a relationship direct with the consumer even if it's not high volume and profitable in the short run.
I feel like they need to develop the skills just so that they get some customer intimacy so they can start building more relevant faster,
more agile products and I feel like they they need a lab to test and learn all this digital shelf content and all these digital best practices that we.
Been talking about on Today Show so when they execute at Walmart,
they're not just you know sending an image that they have no way to test and hoping it sells well in Walmart like far better to be able to test all that content on your own direct-to-consumer channel
Gatorade it really quickly and then take a hero image that you know work since indicated to Walmart so for a variety of reasons I think that's an important
a scale for cpgs to evolve and I would say they are they are doing that cautiously and slowly.

[43:09] We haven't done it wouldn't be a Jason in the sky show that will Amazon and we recovered at the top of the show but
I didn't see anyone from Amazon speaking on I may have missed that but sometimes these conferences it's funny people are avoiding talking about it and stay 800-pound gorilla in the room was was there a lot of Amazon talk to at least find the scenes.

[43:31] Yeah so
to my knowledge Amazon really didn't have a presence at the show which on the one hand isn't surprising but on the other hand I would say
the founders of this show have actually been pretty decent at getting Amazon speakers to their other shows now admittedly the speaker's they get are the ones that you don't have the most vested interest in.
In selling their products to the industry so not shocking that
pay by Amazon is happy to go to money2020 and talk about their digital wallet right and
not shocking that that the Amazon Marketplace when that used to be a separate and into the you know was was happy to go to shop talk and kind of Recruit new Sellers and things like that.

[44:18] The but they did have the prime now folks I have spoke at several of the shop talk shows and so you might have thought they would be there,
it would have been fascinating to hear from
some of the Amazon Fresh people are now that you know that the folks responsible for the Amazon Whole Foods in a graichen in and none of them were publicly there I'm sure Amazon secretly had some people there but.
Almost every conversation when you say digital disruption of grocery,
everybody points to the same event that like there was a lot of talk about digital disrupting grocery but nobody nobody was personally experiencing it or nobody was very worried about it until the day that Amazon announced today,
they purchased Whole Foods and that that really sort of Kick this whole.
Disrupt digital disruption of grocery in a high gear and caused by you know almost all the people we saw speaking were people that got hired as a direct result of that acquisition.

[45:19] Mom said they were definitely on everyone's mind even if they weren't there in 4 in in person.

[45:26] Put in the other high like showing it.

[45:29] I think those were the big ones it is interesting that this is one of the spaces that I like doesn't feel like Amazon has one yet and they actually,
probably have some intrinsic disadvantages versus some of the other players so.
I'm by no means prepared to say oh my gosh they're not going to win
Amazon on the Rhone you know dabbled in in fresh fresh,
for I want to say amazonfresh is like 10 years old right and never really got a ton of traction and then after they bought Whole Foods I've been really impressed by how fast.
Amazon's been able to integrate a lot of their digital chops in a Whole Foods and then some test markets like the one I live in
they have some really compelling Whole Foods delivery options and Whole Foods curbside pickup options which are great but the reality is
Whole Foods is a tiny percentage of the whole grocery market and they've you know implemented these tests in a tiny percentage of the whole food so you know you look at the
the folks that Walmart or Kroger is touching with digital grocery versus the amount of customers Amazon's touching and right now.
Walmart and Kroger have a head start now I would argue Amazon the way faster more agile company than Walmart or Kroger and so
you know I think we can expect to see Amazon continue to make up ground but it is always interesting to see see a market where Amazon probably has to try harder than some other folks if they want to win.

[46:58] I don't know. What do you think.

[47:00] It's going to be interesting so you know they are pushing the Whole Foods pretty hard I've noticed in my Prime now recently there
they're kind of integrated Whole Foods delivery right in the prime now in her face which is used to separate set of inventory and yeah I think it's
too early to call account Amazon out of any fight.

[47:20] No
no I I totally agree I'm so in and it's going to be fun to have a ringside seat to watch it all play out I will throw one other teas are out there
we did get to talk to several of the friends of the show that have been on the show a number of times before and so shortly after this episodes available will have a couple episodes live from the grocery shop show and we will get some other folks perspectives on the show in the industry and so you know
if you're if you're trying to figure out the the digital grocery space I would encourage you to look for those upcoming episodes as well
and with that this is going to be a great place to rap because we have used up our allotted time so as always love to continue the conversation on Facebook if you have any questions or feel
like we got something wrong we love to hear from you and as always if you love this show we sure would appreciate if you jump on the iTunes and give us that five star review that's the
the biggest favor you can do for the show.

[48:24] Awesome thanks everyone for joining us and thanks Jason for being our Jason Scott representative in the field in Las Vegas.

[48:32] It's it's never as fun without you but you were that you were certainly there in spirit so hopefully next year we'll get to do it together and in total next time happy commercing.

Oct 26, 2018

Happy Birthday, to Jason's wife, Leila!

Scot Wingo is contributing the Forbes Digital Council, and writing about his new Vehicle 2.0 Framework.  Introducing Vehicle 2.0.  Jason Goldberg is also contributing to a regular retail column on Forbes, starting with his first article: What Competitors Are Missing About Amazon's New 4-Star Retail Concept.

Scot is appearing in a national TV spot promoting his alma mater, North Carolina State, "Think and Do!"

Jason is leading several sessions at GroceryShop October 28-31 in Las Vegas, including a keynote interview with Sam's Club Chief Merchant Ashley Buchanan.

Amazon Earnings:

  • Amazon's third-quarter earnings beat Street estimates, but its revenue and fourth-quarter outlook fell short of expectations.
  • Revenue: Revenue increased +29% Y/Y (+30% ex-FX) to $56.58B, 1% below the Street's $57.11B. 29% Revenue growth was below consensus expectations as Int’l revenue disappointed with a ~$1B shortfall.
  • North America revenue (ex-AWS and ex-WF) of $30.10B was up 25%, in line with 2Q18 growth. International revenue of $15.55B was up 13% (+15% ex-FX), a notable deceleration from 27% growth in Q2 (+21% ex-FX). AWS revenue of $6.68B was up 46%, down from +49% growth in Q2 but in line with expectations. Physical Stores revenue of $4.25B was slightly ahead of consensus expectations.
  • Amazon's "other" category, aka advertising, jumped 123% to $2.5 billion in revenue

  • AWS revenue: $6.68 billion vs. $6.71 billion estimated, according to FactSet
  • Net income, meanwhile, grew more than 10-times from the year-ago period, to a record-high $2.8 billion, marking the fourth straight quarter of topping $1 billion in profits. The $3.7 billion in operating income far-exceeded Street estimates of $2.1 billion
  • GAAP Operating Income of $3.72B was higher than the Street's $2.12B. Gross margin of 41.7% came in above the Street's 40.5%. GAAP Operating Income margin of 6.6% was higher than the Street's 3.7%. Profitability, once again, was a positive surprise with Op Inc ~$1.5B ahead of consensus expectations,

Other News:

  • Implications of the US pulling out of UPU Treaty
  • Implications of Sears bankruptcy

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

Episode 149 of the Jason & Scot show was recorded on Thursday, October 25th, 2018.

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.


[0:25] Welcome to the Jason and Scott show this is episode 149 being recorded on Monday October 25th 2018 I'm your host Jason retailgeek Goldberg
and as usual I'm here with your co-host and television spokesmodel Scott Wingo.

[0:46] Hey Jason welcome back Jason Scott show us nurse yeah yeah yeah.
So if you're at the front should I guess we'll will preface it's been a couple weeks but a show out so apologies to everybody we have been just crazy busy and what Jason's referencing there is
I did a small video for this NC State thing and then end up being in a promotion that they
are nationally a lot of people have seen it so that's been fun we'll put a link to it in the show notes so NC state has the motto which is thinking do,
I am and I'm featured in there talking about they can do.

[1:26] And they are airing at like on ESPN during the games.

[1:30] Yeah when the when the college's nobody watch college football UIC usually during halftime they get two spots that they can kind of do a promotional video about University each University gifts and this is one they've been running for.

[1:45] That's it's totally awesome I'm just saying it's my animated screensaver now so just so you know.

[1:50] It's a little creepy but whatever floats your boat Jason.

[1:56] Not even the weirdest thing about me.

[1:58] Another fun fact is we are both contribute to Forbes you had a really good article where you you went through your Amazon go store the force Star Story.

[2:13] Yeah and you are like some fancier CIO contributor if I'm not mistaken.

[2:21] Yeah if you have the tech Advisory board or some such
and I am writing about vehicle 2.0 which is a framework we've developed its if he for thinking about the future of cars which seems like it wouldn't have anything to do about e-commerce but it's kind of interesting.
The first of all you have a.
Perspective on how fast or how slow this vehicle stops going to go in and then second of all there are overlaps there so for example
imagine autonomous vehicles delivering packages.

[2:54] Yep for sure and I suspect in the not-too-distant future will be ordering a lot of packages from our vehicles and in many cases getting delivered to our vehicles.

[3:05] Yes sir that's good and then the in exciting car news so Tesla's new operating system came out so that that has been fun to play with and a lot of the folks that are in the same demographic issue and I the most exciting part about the parade
this is the Tesla West Nine is they have an Atari simulator in there as one of the new Easter eggs so that you can't do this while you're driving so full disclosure there.
Sadly but I guess safely but it is a lot of fun to play on the touch-screen the various old Atari games,
most fun one probably is Missile Command because he was always super frustrating to have to deal with that track ball and you can never get
faster left right it in your little basis would get destroyed so now you can kind of do a two-finger thing and it makes it a lot easier to save your bases file.

[3:57] I am always jealous when you get a new upgrade because I just think that's the coolest thing that you're you go to bed and wake up in your car has been upgraded it makes me want to like go out and get a fancy new cup holder or something for my car.

[4:10] Yes you could. You could get a Tesla you should.

[4:14] Yep despite the fact that my wife and I have no commute in the car is almost exclusively used by a three-year-old shirt.

[4:21] Call Anna Jason you got a lot of stuff you can be doing here either this week or next week.

[4:31] Yeah the the these next two weeks are super busy for me on the personal front this is the busiest week of the year for me tonight is my wife's birthday,
inside of a side-note shout out to you honey happy birthday she most wanted to celebrate it by having me catch up.
With the podcast cuz she knew the listeners were frustrated with the,
the Gap we've had and her main request for her birthday is she wants to go to the Star Wars experience in Orlando on a joint vacation with the windows so we're going to have to.
I think we're gonna have to find a way to make that happen.

[5:13] Absolutely that is one birthday gift I'll be happy to help make happen.

[5:17] Exactly and then it's a crazy fertility week apparently in my family because in addition to my wife's birthday.
Tomorrow is like my mother's birthday my mother-in-law's birthday and my father-in-law's birthday.
So so we're doing a lot of birthday celebrations this week and then Sunday I shoot out to grocery shop which is this new trade show in Las Vegas this will be the first year.
Mainly focused on digital disruption of the grocery category.
It's put on by the same folks that started money 20/20 and Shop talk.
And I think they were hoping to get like a thousand attendees in this first year and they actually sold out capacity of the venue at 2200 people.
So it's it's shaping up to be a really good event and I'm dramatically Overexposed at the event so Sunday night I'll actually be doing the keynote interview with Ashley Buchanan who's the chief Merchant at Sam's Club.
So I get to talk to him about digital at Sam's and we'll talk about scan and go and some of their partnership with instacart and some of the other things they're doing hopefully I'll have some.
Samara tough questions I'm doing a piano on.

[6:36] Brands using product content help build a brand since we got.
Folks from the Boston beer company which is like Sam's Sam Adams we've got Chobani what unit or disrupted the the yogurt space and we've got the wonderful company with the almonds and pom wonderful Fiji Water and all that stuff.
And then I'm doing a panel on the evolution of the cpg retail relationship we've got constellation Brands which is.
A big house of brands in alcohol space I think has Corona amongst others you have a elf Beauty and then a Fairway Market which is a great bespoke grocery retailer in the New York City area so.
Some topics that are near and dear to my house heart and I'm looking forward to seeing everyone at grocery shop and the.
I do have plan I know you're not going to go to join us so that always makes me sad but I do think we're going to get the opportunity to record a couple shows from there with some of the the grocery industry makers.

[7:38] Next year they're going to Rebrand the sink to Jason talk or something like that cuz it seems like you're just doing everything there.

[7:45] Yeah I think that was actually there original premise and then they found out like that the only for family members I could possibly get to attend we're all celebrating their birthday and so they decided to scrap.

[7:56] Expanded to smother people in the loss of that that looks good I look forward to seeing all the social media that comes out of that and and he ran to the interviews any trip reports.

[8:11] I do so,
we've talked about Amazon go on the store on the show we did talk after they open the first go store in Chicago they have open to other go stores in Chicago so now we have a.
A fleet of ghost tours and then this week or last Thursday Google opened a pop-up shop shop here in in Chicago for the holidays.
So Google has done pop ups for several years but they've always been in New York this is their first year in Chicago so I was eager to see.
What that look like and I I went and visited it this week so I'll talk about that in just a minute and then.
They have announced their first permanent retail store in the US and that is going to be in Chicago there's no official date on when that's opening yet so we're continuing.
To watch for updates on that but I'll be interesting to see what a permanent Google Store looks like but the pop-up is really sort of.

[9:12] Very similar to pass Google pop-ups it's it's focused on the Google Hardware products so the pixel 3 phone their new home hub which is there a voice assistant that has a screen built-in so it sort of.
Competing with Amazon Alexa show.

[9:32] They you don't have a a couple cool accessories I've never really smart a wireless charger for the pixel phone.
So you know you go to the pop-up they have all the products they had them on launch day.
Which would which is kind of cool as the first place outside of Verizon you can get the pixel 3 phone.
And they set up a couple of fun vignettes to sort of demo the capability so they have sort of a.
A fake record store you can go into and play music using the the Alexa assistance in there that their new high-end audio Fidelity speaker.
You can go into a tree house and do a bunch of home automation stuff so you can you know give commands to Google and you know see the shades in the tree house go up and down or change the lighting in a few different things.
And they have a kitchen vignette and in the kitchen vignette you can have a bunch of Easter eggs you can give commands and it'll like pop open a drawer with candy in it and some stuff like that so.
Some some fun little vignettes to kind of get you experimenting with a Google product but sorta in typical.

[10:44] Pop-up shop fashion you know it it really felt more like some sort of Museum exhibits where you could go in and try products rather than a working retail store.

[10:57] And you know the it was very sales assisted experience you know there more Google employees in the store then there were customers.

[11:06] You know if if you are specifically looking to get Hands-On a Google product it was great opportunity to do that but I'm not sure as a pure retail store.

[11:15] It was all that that interesting or or Works particularly well and in my mind the big change from previous Google pop-ups was just sort of the.
The visual treatment so in the past they've done he's really kind of techno treatments with a lot of like.
Animated light things and fiber optics and you kind of got a very sort of Tron feel from the the Google pop-ups in this Google pop-up was a much more.
Sort of the Vintage organic feel so you know instead of a house they had a tree house and they they don't sell these other they should they they're like merchandising all of the.
The the phones and he's cool Google tool boxes that they made for the store and so is very white.
Sort of organic store with a fake tree in the middle of it and it was two stories and so if you live in Chicago you're interested in some Google products totally worth we're checking it out there are a couple features in the pixel 3 that I'm super jealous up as a.
IPhone user they have dramatically improve new spam telephone spam filters which.
I feel like I'm getting a lot more telephone spam so that seem cool and they have a great new visual search built into the the camera and incredible new will light features for the camera that seem to be class weaving.

[12:40] Awesome I don't want to.
Get you an agitated but I am ambidextrous and my pixel 3 actually just arrived today and I'm going to crack it open after this podcast so I'll do it boxing next week and tell you about all the awesome teacher missing.

[12:57] Exciting I I probably will add one of the beat to I think it is going to be fun and if you have already gotten one spot I do suggest you get the the Google pixel.
Wireless charger.
It's really smart and clever like unlike traditional wireless chargers it recognizes each individual phone and you can have different settings for each phone it basically turns the phone into
a mini Google home hub when you put the phone on the charger it has a bunch of unique features that
I feel like everyone else should have thought of but give always the first ones to implement.

[13:31] Awesome I didn't know about that so I appreciate that
cool wall decals caught up on outside and it wouldn't be a Jason and Scott show without.
Amazon news your margin is there a opportunity.

[13:59] Yes Jason said at the top of the show it's Thursday October 25th and.
After the market closes today Amazon announced their third quarter earnings and just kind of position awareness if you listen to podcast
setting up for Holiday 18 and
I like good stuff going on in a little while kind of shaky here in the last couple weeks the stock market's gyrating a bit tariff kind of stuff is accelerating were to talk about some things there later than the show
around China impacts so for me this is a really important set up cuz this is kind of the one the last data points work
it going into holiday 18.
Add a reminder for everybody we tend to think of e-commerce as Baseline going about 15% 1/5 overall retail tubilee grows low-single-digit so 4%
so with that being said Amazon did announce their ornax and it's kind of a mixed bag so he was a little light and and I'll go into why but then profitability exceeded expectations so
as of the recording of that show the stock is down a tad and a smoke so.

[15:20] When you peel the onion on on the top line revenue came in at.
30% year-over-year growth is 56 billion and that was about 1% will at the street was looking for so that one person.
Turns out to be about a billion dollars so what's a billion dollars between friends who was largely on the international side
Amazon doesn't really give any details about things but reading the tea leaves their you know it feels like there's
there's some stuff going on they did annualize some things like suck exertion of some changes they made in India
but then also you know I think a lot of the Wall Street analysts are or feeling like this is
Felix of tariffs and packed so when item is sold from China and us that counts as
it's where the seller is that that counts is international Judy and Skip Bayless so so that could be Amazon on the little bit of that passes Air Force they're going on
Ding and revenue little bit more when you look at North America and you take out just when you just get the retail North America that snow cloud computing.

[16:33] Whole Foods is a 25% begin to put this in perspective Amazon overall grew about 30% even that it's amazing you know huge 800 lb scale
North America grew at 25% and then
International only grew about 15% which is a pretty steep deceleration from last quarter is 27% of us continue to do really well that 46%
and a physical stores came in right at expectations one of the stupidest things we like to talk about on the show is the advertising that continues to grow
triple digits that grew a hundred 23% and is now 2.5 billion dollars and
yeah that that just kind of looking at the trend overtime book with this the show notes so you'll get you one of 18 at 132%
U2 under 29% you 323% so little bit of a slow down but really just continues to be white hot
that eternity Jason for some other highlights.

[17:42] Yep it's always hard to talk about a Slowdown in growth when it's still over 100%.
That's a first world problem for sure but it's it was sort of a bifurcated story you I got the,
the revenue was a slight Miss for the quarter but earnings for the quarter were really strong so they were.
2.8 billion for the quarter which is the their highest earnings ever that means that's four straight quarters that they've earned over a billion dollars in profit hopefully that.

[18:18] Jason.

[18:20] I was just going to say I hope I hope that finally puts to bed the the silly myths that they're not profitable.
That is wildin more profitable than they were just a short time ago so that is like 10 x their profit from a year ago
and that earnings was a pretty solid beat on the market expectation so on the one hand you go man they say we miss Revenue but they blew away earnings that should be a great story
but then you know they gave their guidance for Q4 which was a little soft and disappointing to the market
and the ramifications of that is this after hours trading their stock took a meaningful dipso their stock was down 9% tonight,
if that holds tomorrow it is conceivable that Microsoft which had a good earnings report yesterday
well at least briefly pass Amazon is the second most valuable company so I'm not sure that says anything particular negative about Amazon but that's a pretty impressive run for Microsoft
will get themselves on the mixer.

[19:31] There's a little bit of overlap so one of the reasons Microsoft doing well is azure which is their competitor to AWS
it seems to be really doing well and and kind of
sticking out of a definite second position and nudging out IBM in Google that were trying to get that that second position by the Amazon seems like seems like it's
pretty quickly becoming a two-horse race between Microsoft and Amazon.

[19:56] An in general Microsoft is still way behind in Cloud but.
As a result able to grow much more quickly and of course in our category of retail what are the one category where
you know Amazon faces some headwinds and their major retailers that obviously don't want to use AWS and there's some big powerful retailers like Wal-Mart they really discourage their vendors from using AWS so
retail is one one particularly lucrative category for Microsoft azure.

[20:26] Yeah on the.
On the marketplace side one of the metrics than Amazon does discloses 2% of orders are units that came from Marketplace sellers last quarter it was 53% and it held steady at 53% again.
Don't spend picking up about 1% every quarter so stabilize here at 53%.

[20:53] Yeah and then there you know there after their names there's always the Q&A with a couple of the Business Leaders and,
I'm always looking for tidbits there and one question that that Amazon got asked is about ads on the Alexa platform and I was.
Happy to see there the guy that weaves investor relations for Amazon say that that they have no plans to,
put in the ads on the Alexa platform in the day exclusively want to focus on it being a good customer experience so.
Not shocking but but good to affirm that that they're not going there.

[21:40] The and then you know kind of following up on the analysis of of the quarter I think you know people are definitely looking at that International softness and you called out like that they laugh their suit.
Acquisition so that that probably had a material impact on International growth and then there's this big.
Indian holiday it's right on the cusp of a shopping holiday that's right on the cusp of Q3 and Q4 so.
Last year it was in Q4 this year it's in Q3 and so they're cute their comps.
Mirror over a year are challenge cuz the holiday was in in one year and not the other.
One piece of speculation is another report out there estimating the size of the Prime Membership.
And that they are reporting that that growth in frying is dramatically slowing down which is,
not a huge surprise
you know the Amazon themselves they said they have over a hundred million Prime households and that's a global number but in North America there's only like 120 or 240 million households depend on how you count so it
and it has to be getting harder for Amazon acquire more.
Prime households and if it is in fact true that they're requiring us households than that certainly would have an effect on on future quarters growth so that's going to be an interesting thing to what.

[23:09] Yeah yeah once you've kind of have every household on Prime then it becomes a
saturation game to see the one thing on the fourth-quarter guides that you mentioned is it was a little soft on Revenue but but about
8% off on the prophet side and Amazon's not being specific about it but one thing they did announce that we haven't heard on the stove is there
increasing everyone's wage for warehouse workers to $50 there's a lot of controversy around this so so this was a reaction to a lot of politics going on Bernie Sanders has been kind of lighting them up these ladies kind of
but I think as an ox we're kind of silly things where they'll take Jeff bezos's net worth in / 365 and don't say that that's how much he makes a day or so.

[24:05] Forgets the 20 years where he you know took tons of building Amazon but whatever I do dress and
there is a point there that there is a large disparity between his of the top echelons of Amazon warehouse workers to Amazon straighten that out by
$50 an hour doing so they get rid of stock options and some other things that they don't like that
I can't win so that in the lot of people trash come over getting rid of those things so that being said it is a prematurely and talk to
literally hundreds of thousands of employees so a lot of speculation that.
Big head wind on the bottom line going in the fourth quarter is going to be that that wage increase Warehouse her.

[24:52] Yep and I I think they were specifically asked if that it was going to have a material impact and Amazon didn't comment on
the exact impact of the wage increase but that that wasn't pretty like from my view a pretty Savvy move
you know there's been this trend in retail for a while you don't return a really competing for talent you know unemployment is low so it it's hard to get people and we've seen both Target and Walmart you like dramatically increase there
starting wages in an effort to improve the quality of the workforce and then you know Amazon came in and LeapFrog them in and Amazon is competing for four people at this point to fill those Protomen centers in so that like I'm sure there was some political advantage
in doing that like that you know I do think in a lot of ways it's the right thing to do I was here for the employees.

[25:48] But it also just is a capitalistic thing to do in terms of making sure that you get the input the workforce that you need in this competitive environment so
be interesting to see even what economic impact it has
but the other question that they got about the financial impact in this going to happen thank you for is
the u.s. postal rate increase that is coming and am I was pretty clear that they did not feel that the
postal increase was going to materially affect them into me this is another one of these sort of funny ironies

[26:28] You know that the president that appears to have some animosity towards Jeff Bezos adopts an issue and then some some which situation gets past like the sales tax
Supreme Court ruling or now this postal rate and
you know that you like him superficially is tweeting that this is going to have some negative impact on Amazon Amazon.

[26:52] Has more ways to deliver packages than everyone else they have more of their own package delivery and so the operations folks and Amazon or like no we're just going to be smarter about which of our delivery vehicles we use only think we're going to be able to absorb that rate increase
and of course no other retailer has those levers to pull in so like the
postal rates going up actually is a competitive Advantage for Amazon versus the rest of the market that doesn't deliver 15% of their own packages like Amazon does.

[27:24] Yeah to that vein couple of tidbits so
there's a lot of video surfacing of Amazon order to something like 20 to 40,000 Prime delivery dance these are really nice there these Mercedes sprinters
and I don't know about you in Chicago but in the Research Triangle the Raleigh-Durham area I probably see four or five of those a day right now and it started where they were going to large corporations so
where were there a lot with my stuffy and your folks are reporting to Neo at Cisco and Citrix and MetLife.
All these large employers there seeing the Amazon big ants go there a couple times a day and then now it seems,
large Prime neighborhoods deserve this kind of replicating the FedEx Ground model to FedEx ground
not realize this but the next error is W-2 employees FedEx Ground as a 1099 network of local stores that are given
license to FedEx brand and they operate ground on behalf of their local businesses so,
Amazon your kind of started.

[28:35] This mix of some fulfillment center employees are driving these things and I talked to several of them and the ones I've talked to her are full on Amazon employees
but a lot of them also are these 1099s ramazan will set you up in your own little 1099 delivery to you
certain number of packages and effectively a dollar per package so your point pretty fast meeting at Amazon that really wrapping that up.

[29:05] Yep.
A couple of other pieces of Amazon news not necessary related to earnings but Amazon did launch a new credit card in partnership with Amex this
I think maybe you last week that was targeted at small businesses and it has some interesting features it's a no fee Amex or if the first time you can get a free MX
They sort of have variable terms for each purchase that you can select at the time of purchase in Amazon so that so there's a unique user interface in Amazon for purchases better.
Completed with this credit card and so you can say for example that I want to use my Amazon reward points to pay for this purchase or you can say I'm going to,
pay back this credit card charge in the next 30 days and you get 5% back for doing that or you can select these 90-day terms.
You know take 90 days to pay for the purchase so kind of an interesting tighter integration between Amazon and Amex.
You know what I'm always interested in those kinds of tie-ins because you know payment is such a.
A potential competitive advantage in the e-commerce pay so it's interesting to see Amazon doing that.

[30:26] I mentioned earlier that we now have 3 ghost tours in Chicago we also had the the first go store open in San Francisco this week so these things are rapidly opening.
Side note kudos to the Amazon real estate team they've actually done a phenomenal job of hiding a lot of these stores from the media which is you know.
Carefully carefully watching property managers to figure out where all these stores are and I I know it's Amazon's been a pretty good job of surprising us all with some of these openings.
I had an interesting little debate with some folks on Twitter this week.

[31:01] You know as as it seems clear that they're opening a network of these stores and there is that Bloomberg report that they're going to have it three thousand of these go stores buy.
Doug Stevens a retail author and and subject matter expert me to tweet saying.
You know that 7-Eleven is now on the clock.
They're going to get dramatically disrupted by Amazon and they're really not ready for it and I sort of made a smart alec or reply.
You know while I've never would tell anyone not to worry about Amazon I'm not sure that first and foremost Amazon go is likely to affect 7-Eleven I said that.
You know probably print amazed year or hobo pie.
Are at much more risk from the Amazon go store then 7-Eleven is and my contention is the ghost or is really a restaurant.
You know whose main mission is to get you lunch when you only have a half hour lunch break and that it's it's not really a competitor to a traditional convenience store in so some folks on Twitter jumped in and we had a we had a good healthy debate about that then.
Obviously the Ender Wintergreen I'm right.

[32:11] Or they got blocked.

[32:14] Yeah alright I just scream them exactly a side-note top three categories at 7-Eleven.
7-Eleven sells a ton of gas which Amazon go stores don't sell yet 7-Eleven sells a lot of tobacco which Amazon doesn't sell
at all and then they sell a lot of alcohol which Amazon go only sells in one store in Seattle
so you know where food is in a growing part of 7-Elevens business it's not even a top 3 category and it's it's like 95% of the skews in this this ghost or so that's why I think Joe is much more of a restaurant than a traditional convenience store.

[32:53] When one last reminder is it's been a little over a year since it was on announce their hunt for hq2 so Alaska chelation is that we should be hearing about that here in the fourth quarter.
Amazon said it would take about a year now it's firm you this involves a lot of details and local governments and stuff so I.
Adders reversing a ramp up of speculation around hq2 stuff I'm kind of interested.
You know there's a lot going on in Chicago not pick on Chicago's great City.
For all the other stuff they've done the kind of event Seattle York and Chicago but now they're just really pouring it on in Chicago I wonder if that so I could slide indication that maybe Chicago's kind of pulling into one of the top.
Possible locations for hq2.

[33:50] Yeah it would be interesting with my wife and I were driving around town today and there's a ton of trains building conda commented like do the the condo developers know something about Amazon that we don't know.
That. Why do you think Chicago is a interesting market for Amazon and you know it's a good test Market because it is it does.
I have a broad representative demographic
I personally would be a little surprised if it's here but that being said I suspect we're all going to know pretty soon.

[34:28] And then you use it surfaced at nursing little spot between Amazon and eBay.

[34:34] Oh yeah
so you may actually filed a lawsuit against Amazon and it related to Amazon potentially trying to steal top Marketplace Sellers from eBay and the reason I was a lawsuit is
the allegation is that the way Amazon was doing this is they
very systematically infiltrated a private
chat board for these eBay sellers and created a bunch of fake personas and you know what we're reaching out in Contin privately contacting sellers,
through like a pretty sophisticated alleged hacking of this this site eBay communication platform and
you like it it seems like they have a fair amount of evidence it is true it's a little surprising to me that there's someone in Amazon's position would do,
you know I would certainly presume that wasn't a corporate directed to do this but that you know someone had enough autonomy
to do this and can put off of that scale it would be interesting so I don't know what the real story is there but it's going to be fun to watch the lawsuit play out as a an interested Observer.

[35:55] Cool so that that kind of wraps up our Amazon part of the show and then we had a lot of listeners that were sad that we we took a little break there so apologies for that and then two other topics that it looks really wanting this hit on IR Sears
and then this really big change to the u p u which is squarely in your.

[36:18] Your wheelhouse Jason saw the Sears side there was kind of two buckets of questions we got from listeners one was really you know some folks selling on the Sears Marketplace or are you in this would apply a guest to vendors
yo what what should I do to Sears in her chapter 11 bankruptcy
what percentage of the time companies come out of bankruptcy other times they don't and when they don't they're they leave creditors sitting there kind of holding the bag and a lot of times adders
even a Marketplace seller would be considered under their left holding the bag
and then the other thing so I'll tackle that one in the other one Jason was over all kind of Redan what's this really mean for retail
my guidance would be
you know it's all a risk tolerance question and Anna scale question so if you're you know if
if you did have a speed bump and you lost you know usually is inside of trailing 30-day payment type cycle
skiers of material enough that you did lose 30 days of that cash because of a bankruptcy if that is you know pretty.

[37:32] Material to your business to be getting packs it out of 10 percentage I would start trimming my sales for selling on Sears and reduced to a tryst September set
yes it was I think that's the prudent thing from a risk management perspective when a company goes into bankruptcy to start limiting your risk,
now if you're someone that that is super risk intolerant and
it is going to bother you make me time to phase out that Marketplace because and and see what happens with the chapter 11 you can always come back and it when the risk is diminished so I would kind of you know.
Figure out your risk tolerance a spectrum of hey I go bungee jumping off Bridges as a super sweet.
Each risk for breakfast all the way to I don't own stocks I keep cash under my mattress and level and then apply that to to your.
Your strategy for selling on Sears and also put it through a filter of materiality is is this more than 10% of your business or not.

[38:38] Yeah that seems like totally Sound Advice I can't believe you you gave out my mattress strategy online though.

[38:47] Yeah they will talk about inflation some other time.

[38:51] Okay.

[38:53] It's actually.

[38:55] You know every time
one of these is a significant retailer goes under there's always this question like who's going to benefit from them going under or what what's the impact going to be on the rest of retail you know Sears is still like a 10 billion dollar a year retailer in so
that you know it today.
Assuming they don't emerge from the realreal organization and and retain a significant portion of their.
There are 10 million dollar Revenue run rate a bunch of other retailers are going to benefit.

[39:31] The thing I like to point out is Sears has already donated most of its market share to the rest of the market so you know.
There there was a time when they were 40 billion dollar retailer and they've been slowly a roading since 2006 and they probably have donated.
Over a hundred million a billion dollars in in share to other retailers.
Over these last 12 years or so and so you know the the bulk of.

[40:03] The benefit of them going out of business like has already paid off two other retailers.
And you know there's a lot of analysis that goes in a who's going to benefit most from these stores closing and you know who has favorable,
merchandising categories that are similar to Sears who has similar geography to Sears to benefit from the.
The specific store closures.
But in general I think if you look at the macro Trends I I sort of have this premise that were really seeing a bifurcation of retail and where were essentially seeing.
A few huge aggregators that focus on selling every product that's available in doing so at a really low price and super efficiently.
And if that sounds familiar to you in North America and that's because I just described Amazon.
There would be a good argument that Walmart is also one of those aggregators that that's going to continue to do well and in the future we might have a duopoly if he's too big.
Big aggregators and then everyone else is in a really focused on selling curated assortments to specific.
Target audiences and really selling exclusive products that you can't get from the big aggregators in so those big aggregators are.
In the best position to benefit when.

[41:24] You know someone else that used to win based on assortment and scale goes away so like obviously Amazon Walmart or.
Going to take a significant percent of that share that Sears losses in Sears specific case because of a big portion of the revenue is soft goods at a low price point poles is particularly well positioned to.
To get a nice benefit from the Sears stores going away and because appliances what a big chunk.
Of Sears Revenue Best Buy is also in a position to get.
A nice lift from the the the Sears market share lost so I think those are the retailers.
Will see benefit the most but you know.
At this point we're not losing the big one of the biggest retailers in America we're losing eyeshadow up there once was one of the biggest retards in North America so I don't think this is going to be
a title change in the Retail Landscape by any means I think you know it's more sad because of.
The history of Sears and what a dominant position they want had and how important they were to the evolution of retail in North America and frankly in many ways how important they were to the actual development of North America.

[42:41] Anderson so you can take off the mattress all the money from of your mattress and put it. It sounds like.

[42:48] That probably would be far from the worst investment I ever made.

[42:53] What will save that story for a future ship so that's that's good perspective now tell us about this whole Universal Postal Union treaty and what's going on.

[43:07] So this is a very little known thing that suddenly is getting a lot of ink so
you know back in 1874 at the treaties burn the world establish this thing called the universal Postal Union later got rolled into the to be sort of a subsidiary of the United Nations and then the idea of this poster 3D was
that every country you would agree to uniform rates for postal delivery so when you're
in France and you want to mail something to Germany you could know in advance what the cost would be to mail that and the cost ought to be,
the same for mailing between every country and each because that mail requires the,
cooperation of at least two Postal Services the one that picked up the package from you and hands it to that that foreign country and then that terminal country that the country that gets it and has to deliver it.

[44:11] They ate their handling of that package the treaty
agreed on how those two postal entities would share the the rates for that shipment and they agreed that that the international shipments would get equal trip treatment with domestic shipment so if the.
Is the terminating country you know couldn't for example deliver International Post much slower or less reliably or with West tracking are these kinds of things.

[44:44] And so it sort of made it very easy and possible for 4 people all over the world to mail things to each other and know in advance how how much it was going to cost and have
pretty good confidence that it was going to get delivered and then overtime this treaty added some other useful things they added some standards like a big stamp should be they added electronic data interchange so that the the
Post Oak interchanges could be more efficient and they added some you know things to catch fraud and crime and and share databases and things like that so so we've all had benefited for a long time from the Disposable 3D
it's got a hundred and ninety-three member countries in it now.

[45:26] So if I feel like that's that's good for the world it's super important in a lot of e-commerce.
Pretty good cross-border e-commerce still gets delivered via the post office so there's a lot of artists that make beautiful art here in the US and they sell it to people in Europe in the primary way they deliver that is.
They mail it via post a post so the one sort of real challenge is,
did there was a clause built into this postal treaty that essentially said developing nations,
would get charged less terminal fees.
And so what that essentially said is more developing poor or countries would not have to pay as much
to have their their post delivered by richer countries and so if you're in one of these more developed countries
you are obliged to accept packages at a lower cost from a developing country and if you lost money delivering that the way you would have to make up that money is by charging the people in your home Market.
More for postage and like there's probably a good argument that that.

[46:43] That mechanism for developing countries was probably fair and had some benefits and made it easier for more countries to participate in the treaty, one of those countries that was flagged as a developing country was China.
And the treaty is super slow and it takes a long time to change
like I think there's not a good argument that China should still be considered a developing economy for purposes of this treaty but but they were and so what that essentially meant is
that a seller in China could sell something on Amazon to it to a buyer in the US and they could very cost-effectively,
male that that good via
post and frankly it was much cheaper to send something from Shanghai to San Francisco then it was to send something from Chicago to San Francisco and ironically that that seller in Chicago selling the San Francisco was
having to pay a higher postal rate to subsidize that cheap delivery from that Chinese seller so treated this really unfair situation where
Chinese sellers had a much lower cost of postal
delivery for cross-border trade then did for example American companies and so a lot of people felt that was unfair and so now the Trump Administration is threatening to pull out of the treaty,
because of that that fundamental unfairness which frankly totally agree is unfair the problem is.

[48:13] If we do in fact pull out of the treaty.
What that also means is that all those sellers in the US that want to ship via post anywhere else in the world can only do it if the United States negotiates a individual treaty with a country you want to ship your goods to sew.

[48:30] That that potentially would mean we need a hundred and ninety-three postal trees that we have to negotiate one and one with each of these countries,
many of those countries we don't have an ambassador with right now so I guess it would be a big Challenge and so while I think pulling out of the upu fixes this this.
Fairness imbalance with China
it's going to create a bunch of new headaches for people in the US that do cross-border trade and so what you know frankly the best out come here and what what I think a lot of his hope is the case is Milli by threatening to pull out of the upu we could put.
Pressure on the the governing bodies of the upu to sort of fix this this China Gap
to keep us in the treaty and so hopefully this is just some sabre-rattling it causes them to rethink the developing nation clause and we stay in the treaty but if we do pull out that'll be you no good news for some people that are competing with China but it'll be bad news for a bunch of other US base sellers.

[49:32] One of the companies that seems potentially most impacted is wish so
Bocas wishes Marketplace are Chinese sellers Supervalu oriented so they're not using FedEx or anything like that
they are using the postal system and the wish founder was actually kind of saying to you earlier point about it is kind of ironic that.
By raising the postal rates it actually kind of helps Amazon versus other retailers that this is another interesting kind of example actually oddly benefit Amazon
because you know now there won't be the goods from wish that you're competing with
Amazon isn't the middle sister where they bring products are from China on boats called Dragon Boat so it'll have to get a lot of their goods they skirt this this
this just don't understand how that works correctly.

[50:25] Yeah. You're exactly right and this is again the biggest sellers I actually have more options right and so even
and I don't know how true this actually is Betty wish claims that hey this isn't going to be you know to join material to us because we are selling enough stuff from China to the US
that we can be a cost-effective freight forwarder so we can put all those small
packages on our on boats bring containers over here and then dump them in the US Postal System to be delivered domestically and not have international right and because we're a big seller we have enough volume to aggregate to do that
where as you know smaller sellers wouldn't wouldn't have that option so remains to be seen whether which will be able to
follow through on that if we pull out of the upu treaty but like certainly it's your point Amazon.

[51:16] Already doing that and there was a I think Jason Delray did an interview with the CEO of wish and he had a funny comment like when the
the Diplomat talk about pulling out of the UVU one of the reasons they say it is it's totally unfair the US Post Office is losing three hundred million dollars on.
On postage as a result of this deal and the wish CEO offered to pay it
and obviously like that's not the the total cost that's lost from from this this imbalance but it I thought it was a funny snide remark.

[51:57] Hearing you describe it almost could be an eBay proxy on eBay benefits from a lot of this stuff too so it'll be interesting to watch that and then in the world that talk a lot about ePacket do you know what that is and if it's a fact about us.

[52:12] Yep like so that is a specific postal product and it
if I'm remembering right it's indexed to the upu rates but it's not actually governed by the upu rate so it would be
possible for us to change the ePacket rates without pulling out of upu but it would require the US Post Office to change
some of their their pricing policies and I think that might require a vote of Congress if I'm if I'm not mistaken so it's a
a slightly special case but it basically is indexed to the rest of this problem.
I'm so it's all it's all going to be interesting to watch like I never thought I would get a chance to talk so much about the nuances of international postage systems.
I think my my father-in-law the stamp collector would really enjoy it.

[53:09] And that's going to be a great place to wrap it because it's happen again we've used up all our a lot of time as always
if we got anything wrong or are you have further questions or want to discuss anything from Today Show would love it if you jump on Facebook and leave us a comment will try to reply right away as always if you benefited from the show
now would be a great time to jump over to iTunes and give us that 5-star review
if you hate it today show Scott's a personal cell phone number will be in the show note so you can give him a call and let him know.

[53:44] Absolutely look forward to hearing from everybody thanks for joining us everyone have a great week.

[53:49] And until next time happy commercing.

Oct 3, 2018

EP148- Amazon 4-Star Retail Concept Store 

Amazon 4-Star, Amazon’s latest brick and mortar retail concept, opened in the SOHO neighborhood of New York City on Thursday, September 27th. The premise that its assortment of merchandise available in the store is rated 4-star or higher, curated by customers, a top seller or is new and trending on Amazon.  Jason was on-hand for the grand opening and gives a first-hand account.   "What Competitors Are Missing About Amazon's New 4-Star Retail Concept" from Forbes.

  • Overview of Amazons brick and mortar formats to date
  • Description of the Amazon 4-Star Store
  • Digital Fact Tags
    • SoluM is the hardware provider 
  • Checkout Experience
  • Implications for other retailers


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

Episode 148 of the Jason & Scot show was recorded on Monday, October 1st, 2018.

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.


[0:25] Welcome to the Jason and Scott show this is episode 148 being recorded on Monday October 1st 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host,
Scot Wingo.

[0:41] Hey Jason welcome back Jason Scott shirtless nurse well it says you have a special treat for you this week we.
Jeff Bezos says you know is one of our top listeners and he knew Jason was in New York last week and he thought that would be a good time to open an exciting new store
the four-star store in Jason Our Lives always in a city on a new Amazon thing opens a reporter is going to give us a trip report today.

[1:10] Yeah I know it's super excited to talk about a 4-star I'm sad because the last show we were together so now I'm having to get used to the the separation and doing it remotely against God.

[1:23] I know I know well I'm sure we'll see each other next couple years.

[1:27] I'm looking forward to it already.

[1:29] Cool let's kick it off by so you know you and I fall asleep closely maybe not everyone else's is obsessed with the Amazon physical stores
let's kick it off once you give us an overview of the different store formats that are out there.

[1:49] Well so I think the first brick-and-mortar store than Amazon ever opened was probably the Amazon bookstore the original one in the University Center in in a suburb of Seattle.
Now I want to say there are 17 or 18 of the book stores open.
Instead of this is like the.
They do Intex sell books they also sell Amazon Hardware in the store some of the key unique concepts of the store.

[2:21] Amazon has Dynamic pricing their pricing on a line changes all the time they want to offer the same price in the store that they do online so the store has no price tag so you have to use the Amazon app and scan everything in the school or store.
To learn what the price is when you make your purchases you get in line at a traditional cash wrap but instead of paying with a credit card you're highly encouraged to use,
the Amazon mobile app to check out using your Amazon digital wallet so they have kind of a.
To my way of thinking convoluted High friction.
Checkout experience and I expect we'll talk about that more and there's a lot of speculation about the purpose of those book stores.
It it seems unlikely to me personally that that Amazon has identified the dead tree book category is a category where they desperately have to get more market share than they were getting online and so they open.
Book stores because they thought that that was the category the world needed more of my my promise has always been,
that Amazon has these really successful Hardware products like the Echo and the fire and the day recognizes that they needed a demo environment in a customer service environment for those and that the the books were kind of.
The decoration around the Amazon Echo Store if you will.

[3:50] And then what other formats are there out there.

[3:55] So a couple formats cropped up after that.
Amazon head-to-head Amazon Fresh for a while and today you want a couple of these Amazon Fresh pick up locations in Seattle so these were,
places where you can order your groceries from Amazon Fresh and instead having them delivered you could drive through almost like a bank teller.
I drive through bank to our kind of situation and they would put your groceries right in your trunk,
they're very fast service level so you can get your groceries delivered like 30 minutes after you place the order these two stores.
Open shortly before Amazon bought Whole Foods so this at one point was there.
That you know what like the tip of their Spear of their brick-and-mortar grocery strategy and then of course they,
they are upset the industry by actually buying a brick-and-mortar grocer.
So they they have of course they have the Whole Food stores is another Amazon format and they,
they made a lot of progress in digitalizing I think I just joined a new version of that were there.

[5:03] The grocery store so prior to the acquisition you could not find out what Whole Food carried in the individual store you cannot see inventory now you can shop the whole inventory of all the Whole Food store,
they've added a ton of omni-channel feature so you know Whole Foods delivers.
In many markets they have curbside pickup I would very fast service levels in in mini markets they've integrated
Amazon Prime into the Whole Foods experience so you you get discounts on product of your Prime member and you are now using,
your mobile app in your barcode to get that Prime discount when you checkout at the front Whole Food store so Whole Foods is there only one of those Concepts and then.

[5:47] Inside of many of the Whole Foods Amazon has a hardware pop-up shop and so there now 37 or 38 of these Amazon pop-up switch is a,
format you know. Dedicated to the Amazon Hardware so that's mainly Echo fire ring,
antonym of amazonbasics products and as we know that those are all expanding lines they're adding new skis used some of these pop-ups are not in Whole Food stores,
and then not included in that count Amazon has also done a shop and shop inside of a bunch of Best Buy stores that has a lot of these physical things,
so those are is far as I can remember where the main,
Amazon brick-and-mortar formats leading up to this this new Amazon 4-star store that just opened in the Soho neighborhood in in Manhattan.

[6:43] Cool so it's good over you so give us an idea of what.
What it's like when you walk in this thing
one thing I saw online a lot of people are not questioning the name for Star it's almost kind of like why not just have five-star stuff so I would love to hear your thoughts on that and then you walk in and give us a lay of the land is a
categorical or some people say it's a bunch of random stuff I would never buy just kind of all jostle together I love to hear your kind of like a little tour of what you saw there.

[7:16] Yeah they got some merchandising is currently in the eye of the beholder we haven't explained it to her listeners
the concept behind the four star store is that everything in the store has earned four stars or more on the Amazon platform,
or is a hot seller or is a new and trending products,
so it's essentially it's their taking these products that are doing really well on the Amazon e-commerce platform and putting them in a physical store format and so yeah you know.
Haven't given a lot of thought to the name the.
You know you're right like it's open a misinterpretation that it's tough that's rated for not five-star it if it really is meant to be four star and above.
In many of the products in their likely aren't 4-star because they're their new new trending products as well so so the.
The merchandise in the store is a little broader than the name might imply it's a 4000 square foot store which of the similar footprint to the book stores,
and the physical fixturing in the store in the signage in the graphic elements are all very similar to the bookstore so if you shopped a bookstore the.
The visual merchandising in the the four-star store with feel very similar to you.

[8:42] There there's One Merchandising element that's dramatically different and we'll get to that in just a minute but the main thing that would feel different about the four star store from the book stores is.

[8:54] Quite simply the merchandising assortment that is in the stores and in fact you actually can see some of the.

[9:03] The Fingerprints of this store in the earlier book stores so in the book stores.
At some of the unique gondolas they had four books is they would have a gondola just for books that were rated 4.8 stars or above,
at the time that was a novel concept that that you know that they had a merchandising display unit dedicated to well-reviewed products and then they also had a gondola for stuff that was rated 4.6 stars and above,
my New Yorkers for the store in New York so they had Us store that had you know that was very sensitive to.
Well reviewed products from other people in the same Market is you and so in a way you can almost think of this door as taking those couple of innovative displays out of the book stores and turning them into a,
a whole brick and mortar store there is very very clear wayfinding so the.
You like that the signs for the categories of products are pretty clear and in so you both have sort of tables that have things like,
new and trending products you would we have a category for like,
products at 10 to get purchased together you have a table for things that are hot in Manhattan you have those kinds of.
Of curated assortments based on on on ratings and reviews and user-generated content.

[10:30] On tables in the middle of the store in the most of the walls of the store are little micro categories so pet products or travel products or kids products,
and then there's a couple big category so they're their there are tables that are dedicated and labeled as Amazon product separately there's a home automation section,
there's a fire section,
there's a big section in the middle of the store that I'm pretty sure is a vendor funded display that's for the the the iRobot.

[11:10] Artificial intelligence vacuum cleaners.
And so you have a bunch of these categories and I think it's toy fair to the unit people that walk in and say hey it feels a little hodge-podge G disorienting.
To me what that is is you got a.
A category of pet products sitting next to a category of travel products right and you you know there's there's not necessarily.
In an obvious association between those two categories and yet they're their merchandise adjacent lie in the store.
I'm not sure if I mentioned it earlier but they're even tables for things like amazonbasics cookware for exam.
So that the assortment can feel a little.

[11:58] Random the or or you know there's some objects of positions of the assortment but in a way that's one of the things that's interesting to me about the store,
you know ink increasingly we talk about stores like Amazon's website as being the.

[12:15] You know the absolute winner at things like a sort mint and convenience and priced and so we talk a lot about you know the best play for a lot of other retailers is to be at the other end of that spectrum mbn that sort of.
Accuration in Discovery into the Spectrum where you you know you you could be surprised and delighted to discover some new product that you didn't even know you wanted,
did the retailer help you find and none of the previous Amazon Concepts were really very good at Discovery and certainly Amazon's website you know has not been successful at Discovery,
yeah they've done the number of Pilots including one we talked about last week the the Amazon Scout experience to try to get better Discovery but that's always,
been sort of a a gap for Amazon and it's it's been one of the.
The plays you seen a lot of other retailers do to try to compete against Amazon and so now you have this new store format that I do think,
has a strong element of surprise and Delight but if you went in there to shop for Amazon products if you went in there to see the new echo or to see the the the microwave oven which side note it's not in the store yet.

[13:28] You you would discover some other products that are highly rated that a bunch of people are buying on Amazon that you probably didn't know existed and said there is that kind of fun element of surprise and because it's a broad assortment
a lot of people point it out like you know it's a pretty it's a particularly good assortment if for example your shopping for a gift for someone because there's
a wide variety of different things for people with different tastes.

[13:54] Coop's what,
we'll see where this was the biggest swell a lot of people in New York love that store called story that you know,
Angels kind of every quarter that has a theme of the tend to be seasonal like around. X day it'll be love and home
Macy's acquired that I believe and then that's a store that's like really just focused on Discovery and then we've had beta on the show where is really around device Discovery at what time is the Apple Store you can have that time.
How would you kind of rate this and that Spectre mode stores oriented towards discovery.

[14:37] So it is much closer to the,
the sort of beta end of the Spectrum in in fact I would in some ways that share some common strengths and challenges with the beta format right so
you know like Bay that you're your apps to discover some new stuff when you walk in that store that you didn't know existed and that's great but will I get beta,
there probably aren't a lot of customers that have a particular product in mind.
And then are going to go to the beta store to fulfill that particular product right so you know to me one of the challenges with the beta format is it's very strong if you just want to discover something you didn't know existed but it's it doesn't you know,
do particularly well as a destination for products I already know I need.

[15:25] Into what's interesting about this Amazon 4-star is it does have a little bit of both like a view
new that you're all your friends were talking about Echo and you finally want to jump in and buy an echo or do you already have an echo and you want to learn about more home automation products that you can integrate with your Echo,
this store is going to be your destination they have the broadest assortment they have in staff
Nina in-store people that are trained to teach you they're doing in-store demos and things like that and so it is your demo for Amazon products and then you're going to have that beta style Discovery experience,
around the Amazon products so in that way it's a little bit better of a blend you did you mention story Into Me
story also is a very much a discovery experience but it's a much more,
carefully curated Discovery experience so.

[16:20] Everything in story is going to fit into a single theme in that theme is going to change every couple of months or every story is they call it right so you know if it's a,
a local food base theme all the products in the store are going to be related to local food and how to prepare it and shop for it and buy it,
until there is a cohesive theme and you know the the cohesive team in beta is sort of tech gadgets if you will,
then you know that there really isn't as much of a cohesive theme in this Amazon store it's more of the decoration bye bye rating,
plus all the Amazon products but I do think.

[17:03] This is going to end up being a destination store that's a mission for people that decide they want to buy Amazon products if you want to see that microwave oven before you buy one,
I think this door is clearly going to be your destination if you if you live in the New York area and then it is going to be.
Another store in a popular shopping district in SoHo that people just want to go into brass and see what's new in hip and they're going to expect to see fun new stuff every time they walk in the store and compare that for example to the,
the world's most successful retail concept Apple,
like I would argue that there's very little fun surprise when you walk into an Apple Store I mean you know when they first want to take care of a lot of third-party product but as they have launched more of their own products they really.
Apple is really narrow the assortment to just stuff they sell and when they you know bought beats they said they didn't want to sell other people's headphones very much and so,
in general all the products in that Apple Store are Apple products and they change at best once a year and so you're really surprised when you walk into an Apple store that you're going to be able to walk into this Amazon store
you know it certainly every couple of weeks and in discover some new stuff so that's an interesting play for Amazon.

[18:18] Go see you're getting you got the vibe they're going to be changing this products pretty frequently like where they like running around like oh my God this is now below for stars and here's the new thing in this is hot and turned in her.

[18:29] Yeah I definitely don't get the sense that is going to be real time but I think they are committed to two very frequent product refreshes and that certainly is one of the things wall,
will want to watch.

[18:41] The I hinted up front that there's that the merchandising mostly feels exactly like the Amazon bookstore but there is one dramatic difference between,
the book stores in this door and that is that this door.
Uses digital displays are what we call Electronic shelf labels or sometimes they're called electronic fact tags.
In front of every product in the store so there's a little e ink display in front of every product and what that lets the the Amazon 4-star,
store do is it let that store show that Dynamic price in at that price changes throughout the day,
the prices updated on that on that ticket in real time and of course in addition to having a price on that ticket
they also show the average star rating and the number of reviews that every product has got it has and so since all of those things are kind of real time and can be changing on the website all the time,
it makes sense that they went to a digital display in the store so that you get that updated information so it's not so much,
but they're changing products out every single day but at the very least they're updating all that information about the products every single you know our,
and then interchanging out the products fairly frequently.

[20:02] Is it you know when you say this I imagine like a little candle kind of cut to fit on the Shelf is like is it an Amazon product they've made for this or is it a third party.

[20:14] It is not it's a third-party product so there's a.
Vibrant competition out there for these fat tags some other retailers use them Whole Foods interesting enough was an early adopter they use them in some categories like the beer category.
Kohl's has deployed them pretty much everywhere in New York City there's a very popular photography store.
That's a e-commerce site to the rest of the country which is called B&H Photo and they use all these fact tags the in many states,
if the price of the cash register is different than the price on the Shelf the Retard gets fined and so one of the reasons that a retailer might want these electronic fact tags is to guarantee that the cash register price is always.
To the shelves into a lot of retailers particular in Europe have deployed this technology just to protect themselves from that kind of Regulation,
I'm in consumer protection laws but increasingly we're seeing that you can also use these digital fact tags to give customers a better experience and if you're someone that's going to change prices frequently.
Frank Zappa Warren Buffett owns a store in Nebraska called that are in Omaha, Nebraska Furniture Mart.

[21:27] They they sell a it's a huge Furniture campus but they have a 50000 square foot consumer electronics store that's kind of like a Best Buy in it,
and that store spreads all their competitors prices every morning and they update the price on everything in the store to be lower than any competitor and they do that using these digital fact tag,
so we're trying to see him,
yeah it is a display technology that's very similar to the Kindle and I did do a little spelunking when I was in the store and and their particular solution comes from this this Bender called,
so um I'll put a link to to their products in the in the show notes but it's s o l u -
And you know typically all these vendors make a wide variety of sizes they have some color capabilities so you can add Getty ink in like three colors,
but mostly what Amazon's using our bar kind of the least expensive products in the in the line so they're the two smallest format tags than Amazon's using and they're just black and white.
These things are run on a battery they clip to a shelf just like a paper sign would.

[22:38] Store updates prices on a server that talks to all of them you use a mobile phone with Wi-Fi to update pricing,
and then there's a zigbee server which is a flavor Bluetooth that used to actually update all the all the individuals back tags in the store.

[22:58] White so I have been in an Amazon bookstore and their you kind of used app why do you think they're using this instead of the app based approach.

[23:07] Two reasons number one like I would if you actually go back to our bookstore first first show I suggested back then that I was surprised Amazon wasn't using electronic fat tags in the bookstore because
I felt like forcing customers to use the app is a.
High friction experienced some customers will do it some won't but it's slower and you know customers shot the store they don't have the app and so,
I was kind of surprised they didn't have fat tag Justice all the pricing problem but now in this poor starving store they've doubled the problem because they had that they have the dynamic pricing problem but now they have the problem of showing you what the ratings and reviews are
like that's the whole premise of the store and so they can't get that social proof available for every product than that's you know,
it's hard to deliver on the on the promise of the store and so I think they needed the fact tag to have the real time updates of the of the the star rating,
and the dynamic pricing and so you know I think that that's kind of cool I'll bet you we don't see any new book stores open that don't have these,
these these tags in them and I'll bet you if if Amazon does deploy this this format a little more broadly that it's another nudge to a lot of other retailers because once you,
have the ability to see the star rating in the store for a product.

[24:31] You really want that everywhere and you you certainly want that at Target and Walmart and you know once once the expectations are raised that you can easily get that like I think a lot of other retailers are going to have to.
Have to match that capability and are least I certainly hope so.

[24:46] Cold out how often do these things update like when you're in the store did you see them updating or you think it's like that once a day thing or.

[24:52] So I didn't I didn't see any updating I didn't have the patience to stay the same
United change a review and see it see a change I pray I should have done that in hindsight
in my mind I I know if I'm working with these tags that it's totally viable to change the price multiple times a day so I just imagine that they're probably refreshing the tags every hour or every,
couple hours in the stores you don't want to constantly refresh him cuz they are running on a battery and so for example if you.
If you updated every 10 minutes or something that you know that the batteries would would last considerably last time.
These tags actually don't use any power when they're not being updated so one of the benefits of the E tank is it needs electricity to change but once it changes.
It doesn't take any power to two.
Keep its display State and so then when there's igby goes to sleep you basically have a tag that's that's electric but isn't isn't drying any power from the battery which is pretty clever.

[25:54] I kind of believe V Amazon 6S for mandevilla themselves cuz they've got all the underlying technology and.

[25:59] I'll be totally honest.
Yeah I'm familiar with the number of these tag manufacturers I was not familiar with this particular manufacturer and I was somewhat surprised when I you know
climbed underneath that is playing was looking at the back of these things to see the day they were a third-party product I tend to agree with you I can feels like something,
you think Amazon would have engineered and then maybe potentially sold the other people.

[26:26] Did you get arrested.

[26:28] I did not get arrested.

[26:31] Did you get caution to the work of the lake sir sir get down from that ladder.

[26:36] I feel like I have this whole skillset about being really slick and smooth and retail stores and and you ain't getting a little another Eyes Photography and stuff and it's mostly wasted skill now because in the old days,
they tried to catch you and they really frown on that like now like every single person in the store is taking pictures for Instagram and what not and so.
If you like being stealthy is a is a valued skill in the stores
I will say One Missed opportunity I was really happy to see the digital fact tags he missed opportunity is what you can also do on those digital fat tags is you can throw an NFC chip,
inside of the fact tag.
In effect this manufacturer even offers that as an option and so is we we covered last week the newest Apple products can now read NFC chips with in the background and so what that would mean is.

[27:33] You shop this door you see the price you see the number of ratings and reviews and you could take any Android or any brand new Apple phone and just wave it in front of the price tag and it could open the Amazon for the detail page and let you actually read the reviews for example
and so to me that would have been a nice link,
to the customers mobile device for the people that want to do a deeper dive or at the very least Amazon owns their own 2D barcode technology called smile codes you would have expected,
there to be a smile code you can scan for each of these products in at least so far they they have not gone that way so maybe that will be there next door concept is though,
the lad smile codes in the NFC chips to the to the digital Factory.

[28:17] Someone told me on the tag anyone can shop in there but it will actually highlight if there's a prime discount so there's certain things that were either Prime exclusives our heads exclusive Prime discounts did you see that.

[28:29] Yeah I did not notice any Prime exclusive but I did notice product that had a prime discount and so then the tag use this kind of is was format and said they say like with price.
You know 1999 Prime price 1599 or whatever.
So you could see that that you know and they they this store like I got you know I didn't count how many skus are in the store but like it it,
it would not Shock me if 40 or 50% of all the shoes in the store are Amazon products between Echoes Kindles fires.
Amazonbasics you could easily imagine that have two products in the store Amazon Prada.

[29:15] Sagittarius

[29:17] You you may yeah usually I have a muted for podcast but because we did a special episode tonight I decided to leave her on and she's punishing me for it.

[29:25] What else can you highlight about about the storks prankster.

[29:34] So the instapot was prominently featured I know that's a super product Everyone likes to talk about the.
They did have some digital displays for some of the Amazon product so.
Particularly for like the the ring doorbell displays they they had a button you can push that was built into the table and they are like a 20-inch monitor built into the table and they played a video sort of.
A demonstrating the the the ring value proposition to customers and said that you know these were these richer interactive tables most of the Amazon products.
Out and available for customers to try and use and then tried to set up good demo environment for all these products.
This is all live merchandise so all the Amazon or non Amazon products if you wanted to buy something you you grabbed it on the Shelf there's an inventory on the shelf and you will you walk to the cash register and and buy it yourself.

[30:37] You know so in general I walked in that store and I might go out you know this is a more fun store to shop then any of the previous Amazon Concepts I've been in pain so I thought that was really favorable and I actually think.
The idea of merchandising the store based on customer social proof is really smart and I think it's very smart for two reasons.
Does ratings and reviews it become like the most persuasive attribute in selling stuff online and and you know there's a lot of studies that each other like 2nd or 3rd behind price as the,
the primary attribute to customers care about Amanda cases they're more important attribute than the brand name.
Anythink gosh all those ratings reviews are ubiquitous available online they're not available in any brick-and-mortar format right and so who's the first retailer to figure out how to leverage ratings and reviews in a brick-and-mortar store.

[31:30] What a surprise it's Amazon I think that's really smart I think a bunch of other retailers are going to.
Have to move in that direction and we've also talked on the show a lot about this trend of moving away from.
Sort of intuition bass merchandising to data-driven merchandising right in historically,
you know if you were opening a store that was going to cater to gift-buying you'd hire some Merchant and they would you know be responsible before deciding what Pool Products They Carried and they would use their own intuition,
and if they did go to,
new product trade shows and they look at stuff and they say I want that bad in that and I don't want that bad in that and it would be entirely based on their own previous experience and intuition,
I'm increasingly we see some of the really successful online retailers like Amazon and Stitch fix.

[32:20] Replacing those merchants and their intuition with data scientists and their evidence and so you know now you got an example of a brick-and-mortar store that's largely curated.
Based on data in this case review data rather than the intuition of a merchant and so you know again,
traditional retailers probably look at that and look down their nose at it but I think it's the direction that retail is going in and it's not not wholly surprising that that Amazon is.