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

Join hosts Jason “Retailgeek” Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Founder and Executive Chairman of Channel Advisor, as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.
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Now displaying: October, 2019
Oct 31, 2019

EP195 - Coca-Cola VP of Shopper Marketing April Carlisle

April Carlisle, VP of Shopper Marketing National Retail Sales, The Coca-Cola Company. In this broad-ranging interview, we discuss Coca-Cola's digital footprint and strategy, digital shopper marketing, the evolution of e-commerce for consumables and grocery, and the future of shopper marketing.

April was inducted into the P2PI’s 26th Hall of Fame this year.

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

Episode 195 of the Jason & Scot show was recorded on Monday, September 16th, 2019, live from the Grocery Shop trade show in Las Vegas, NV.

http://jasonandscot.com

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

Automated Transcription of the show

Transcript


Jason:
[0:24] Welcome to the Jason and Scott show this episode is being recorded live from grocery shop trade show in Las Vegas on Monday September 15th 2019,
I'm your host Jason retailgeek Goldberg and unfortunately Scott was unable to join us so you're getting twice the Jason for half the cost of that's a value in any case
but today we have a special value because we replace Scott with a small the far smarter
April Carlyle who's the VP of Shopper marketing at the well let me get the title right,
because Scott teases me that I have a long grandiose title and I feel like yours has many words is mine.

April:
[1:04] Is it actually longer than yours.

Jason:
[1:05] I think it might be so April is VP Shopper marketing national retail sales at Coca-Cola North America.

April:
[1:13] Yes you got it right.

Jason:
[1:14] Exactly and so I'm hoping you get paid by the work.

April:
[1:17] Do I get paid by the number of Cokes that I helped sell.

Jason:
[1:21] One of those could be pretty lucrative.
I liked it so there's probably no one listening to this podcast that's not familiar with the Coca-Cola Company.
And yet I have a feeling a lot of listeners don't fully appreciate the full scope of coke so can you give us the elevator pitch that we might not know about your brand.

April:
[1:42] For sure so our new positioning is beverages for life,
so yes we have amazing sparkling brands that you know and have known for a hundred thirty years so Coca-Cola.
Diet Coke Sprite Fanta Etc but we also have an amazing water portfolio with smart water and Topo Chico,
and vitamin water and Dasani and we are in the juice business with Minute Maid where in the TV asnis with Gold Peak and peace tea wear in value-added Dairy with.
Fairlife so we have pretty much any non-alcoholic beverage I need you may have we probably have a brand that either is in our full portfolio or we have lots of friends that are partnering with to see how they're going to do in the future.

Jason:
[2:27] Until I know this from personal experience when you come to visit you you can cater to all needs everyone is well hydrated at every meeting.

April:
[2:35] That is true we have free beverage vending machines all over the building and Tackle even have an app
the tells you which particular excuse are in each vending machines you can go find the beverage that's right for you but having said all that
you know most people have eight glasses of Beverage a day and we're only capturing one of the eight so that's huge upside opportunity and we're constantly looking for how can we meet more of our consumers needs.

Jason:
[3:00] That it's great to have a broad time to approach and it kind of helps insulate you from antitrust issues I like that.
Comes up a lot with Amazon these days so we were teasing in the opening about the title what the heck does a VP of Shopper marketing do at Coke.

April:
[3:18] So what are the basics so if you aren't familiar with the world of Shopper marketing it's a world that I've actually helped Pioneer back in my days at
Procter & Gamble but now is a very well-established field of marketing and what difference
differentiate Shopper marketing versus traditional marketing is it's all marketing through the lens of a retailer,
so how can we build brand equity for Our Brands and the retailers Brands and assets at the same time so that is the purview of my work is leading Shopper marketing for North America,
for the Coca-Cola company so with that comes I have a team of 50 people and they're all based predominantly outside of Atlanta where our headquarters are,
and they're based where our customers are so I have a team in Bentonville working with Walmart at team in Minneapolis working with Target,
and their day-in-day-out job is to take our
programming and are opportunities with Our Brands looking at what the opportunities are to drive traffic and sales and category with our retail customers and then how do we jointly develop marketing programs together,
but we sit within sales which is very important because we are serving as a multi-functional resource to build the overall sales of the team.

Jason:
[4:30] And is it fair to say that unlike some other marketing discipline and Shopper marketing sits pretty well in the funnel so your success criteria is usually.
Pretty close to sales is that or am I you're you're giving me a look like I'm wrong which is totally cool that's our listeners listen to the show mainly because I'm wrong.

April:
[4:49] But Jason you're probably rarely wrong but there's always a nuanced and so yes we are lower in The Funnel of the way I like to think about it is you know are predominantly are traditional media is to help you,
to think about considering Brands and we think about in Shopper marketing is actually helping you choose which brand is right for you,
what I would tell you though is with the onset of our retailers are now developing and owning their own media platforms they're asking us to actually do traditional what we would consider upper funnel consideration work,
through their owned properties as well as consideration which too often is a little bit lower in the funnel.

Jason:
[5:31] Okay that's fair enough
when they are between your mind when a wholesale partner asks you to partner on on top of funnel activation because that's partnering with a retailer that still Shopper marketing even though it might be.
Out of home or something like that.

April:
[5:49] Not necessarily so you know our biggest customers such as Wal-Mart excetera their now developing their owns programmatic media-buying and and it's you're buying an audience.
So they're delivering an audience segments that maybe maybe right for your brand and so that's considered you know top of the funnel.

Jason:
[6:08] Yeah fair enough I just met my simple mind I'm picturing like any of my own defense like when I see a coke at during NASCAR
it's reminding me that I'm thirsty but most of the Sharp Shopper marketing activations there's are hitting someone when there's already some higher buying intent.

April:
[6:30] I'll give it to you I guess.

Jason:
[6:31] I appreciate it I'll
I'll take half credit you are very credible in the space so I don't want to let you know I'm not going to argue with you and to prove that you alluded a little bit to your Procter & Gamble experience despite your incredible use you you have a storied career in The Shopper marketing space
and listeners always like to get the kind of picture of how you came to this world can you give us your back down a little bit.

April:
[6:53] For sure so I would say I'm a Pioneer in the field of Shopper marketing one day I was sitting in my chair at Procter & Gamble as a sales leader who apparently had some marketing tendencies,
cuz I was developing some campaigns with my customers and P&G decided that they needed to start developing a new competency,
and what was really driving that is our retailers,
up until the head and pretty much where untargeted it was kind of anybody with a buck in their pocket is who they would go after but are the retail customers were quickly building,
marketing teams in inside Sim actually finally leveraging all the data that you know they have access to for years and years and never did anything with.
And so with that we needed to actually be able to have people who could partner with our customers marketing counterparts.
And so they said we can take people who have sales background and understand how to work with our customers are we can take someone with a marketing background or we can try to find some people that have kind of a footing,
Bible camps in so I fell into the latter category started out my first customer was Albertsons so one day I was the saleslady the next day I was The Shopper marketer.
And I figured my way out of Albertson's was figuring it out and moved on and eventually LED all of Shopper marketing for North America Canada and Puerto Rico for P&G.

[8:13] And I kind of got to a point in my career where I really in order to be a true marketer it's really important that you have agency experience and understand how the the creative process works
so I made the leap went to Leo Burnett Arc and led Global Shopper marketing for them for 5 years,
all that included working with clients and helping them build their own Shopper marketing departments as well as building the agencies capabilities.
Eventually what new business for Arc and one of my clients was Coca-Cola.
And they had been recruiting me for quite a while to make the move to Atlanta and help them lead and it's the best job ever I didn't even realize that I had been positioning myself for this my whole career and I couldn't be happier.

Jason:
[8:57] I think that's often the case with great careers is that in retrospect that it's neat they seem totally sort of obvious and and in the moment is it it's not always as well-planned as it looks like in hindsight.

April:
[9:10] Well it's important in cpg world that you're that you feel really loyal and a part of the brand and I actually started drinking diet coke when I was 16 years old I can honestly say I've never drinking.
Never drink a Pepsi unless under total Durrett.

Jason:
[9:27] Wait what's that other band.

April:
[9:29] So anyway it just the other funny thing is when I was at Leo Burnett Arc In This Global role I actually used to bring back empty Coke cans from other countries and my daughter had cocaine can I collection.
And so when I accept the job she and she actually by the way as a shopper marketer as well so it is totally in my blood and in her blood.
And I so she actually did a post on Insta saying you know my mom finally said yes to a company that we,
probably have been the fabric of our you know my entire life so it's this is a lot of people at Coca-Cola that have a very similar story it's a very
it's an amazing brand that evokes a lot of emotions in a lot of people have a lot of some of the best memories in their life or with a Coca-Cola in hand.

Jason:
[10:14] That is awesome and I assume then that your daughter was okay moving from Chicago to Atlanta.

April:
[10:19] I actually know so she's actually saying in Chicago and she's got her own life and she's a Chef America tour at tracylocke and she's helping the the cause with some other partners and getting married next off.

Jason:
[10:32] Oh my God that's very cool and there really are only at most second-generation Chopper marketers because for your point it's not that old of a discipline so.

April:
[10:40] That is true in fact I only know of three kind of.
Second generation Shepherd marketers in the industry so it's funny when she was interviewing you know they were asking about things and she knew about FS eyes and in caps.
I mean it's a it's a world that has its own language and my phone is filled with pictures of in caps and displays and digital media and that's what she grew up with.

Jason:
[11:03] We have to get a couple of clarifying points out here so we over that is now owned by Publicis groupe my
my employer and there are a lot of people at we all think you have to go to Coconut because it was a dream job but because you were going to have to work with me.

April:
[11:18] Well let's see how do I clarify that question
it is a honor and privilege to work with someone who does a podcast about stuff that people actually in our industry rarely gets talked about so you're feeling a need in the marketplace so I'm going to give you that.

Jason:
[11:37] Well thank you for that man in your bio I think you covered a bunch of the important things one that you humbly skip,
so I live in Chicago there's a great trade Association is based in Chicago in our industry the point of purchase at.
I think it's changed that.

April:
[11:56] Sample IQ yes.

Jason:
[11:57] Thank you I'm sounded like you had a couple of iterations as the industry has evolved but they have a great hall of fame so I like to take my four-year-old to the Hall of Fame in Chicago on weekends and you have your own Wing as a Hall of Fame member.
I didn't sound like he which is pretty cool so congratulations on that.

April:
[12:18] Thank you you know it's always fun at your children are always humble you so I was on the front cover of the you know if I have to purchase magazine inside and I probably brought it home shirt with my husband and my son is 16 at the time,
and now he's like Mom or anybody any of my friends get this magazine in the mail like now he's like okay I need money.

Jason:
[12:38] I mean you could send it to him.

April:
[12:43] No I mean it is an honor to be recognized this as Hall of Fame in the industry and I think what I'm most proud of is in my time within the industry I really want to help.
Encourage new marketers to learn about this face because it is a part of the marketing mix that.
Is I would honestly say takes even more discipline than a traditional marking roll because you really have to blend the equities of the Brandon the retailer at the same time but what is required is you have to have a love for retail.
And I know any you know Supermarket or grocery South has loves retail
that's you know brick and mortar or digital and so once you introduce people to this idea then this whole new part of marketing that they didn't know exist.

Jason:
[13:36] I totally agree and that's awesome I have to say one of the things that's interesting to me in your role is that you mentioned digital a number X digital is a significant component of the role,
and the reason I said it's interesting is because like of all the categories that have been penetrated by e-commerce.
Grocery with a lot of your products old is not very highly penetrated yet I would argue it's,
it's a having its moment right now and you have a relatively who average sales price product and so there's a school of thought that like me and digital for that kind of product is much tougher than,
apparel or consumer electronics or something like that like like have you found it's hard to get people at Koch excited engaged about digital order that they jump in with both feet what's the.

April:
[14:25] So I guess we need to kind of separate digital versus e-commerce
so from a digital perspective we are all hands on deck in fact we just put a new roll and place he's actually here he spoke at the conference this morning Brian Sappington who leads our digital integration office.
And it is more about if we were talking about the kind of upper funnel or funnel you know driving consideration so
you know as we eat has as we have moved into needs dates for our consumers and how they shop it's really important we feel like we're actually filling in need that digital can help bring awareness to so,
hydration is one of the preeminent need States from a Total Wellness perspective and even from a beauty perspective,
and so if we can help Shoppers understand the value and and drinking higher pH product with smart water and that we have an antioxidant,
and the way to reach them is not it you yes we want to have a display in store but we need to reach them where they're at so they're at SoulCycle they're at.
You know they're getting a facial and in finding all those places and spaces on the digital can deliver to help them bring awareness to the solutions our products can bring to their wives.

Jason:
[15:40] That's awesome can you share any examples of like a particular digital initiative that you guys are like her proud of the coke.

April:
[15:48] Yeah so there's a couple that I'm particularly proud of so I want is with Walgreens.
So are we are identified I need with Walgreens that they had a very low traffic time and a couple of days of the week in the afternoon.
And so as we thought about the role of Our Brands and you know particularly have 20 oz Coca-Cola a cold there's no better pick up,
in the afternoon,
and so if we could drive Shoppers digitally to buy not only one but you know what a nice offer a buy-one-get-one-free on a nice cold beverage in the afternoon was great.
At the same time we had a national campaign that is very well-known which is called our share Coke program where we actually put names on labels of,
of people's names proper names and and so we were able to put all of that together and it was a share a coke,
happy hour program,
at Walgreens the Walgreens loved it because it drove traffic to their stores are Shoppers loved it because it was reminded them that they could get a quick afternoon pick up and it was an opportunity to buy a cook for themselves and then share one with a friend by finding their name.

Jason:
[16:58] That is very cool and that's feels like that require some tight integration between you guys in the retail partner like if you can share like how does the date.
Work there like is that are you primarily targeting people from a Walgreens list.

April:
[17:15] Yes so it's both,
so I we we work in conjunction with Walgreens so we can leverage their own property so we could use their social as well as.
I email so they of course have a very robust Balance Rewards program so they know their Shoppers and what they're buying and they're able to appropriately
you know where you about any IP issues but to Target them where they're most receptive the other thing is that we were also able to
look at weather and so if it was particularly hot outside so you would get an email delivered in your inbox if you are already a Walgreens balance rewards winter you know it's going to be hot out this afternoon
you know share an ice cold coke with a friend then and sure happiness.

Jason:
[18:02] That is that is very cool you kind of alluded earlier to write how important digital influencer sales are and I'm I'm assuming.
Significantly more important than actual e-commerce sales in in the beverage space at the moment and probably forever.

April:
[18:18] In certain category so Alesso and sparkling more so and you know traditional like case pack water.

Jason:
[18:23] Sure that I could totally see that I also think it's interesting that we have this conversation and Brands across a wide variety of categories but you know.
Legacy Brands traditionally primarily distribute through wholesale and now many are starting to kick off these first direct-to-consumer initiatives not necessary,
replace wholesale I really even competitive wholesale but just to do interesting things where they get to have a more direct relationship with a customer and I like so I've noticed you you guys do have a direct-to-consumer e-commerce site,
I want to talk about that but it also occurred to me.
In a way you guys have been telling direct-to-consumer longer than people realize so for example my office at Leo Burnett every floor has a Coke freestyle machine and I assume and oh by the way there's integration with my app,
and that freestyle machine so when I do my custom mix of Dasani playing and lemon lemon lime I think it is using my app.
Like you know who I am and how much of your product on consuming.

April:
[19:29] Absolutely so the freestyle machine is All Digital AI enabled and we use it the data to inform what do shoppers want what do consumers want,
so I am the main stage this morning you heard our Brian talk about our new cook orange vanilla product spend the first flavor and in many years from Coca-Cola,
and I it was derived from the fact is that was one of the number one pairing,
that consumers were using on the freestyle machine so instead of you know what traditional approach to Flavors where you know the scientist mix up some different flavor portfolios you go to a focus group and etcetera,
if this is what Shoppers already wanted and we weren't offering it to them in a bottle can Varian and now we do and it's been an instant success.

Jason:
[20:15] That's awesome and it and I feel like that's good,
I know my it's a defense necessary but you know a big trend of the moment as retailers launching their own brand targets launched a Big Brand in the grocery category today and they they've generally been super successful,
I'm with her own brand and what is the name of that scary about that is they tend to have a lot more customer intimacy they talk to the Target guest every day and they know her preference is so when they build a product,
that accessed all that data if you're appear wholesaler.
You you know you talked about the consumer but really your customers a retailer and so that it is interesting that you guys are eating this better position where you sort of had.
A direct relationship with a lot of customers for a significant. Of time so you're on a Level Playing Field with data at least.

April:
[21:03] Yeah and a little secret is that the orange vanilla gives me what's the number to most labor variant together the number one flavors mom is a surprise is coming out is this Frank.
I like farts a new Coke flavor coming soon.

Jason:
[21:20] You can eat another baby wesner's you could just tell it right now and it probably probably wouldn't.

April:
[21:25] No you'll have to invite me back.

Jason:
[21:26] I would invite you back anyway but that would that'll be another reason event and.

April:
[21:34] You didn't thank you so much it was great.

Jason:
[21:36] Oh that was a super fun.

April:
[21:38] He was awesome for all the listeners out there he did great.

Jason:
[21:40] Yeah as my wife will quickly tell you the short doses of Jason is the way to consume Json.
Usually my wife's very unimpressed with my career about her and her whole family are from Michigan
and you had Desmond Howard at this event which is a beloved figure of course stuff from Michigan and he was humble bragging about him having his own mix on the freestyle machine eat alleged,
it was a top mix everywhere in the country except the armpit of America Columbus Ohio which is a Michigan shot at Ohio State.

April:
[22:16] Speaking in Michigan are we actually have Asher Coke bottles available in the Michigan market right now so if you're go Blue fan you can actually find Coke bottles with your teams logo on it so go find.

Jason:
[22:28] Yeah I like I like all these more personalized products like I said it's exciting,
slash it's like it's a big operational challenge for you guys like all the inventory and yeah.

April:
[22:40] Personalization at scale.

Jason:
[22:42] Yeah yeah I have a feeling we're going to be seeing a lot more of that.
And that is going to be interesting that actually is kind of a good transition so I often talked about one of the potential challenges Amazon might have like they're always you know they're so much traction they're doing someone everything.
But their distribution system is really designed to like have a ton of something and get it close to the customer and be able to deliver it really efficiently and as the world goes to more personalized products and fragmented inventory.
A lot of the big investment in warehouses than Amazon's made aren't perfectly suited for like.
On demand products and highly personalized products long Preamble it wouldn't be a Jason and Scott show without talking about Amazon Scott's not here but he'd be very angry at me if I didn't bring it up you guys are on the platform.
And was that a controversial decision at all and Amazon know it was.

April:
[23:40] No
you know we we want to be wherever our customers are certainly we are a bottle or distributed Network model so that does bring some interesting implications and how do we ensure that the Reno and we have 64 different
the sink bottlers that help us it should be products throughout the country and so how do you think through a lot of those Logistics them
which you know we work on every day so it wasn't controversial I think what's interesting is that
probably some of our brands that you lease associate with Coca-Cola are probably the ones we're doing the most Innovation with on Amazon so if you look at the work that we're doing with the smart water,
I'm actually integrating with Alexa and voice activation or voice-enabled ordering we're doing quite a bit with Artie portfolio with Gold Peak tea,
I am frankly Honest Tea quite a bit as well so again some of the Brand's where Shoppers are interested in,
I really learning more about the really reason reviews are critically important those are the brands that we tend to focus on on that platform.

Jason:
[24:55] Yeah and you know that makes no sense because you like in a traditional brick-and-mortar store there is finite shelf space and you know there's,
significant advantage to incumbents and you probably more so than any other brand in the store but a lot of Challenger Brands like 10 to do better against incumbents on Amazon where there's.
Unlimited shelf space and you tennis Ellen after views of the product more than pure brand recognition,
and so it makes total sense that the the sort of things that are closer to Challenger brands in your portfolio would fit much better on that platform,
so we I mentioned at the show that we're at grocery shop you did a presentation this morning and I think the title Leading Edge marketing tactics advances in Shopper marketing data and Beyond.
Exactly once again I'm hoping you got paid by the word can you give listeners a little like recap of what would that talk was about.

April:
[25:54] Yeah so there was a we had a panel discussion so we had a Charlie Chaplin from the Hershey Company and then we also had Reesha from Albertsons,
and you know we really it was it was talking about.

[26:08] How do we think about the role of these leading-edge capabilities within Shopper marketing so the role of data the role of media mix media measurement,
so you know Richard from Albertsons was talking more about how they're building their it infrastructure and how they're thinking about
I'm their Partnerships and how they're thinking about media.

[26:28] And you know Charlie and I were were thinking through how do we we know we kind of talked talked about the you know Frenemies model right so we're at we're friends with our customers and they're very important to us and,
help us Market are Brands they help us provide a wonderful place for people to go by Iran,
I better now asking us to be their Media Partners and they're asking for significant Investments you know that weren't even on the table you know even 2 years ago,
and the reality is there aren't more money available right so it's a little bit of a shell game of Uno trying to figure out if we had five places to Market Our Brands and now we have 50 places to Market our brand,
how do you choose the places and spaces to go because if you go to small with a buy it makes an impact but we can,
you know we can't not do media with every one of our key customer so there's no better time to be in chapter Mark and you because it really it in
it in your discipline you have to be very focused on data you have to be focused on who your audience is and creating audience segments with r,
all that rich data that our customers have until I think.

[27:39] Our marketing is even better than it ever was before I mean it was kind of a layup before I mean a particularly for Coca-Cola you know what the bower Network you can go in build a big display of coke and it would sell,
and and it still does today but there's so many other intricacies that we need to consider and that's what makes it exciting and interesting everyday.

Jason:
[27:59] I totally agree I like to say that like yesterday's Playbook won't work today and to me that makes it exciting because we have to test and learn and do new things which is like your daughter's not going to be able to follow your your playbook.

April:
[28:13] That is exactly right charity isn't.

Jason:
[28:15] Yeah probably if she's listening good good job the.

April:
[28:21] Make a choice of honey.

Jason:
[28:22] Yeah you can take that in a wide variety of that's always good advice the it does feel like it's a.
There's an extra challenge like we all know how budgeting works like you if you know you know,
turn the budget Based On A variation from what you did last year and hey we had this budget last year and we got these kind of results with it and so you know we fight for resources without our corporate friends and we we get 10% more this year
in a space like ours where there's all these new spending opportunities that didn't exist it's really hard.
Like in many cases those opportunities,
clearly visible when we went through the budgeting process 12 months ago or 10 months ago is that a challenge at Coke like if you guys got two more agile to light can you.
Transfer dollars mid-year from sort of Advil marketing to these new digital Shopper marketing activities.

April:
[29:16] Yeah there's there's an acronym and Coke called Sally same as last year.

Jason:
[29:20] Yeah.

April:
[29:21] And so I don't Sally's out the door and so we're trying to really start from a Bottoms Up approach that you would do in a traditional
brand building where you start with the foundations of you know what is the always-on that we need to have for Our Brands and that can look very different from a Coca-Cola than it is to a vitamin water.
And frankly they're so you know some brands that we're spending Less on because they're selling quite well with
you know because the customer acceptance of the brand is lovely and,
you know they're purchased a quite frequently and so instead of you know what kind of balancing every brand get so much you know really doing that deep dive analysis to say which brands and which brands are we being challenged,
by our competitors and so which ones do we need to lean into and then as we look at that marketing mix are we driving trial are we driving conversion are we driving awareness and so if it's a
we have a new brand coming out which again is a secret and invite me back once it launches and I'll share it with you but it's a brand new brand
and so we're going to have to be all in the first 6 months just on awareness and so they're certain customers that can help us drive that awareness more quickly than others and so it would be part of our awareness
marketing mix.

Jason:
[30:35] So Sally unfortunately is out the door a lovely person but not a good strategy.
All right so instead of talking about last year let's talk about the future for a second
I like to say a lot that we're sort of in the first inning of this whole digital disruption and so if you were to put your futures hat on when you come back on the show 5 years from now.
Like you have some vision for how this whole practice of Shopper marketing is likely to evolve is it digital versions of all the same analog stuff we used to do or is it way different.

April:
[31:10] That actually set for the vision for our system it's 20 20 20 20 25 vision,
and those dates are based on the metrics of 20% of all grocery shopping will be click-and-collect next year in about 3 months right.
Anna by 2025 is I think when will see the Tipping Point for e-commerce to go to Italy for our category and so with that comes what are the capabilities and what are the focus areas going to be for Shopper marketing for the next five years so I have a pretty easy to find sin sin
and what I would say is it's partially driven by.
Thinking through our customers as True Media Partners and what that requires is just because they have.

[31:59] Customer media available for us to buy,
doesn't mean that we're going to buy it at a certain percentage level of our sales or Sally or anyting you know we're going to actually treat them as we would other Media Partners and there's requirements that they need to fill in order to be considered,
some of them are our meeting those requirements faster than others,
but if they want to be if they want to play in the big leagues and media than they need to and it be able to feel the same requirements at the same time.
Are Media Partners also enable certain merchandising lovers within the store so we always have to keep that in mind as well so anyway it's
and part of that is that we're actually building in customer media capabilities within our team so people who understand the media side of it as well as what those customer requirements are and
we are in the trenches every day trying to figure it out.

Jason:
[32:52] Yeah I want to pack that 11 cuz that's super interesting to me so that the first thing and you tell me again don't hesitate to tell me if you have a different perspective but early day Shopper marketing a lot of the activities particular in-store activities,
we would help fun stuff that happened in retail but that source of funding it was it was it was always sort of part of the trade agreement right like.

April:
[33:17] Mean the Twister armor green.

Jason:
[33:18] Yeah we're going to buy x amount of product from you and you're going to give me one and a half percent of that spin back as Co-op to invest in
my store circular or in-store displays and whenever it frankly the retailer would come with some new initiative.
It was really a zero-sum game for the brand right like okay will take dollars out of this other thing we were giving to you and instead put it in to this new thing and we look at that that.
Co-op fund or that merchandising accrual fund or however you treated it as kind of a cost of doing business with at retailer
but going forward it sounds like you're thinking at much more from a performance space it's like how hard is that dollar working is that the smartest place I could put that dollar or could I put that dollar,
somewhere else.

April:
[34:03] Absolutely and ensuring that we're involving our customers in those conversations so you know the some of the traditional levers the circular right,
over the past I don't know probably 8 to 10 years the cost to having your brand featured in the circular hasn't dramatically decrease but the amount of circulation.

Jason:
[34:23] The richest.

April:
[34:24] Has significantly decreased but for those that you know in our world I mean the role of the circular is not just what happens in the newspaper and also drives all these operational,
you know my priorities and what gets tomato merchandise excetera so understanding that but then going back to the customer and saying,
you know we could do a spend here but when you prefer that we like Walgreens help you drive trips during a time that is you know lower traffic for you actually doubles the basket cuz they went from buying one product to and build loyalty.

Jason:
[34:56] Yeah and I would also argue that campaign you mention was incremental to Walgreens and brought new customers into the door at dromore football.
Does appearances in that circular are probably shifting sales from another brand which is good for you but it actually doesn't help Walgreens all that much.

April:
[35:15] Yeah and if it's not growing category sales and neither of us should be pursuing it.

Jason:
[35:20] Exactly so I want to unpack Another Part Of Your Vision you kind of talked about the shift grocery pickup.
Happening very quickly and we talked a lot about it on the show I'm very bullish it feels like I'm just talked to so many customers and done so many studies in.
People just really appreciate the efficiency of ordering from soccer practice and having the the trunk get full on the way home without having to take your kids out of the car and all those things but then it sounded like you were saying and further down the road,
home delivery will well you know sort of catch on like showing your mind is.
Curbside pickup sort of an intermediate step and eventually like we'll be getting a lot of this stuff home or do you just see them both continuing to get more popular over time.

April:
[36:04] It it's the latter I see I see them both some continuing in popularity put a filter for the beverage category the are Brands play a very important role in online grocery pick-up because oftentimes their brands that are built in bulk so you're buying,
12 pack or case pack of water excetera and they actually helped build the basket to get you to your delivery or your even your you know pick up minimum.
And there's things that customers really want to stock up on and you know they just read you know pushing the 50.
So we definitely have an amazing role to play in online grocery pick-up in any Commerce will continue to grow,
the interesting thing is the role of instant consumption in a click-and-collect environment.
And so you know there's been some kind of gloom and doom studies around you know what's happening to the front end you know at stores for categories such as ours as well as candy and magazines and other things.
But we just did an internal study and if there's some surprising statistics and that is that of the people who place an online grocery pick-up order,
over 76% of them actually still make a trip into the store.
And the reasons for that are multiple why it is they forgot to put something on the list they ordered it at soccer practice and then on the way they realized I forgot to put something on the list or someone else in there,
and their home I said hey can you add this to the list.

[37:32] Another reason is some people are really still want to pick their own produce and they're not they're not confident that someone else can pick the produce better than they can,
and getting us ice cold beverage or snack for the ride home is the third reason but they still going store,
so we still need to have a presence with our traditional front end coolers
but we're adapting what those look like so instead of having a you know a large whatever for 5 foot you know
refrigerator door as you're waiting in line in the self-checkout area because typically if you're running into to get to the three items from your online grocery pick-up order that's where you're going so we've actually
design smaller coolers that fit right under the self-service register and then get drive a call to action to pick one up for the ride home.

Jason:
[38:20] Yeah it is super interesting and I heard Brian talk about that this morning in his keynote it it's interesting because other categories they got really impacted by e-commerce.
Click and collect became super important traditionally it's not curbside pickup its in-store pickup and it's well-known that,
they were International purchases that were driven by that like I think Macy's talks about her like a hundred and 20% you know run rate of the click and collect so you're you're finding another 20% spin when you have to walk through the Macy's to pick up your your Macy's purchases,
and it sounds like that sometimes happening in in the grocery category as well and you you did a good job of articulating the reasons,
I have a feeling that like again it is still the first thing we're going to figure out some other impulse experienced as for this curbside right right so at today.

[39:15] A lot of curbside is not very robust buying the Saints like there's people run around the store and picking and trying to get it out in front of the store just before you show up and.
And like frankly like there's a lot of them perfect executions but as this gets bigger retailers are really investing in a Triton so now we're starting to see like hey let's.
Have automated picking and microfilaments centers in our parking lots and it's going to be increasingly possible to very easily.
Expose you to these impulse purchases while you're picking up your groceries and.
Load them in your trunk with the pre-ordered stuff without even having to go in the store so I hope some of that impulse comes back in what you didn't talk about which I suspect you also benefit from is.
So traditionally the argument with Bo impulse purchases go way down when you order online pickup curbside for your point maybe they don't get him quite as much as I want things but they're also.
Is a higher LV people tend to order more stuff in different formats and per your point.
I didn't want to get the big case of water if I had to show up at through the store and load it in the car and do all that but if someone's doing it for me I'd rather get a full week Supply than a day's Supply and so like you.
Like that I feel like there's a yin and yang I feel like we have to work harder to keep get that unplanned purchase but in some ways there's some incremental plan for just as we capture by adding these new new amenities for customers.

April:
[40:43] Dancing to as you know one of the consistent Trends in the beverage industry is is a blurring of subcategories so you know there used to be sparkling you know soda and there used to be water and now they're sparkling water and you know all the category blurry
and so the more we can partner with our customers so I kind of have offers that allow you to kind of mix and match
I'm in a different brands I think Click and Clack actually enables at so if you
we're going to buy one variant of a product and then you know you get on multiples offer and then you're exposed to some other flavors are various that you weren't aware of Shoppers actually are very appreciative and they they actually like having
you know variety within their selection.

Jason:
[41:27] Thanks so in a divided household like mine my wife and I can each get our preferred that I like that.
So when we're coming up on time but one last question so there's also an awful lot of Coke product that sold through on Primm
so restaurants and dressers and all these things and what are the interesting things to me is
those categories are also starting to get disrupted by digital like I'm starting you know 20% of all restaurant meals are consumed at home so I'm ordering them from
doordash or GrubHub at Applebee's on ordering off of a touch screen instead of talking to a server.
In my mind you guys have the the expertise from the digital shelf that like you could play a big role in helping.
You do the best job of selling those Coke products in that restaurant space are you guys getting a chance to play in that space at all or is that something you can Envision happening.

April:
[42:24] Absolutely we're looking at everything so you know we're even thinking about do we sponsor
the GrubHub drivers or do we sponsor that instacart you know Shoppers and
and not because they're actually you know when I was living in Chicago I shopped at Meijer and I used to use the ship's platform,
and for a you know 20 minutes. I had this very intimate relationship with the Shopper and she was actually saying should I switch this that out or you know and then when she came to my door so you know we just need to think about all of the people that and all the touch points within the consideration process
and who can help match our Shoppers with the beverage that's right for them.

Jason:
[43:07] That's interesting that's a fascinating point because I.
Traditionally when I bought those beverages in the the grocery store it was cell service experience but now as a result of some of these experiences
it's almost a sales assistant experience in so yeah you you think about some of the best practices in sales assistant environments and part of it is,
Evangeline sizing the heck out of those
those Associates that can influence the purchase that's that's really smart and that's going to be a great place to leave it because it's happen again we blown through our allotted time
April in the event that listeners want to get in touch with you are you on the interweb somewhere like what's the best way to follow April.

April:
[43:45] Yes so I do have a Twitter handle at April's in size but frankly I don't check a very office.

Jason:
[43:50] Yeah I heard you use it mainly to follow me.

April:
[43:53] I know I should be better out of it I got so frankly the best way to to get after me is through Linkedin I really have chosen that is my preferred platform so feel free to Lake in with me and glad to continue the conversation.

Jason:
[44:07] Terrific I will put that your LinkedIn
URL in the show notes of people don't have to write it down but as always is listeners of enjoyed the show and they want to continue the conversation they're welcome to jump on our Twitter or our Facebook and
will continue the dialogue there if this is the show that finally added value to you and help you in your professional career the thing we most appreciated you jump on iTunes and finally give us that five star review You've been teasing us with
April has been a real privilege to talk to you today thanks very much.

April:
[44:39] You're awesome thanks for having me.

Jason:
[44:41] Until next time happy commercing.

Oct 25, 2019

EP194 - Amazon Q3 2019Earnings and News

 

Amazon Q3 Earnings

Revenue accelerated in the US and intl due to 1-day prime juicing demand

  • US - 24%  (Q1 - 17%, Q2 - 20%, Q3 - 24%)
  • Intl 21% (Q1 - 16%, Q2 - 17%, Q3 - 21%)
  • Unit growth (items sold) accelerated to 22% - 4% acceleration (18%) - fastest in 2yrs.

This came at a cost - profits were down 26% y/y and TODO wall st estimates because shipping costs grew 46%

 Specifically GAAP operating income of $3.16b came in 2% below street consensus of $3.22b  EPS was $4.31 vs street $4.56.

This caused the stock to soften by 7-9% in after-hours trading and articles are already out that bezos no longer richest man.

Amazon’s Q4 midpoint revenue was $4b below Wall St. estimates and they projected lower margins than wall st expected.

Specifically, guidance is $80b-<->$86.5b with midpoint of $83.25b - implies 15% growth, 5% below Wall St.

Amazon’s Ads biz which grew 45% y/y and represented $3.6B in the Quarter.  Brian T. Olsavsky - CFO:  “So other revenue, which is principally advertising grew 45% this quarter, up from 37% last quarter. And the biggest thing in there is advertising and advertising grew at a rate higher than that 45%.”

Amazon News

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

Episode 194 of the Jason & Scot show was recorded on Thursday October 25th, 2019.

http://jasonandscot.com

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

Automated Transcription of the show

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this is episode 194 being recorded on Thursday October 24th,
2019 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scot Wingo.

Scot:
[0:40] Hey Jason and welcome back Jason Scott your listeners Jason I want to start us off with a deeply,
personal question of personal nature and I know this is private awkward to just jump into on a podcast but do you have your episode 9 Star Wars tickets yet they just went on sale.

Jason:
[0:57] I know they went on sale I do not have them and I know you're probably mad at me.

Scot:
[1:04] I'm not because I got you an extra ticket so all you have to do is buy a plane ticket to RDU and you can come watch it with me.

Jason:
[1:13] Is as likely I'll be in RDU as a Chicago on that day so it's a December.

Scot:
[1:20] But it's an open offer to so if you have a hard time getting tickets let me know.

Jason:
[1:24] Yeah I just not a good enough plan or to know that I could get a babysitter on December 20th so we didn't buy tickets and I have to admit a total Star Wars newbie move
I'm somewhere when the tickets went for sale and I got like a push notification on my phone and I'm like.
Wait how did I miss this is the movie about to be released and I missed it.
Of course it's there selling tickets 2 months early.

Scot:
[1:50] Come on dude that's that's embarrassing.

Jason:
[1:52] I'm going to edit that out of the podcast so people think I'm cooler like you are.

Scot:
[1:58] Speaking of Star Wars the even before then we have a big event the new series Mandalorian premiers on it's kind of one of the launch pieces of content for Disney plus that comes out November 12th so is Star Wars fans are going to have to big drops Within
what is that like 40 days so it's going to be pretty exciting and
rise of Skywalker so it's going to be exciting frothy times for Star Wars fans.

Jason:
[2:26] Yeah it is for sure there's a I feels like that watch is going to be successful for a variety of reasons
I know you wouldn't read the trade press that my company poo Bose S1 the marketing contract Market Disney blessed so so I've been inundated and surrounded by Disney plus content.

Scot:
[2:49] Rico does that mean we can see the content early his friends Acres.

Jason:
[2:53] No I haven't when I say surrounded by Disney content I mean promotional mix actual show content unfortunately yeah yeah I'll be somewhere with you on November 12th.

Scot:
[3:06] But this is not a Star Wars podcast if this is your first time you listen to it she may be confused this is actually a retail e-commerce podcast
Jason. It's a well-known for your sisters know that Jason has I think 50 different Alexa devices in his house did you jump in on the new Alexa faucet.

Jason:
[3:26] Yes I am staring at so this is not an Amazon product has a third-party product but I am staring at a box from Delta faucet right now
which is the Alexa upgrade for my digital kitchen sink.

Scot:
[3:42] So what commands does it know on off.

Jason:
[3:45] Yeah so I'm a I'm utterly convinced this is going to be the least useful home automation product I've ever owned but I have.

Scot:
[3:53] The Alexa toilet.

Jason:
[3:54] But I had to have it yeah.
Like when you hear about it you're like oh my god do I really need Alexa to flush a toilet Siri is,
it's a it's an it's a very expensive way to put on an Alexa device in your bathroom and the hope is
that we control music lights and your shower in your bathroom which kind of makes sense right like walk in and have some some music playing in the the proper lights and have your shower preheat so you can get in when it's Altos.

Scot:
[4:29] Does the music come out of the toilet.

Jason:
[4:31] It does not.

Scot:
[4:33] Wait are you talking about substance use are you talking about the faucet of the toilet.

Jason:
[4:38] I was so I was given into the toilet because you went there.
And that the toilets are these Kohler toilets that are few that have an Alexa embedded in them in the one that's most like.
Talked about because it's so ridiculous there is a $10,000 toilet that has the additional amenity of it has a motorized widtsoe in addition to flushing the toilet Canon fax.
Put the way it up and down by voice commands and it also has a multicolor LED so you can set your own color scheme for your toilet.

Scot:
[5:14] Brickell and then tell us more about the faucet.

Jason:
[5:17] Yeah to the faucet is a Delta products and.
It lets you so you can turn off and on the faucet you can specify a water temperature like not a specific degrees but you can say,
hot water or cold water and then you can specify a volume so you can say like Alexa fill the Delta Fire ask the Delta faucet for 60 oz of water.

Scot:
[5:45] Pickle unfortunately the only time we can talk about it cuz once you get it installed Wii U you can't talk about it without turning the water on and off soon.

Jason:
[5:55] That I had to hit I had to hit mute on the device in this room like when I realized you were going to ask me about the faucet so we're safe.
And yeah this is an upgrade to an already smart faucet that Delta cell so it also has like,
its own website and its touch-sensitive so you so if you don't want to use voice you can touch anywhere on the metal.
Fixture to turn off and on the faucet which that feature is at I have actually found to be useful and I now can't use anyone else has kitchen sink because I just touched there.

Scot:
[6:27] Tap it nothing happens you like what's wrong with this thing.

Jason:
[6:29] Yeah I've lost it.

Scot:
[6:31] People live in like 19 2019.

Jason:
[6:34] The Flintstones exactly.

Scot:
[6:37] Well if this is your first time listening to podcast it is not a Star Wars podcast nor is it a plumbing podcast that are actual topic du jour is an Amazon Q3 hot take
it wouldn't be a Jason Scott show without talking about Amazon.

Jason:
[6:58] News new your margin is there opportunity.

Scot:
[7:06] So it was an interesting week in e-commerce we had back-to-back eBay and Amazon releases so I can want to set the table before we dig into some specifics
first of all kind of the macro table is 2/3 is really important in the world of e-commerce because it's leading quarter into the all-important fourth quarter which is the holiday quarter I'm in
still is true even though Amazon has Prime day and and,
you know we don't see any of these like Toys R Us anymore and that separates each category where you had like seventy 80% of of their business done in Q4 but we still all retail Ducey a super sized before so it's very important
time frame and so we like to we like to kind of it also kicks off kind of our holiday coverage on the podcast so kind of read the tea leaves a few 3 and then we're going to start to get some of the
forecast of holiday coming in and then that'll see us up to then talk about the results of things like singles day and then Black Friday Cyber Monday and and all that good stuff
Scot of the kick-off the holiday season oddly enough even though you know I'm here in October doesn't feel like we're quite that yet there yet here
they make you jealous Jason here in North Carolina we had like an 85 degree day so it doesn't feel Christmassy but definitely right around the corner.

Jason:
[8:29] But you are drinking like a peppermint latte right.

Scot:
[8:32] No not yet not yet wait till have to wait till after Halloween to get in the spirit.
To eBay announced yesterday and Amazon announced today and personal a quick disclaimer when we when we talk about
these kind of financial results on the Jason Scott show we always like to go with a constant currency measures in
and US results it doesn't matter but when Amazon eBay these other folks announce International you could talk about euros and then you weren't that $2 but that
that exposes the results to the degrees of currency changes so currency constant currency you look at Euros vs Euros or
basis vs. bases whenever the currency is so it's more true indication of actual growth rate of the company's stripping out the the different
currency exchange rates between periods in the retail we always look at your rear because of the all the seasons that we have in retail
okay that being said eBay was interesting because you had to set up the air oven September the CEO kind of shockingly announced his departure and I think use Twitter as the platform for that one
Island usually got a lot of Co departures lately.

[9:42] Olive public companies Under Armour for example I'm had one as well so see you there Devin when he got out of line with the board board wants to break parts of eBay further apart so that the kind of
obviously split out PayPal about a year-and-a-half ago now and I think the board wants to split out there classifieds Division and StubHub and then Devon didn't wasn't on board with that so they have split up
it's always scary when someone leaves a company kind of before the quarters announced so there's little bit of pins and needles going on around what's going on inside of their
and if shirt off eBay has been on a little bit of a decline and their gmv went into negative territory on a year-over-year growth rate to - 5%
a year ago their year-ago comparisons of Q3 at 18217 was plus 5% that's a 10% swing of a really really.
Free large pool of Jim be there so you be as losing share and you know there's the world of eBay there's a lot of different reasons why I kind of feel like Amazon is a nut
reason for that,
eBay definitely kind of place that more value on a consumer in Amazon the convenience ring consumer the bifurcation we talked a lot about on the show so there is a world there's room for eBay I just think they're not really executing really well and they are distracted by a lot of these kind of corporate.

[11:05] Mechanics that they're dealing with like the split of eBay PayPal and now StubHub and I was going to stop
so heading so so that was kind of little bit of a Dark Cloud over the world of e-commerce and uneven retail
and then today we had Amazon and the set of four Amazon is they announced that they were taking Prime from two day service level to one day in April and they even talk about how
you know there's something like fifty million Prime eligible products and they talk about how,
I'm each quarter they would add 10 to 12 million products into the one-day Prime bucket,
and it's clearly on the site you know you when you add something to your car even before then you you can see if its 2 day primer one day Prime Saudi Amazon has been doing is turning that dial and trying to get
the bulk of the Prime eligible products to be one day instead of just today so.
So that that's interesting and you know what so it's listed in the results so the.

Jason:
[12:08] I was just going to say one fun fact before you jump into the actual Amazon results about eBay CEOs another one of the surprising CEO changes last week was Mark Parker the CEO of Nike.
Announced that he was stepping down in the the reason I bring that up is his replacement was announced who is John Donohue who I think used to be
a CEO at eBay.

Scot:
[12:34] Yeah it's Donohoe and it's really interesting cuz the CFO of eBay in John's regime is now the CEO of Intel so it's kind of funny I oddly
I'm not a name-dropper in but I have like a Forrest Gump weird thing where I have met some folks there but they miss so I now know the CEO of Nike and until.

Jason:
[12:56] That's not remotely surprising to me but very cool.

Scot:
[13:00] Feels feels odd and here I am wearing Crocs so mean I need to get some Nikes.
Star Wars Crocs that stick their own brand for me digging in the Amazons Q3 results the good news so it's kind of a good-news-bad-news kind of thing the good news is one day Prime has really accelerated to man so
urea revenue for Amazon grew 24% in the third quarter and here's kind of the trajectory so the first quarter
and then you ask this so this is North America the growth was 17% and then Q to 20% and now in Q3 24%,
Just 4 percentage points higher than Q2 and so that that's pretty impressive and then internationally also saw acceleration to 21% so when you pull in those together Amazon grew about 20 to 23%.

[13:54] The international progression goes to one of this year's 16% and then 17% and noun in Q3 21% sewing,
also about a 4% acceleration on the international side
another metric that we look at really closely as Amazon talks about paid units Nicole that unit growth that's a metric that it's slow down to about 12% and it is accelerated to 22%,
how much is it straight in the last 2 years so so kind of packaging that together
consumers love when they Prime and it is actually accelerated demand materially for free Amazon which I think is really good Top Line set up going into holiday
now the bad news is this just comes at a pretty steep cost because you know his listeners know the difference between if you went to your your any carrier and you said what's the difference in price between 1 and 2 day shipping.

[14:51] Quite pricey right so Amazon profits were down 26% on a year-over-year basis and that created a headwind on wall Street's bottom-line estimates because shipping cost effectively Groove 46%.
This this makes a lot of sense and you know an Amazon philosophy that,
that we talked about on the show but I live everyday is the Amazon philosophy is first figure out the man and then you can figure out the cost and.
I'm doing this on a daily basis and it really work so if you can go put a product out there and get a lot of demand for it,
decreased scale and scale is how do you drive the per-unit cost down
it's hard to solve that equation at the same time so so I have a lot of confidence that these are one-time cost and we also see is an Amazon doesn't report this will see a little bit later
you know in and you talk a lot about this Jason is we're getting to somewhere around half of the package has been delivered
are Amazon delivering them and I think that's what they're going to do I think I think as that goes to 100% that's how they're going to get the cost down is by using that driver Network that they filled up,
taking the third party shippers increasingly out and which is better user experience and War costume.

Jason:
[16:12] The interesting Lee they were to ask what the the ratio of Amazon deliver packages to carrier deliver packages was on their earnings call and they sort of coyly dodged the answer to that.

Scot:
[16:25] Yeah some people report on it I'm not exactly sure where they're getting their data so it's it's interesting
but I can save for me you know what when you order from Amazon and look at the tracking number she can tell if it's a FedEx UPS USPS or are UPS never see FedEx any more rarely ups and,
you may be 20% USPS so I'm almost at like 70% Amazon delivery 80%.

Jason:
[16:54] Also very high maintenance before but Chicago is a a test market and so we've had,
Amazon doing their own deliveries along before that was a program they rolled out and we we've actually had one like all my Amazon packages are one day so.
And it's like there still are some some ups and USPS deliveries but the overwhelming majority
of of mine are Amazon carriers and I think you're right like so Amazon hasn't disclosed the exact breakdown but there are a couple of these companies that scrape.
Email boxes.
And so that's all you 1010 data and rocket on a data which intelligence which you speak sliced and we talked about in the show but they reported like quite,
quite significant growth in the the the Amazon delivery percentage in I'm I'm sure at the end of Q3 it's even much.

Scot:
[17:59] So what you would call in Wall Street parlance what you call this quarter is a top-line beat in a bottom line Miss so specifically the bottom line and there's a couple different ways to look at this there's this guy property income earnings per share
Yap operating income came in at 316 billion which was 2% below while she's consensus and EPS was $4.31 per share versus the street estimate of 4
56 now it's interesting is Amazon print out their own guidance and Wall Street and crap that up and kind of didn't listen to Amazon Amazon it tried to tell everyone last quarter hey this one day Prime things kind of expensive so.

[18:37] We're lowering our ups and while she kind of said that they were wrong Amazon,
I'm after hours this caused the stock to slide pretty significantly started judge after hours things like I'll look tomorrow and see what's going on,
I bruised down as much as 9% and of course you know everyone was jumping with Glee that that Bezos because of that slide was no longer Richest Man that,
Bill Gates was back on top and see how that goes,
another kind of cause for concern was Amazon also in the current quarter they they tell you what their projection is for next quarter and their guidance was a midpoint on the revenue side that was below what Wall Street had estimated,
about my belt for billion that sounds like a huge amount but at Amazon scale couple points
percentage points so specifically the guidance was a bottom range of 8 revenue for sale 80 billion to 86.5 billion - 83 and a quarter billion.

[19:47] That place at 15% growth rate and that was all she did kind of thought it would be about a 20%,
to hear so it's I put out a lot of data there until let's go back up to 30,000 feet I've been falling Amazon for a good 15 plus years there lies
pretty prudent going to queue for cuz you do have you know
sitting here today we know the consumers in pretty good shape to condoms in pretty good shape but we got a lot of potential negatives out there around these terrorists and and there's a lot of sessions coming in,
like noise in the market so it's always prudent to be pretty conservative going to queue for especially because it is such a
big quarter but you know I'm going to go ahead and call it as a side from some externality that that I can't see I think they're just going to Absolute
blow that away that midpoint in and I think I think even the top of the range is pretty conservative because you know what.

[20:47] What you see in Q3 is it's really clear consumers a loved one day Prime its accelerated this business and it was really amazing to me is 300
billion dollar business accelerating its Revenue up to 23%
yeah I don't think I ever seen anything like that Walmart is kind of just this kind of General size and growing
Buttes low-single digits like you know for Walmart to accelerate their business to 24% if something like that after like
add 24% more stores or their e-commerce would have to go up like
math is probably like 300% or something like that so we've never seen a company scale like this
I'm in the world of retail now some of the pure digital companies like a Facebook a Microsoft hey Google they've had periods of acceleration like this but never a company that has you where houses and shipping products in these kinds of things
it's pretty crazy I'm so kind of help.

[21:49] We talk about such a big numbers I always kind of like to try to ground it and something we can all kind of get our mental image around since here's my stab at that most will see if the Slants with you so,
Amazon is forecasting about an 80 billion dollar fourth-quarter each percent they grow in their.
800 million JCPenney is they do 3 billion a quarter so effectively each 4% than Amazon grows in court 4th quarter is a JCPenney,
I didn't Tire JCPenney so yo at like a 24% growth like let's say their growth is straight line from Q3 to Q4 and its 24% that is.

[22:32] That's essentially six JCPenney's that that Amazon's going to have you no incrementally take out of the market if they grow that much your rear
so last thought if you if you kind of piece this together and you look at Amazon's growth trajectory here's kind of what 2019 looks like
let me see if you can pick out the dew point that doesn't really kind of fit in here so q1 they did 17% year-over-year growth due to 19%.

[23:01] Q3 22% now they're saying oq for is going to be
15% do we really think Amazon's going to slow down to their slowest quarter in the fourth quarter after they spent all this money and time getting everything to one day Prime,
he actually kind of look at that Trend you could kind of say well I could see that it could be 23 24% so,
so the last thought is Wall Street is really fickle right now so eBay did better on the bottom line but didn't show growth that punished Amazon showed tremendous growth at the scale
punished so young,
when the world saying you're kind of in a lose-lose situation you might as well just kind of like rip the Band-Aid off and be super conservative out there and what I think's got the market in this choppy Waters is the the
rough IPOs that have come out from Uber and Lyft
and withdrawals of IPOs and then we work is got a whole Market on a spooked and let you know this company set to go public at something like
you have 50 billion dollars and now it just had to raise Capital at 8 billion dollars to a bottom-line Bill Gates I know you'd listen to the podcast and so does Jeff Bezos don't worry Jeff I think you'll be back on top of Bill here shortly.

Jason:
[24:15] As you're saying that I'm getting like Iams from Bill and he's like pointing out dude I'm trying to give away all my money so.

Scot:
[24:24] She's stroking $500 checks here and there so yeah he's doing his best.

Jason:
[24:28] Exactly so I don't I'm not sure it is his aspiration to stay out of jail so that was quite the earnings call,
I am. I'm with you on the revenue side for sure it seems like,
one day shipping is going to drive a lot of incremental revenue for Q4,
I guess the bigger question is like half how expensive that will be in it and you know it is there a commensurate drag down on earnings as a result of a lot more expensive deliveries for Q.

Scot:
[25:04] Yeah they framed that on the call I forget the exact amount but they did put in a pretty.

Jason:
[25:10] It's a big number is 1.5.

Scot:
[25:12] Pretty big number and I I suspect you know that number
is the number if they had 24% growth and they put in 15 but yard is they have a blowout quarter I think they could have a blowout bottom line now I think what we'll see Amazon thing on a 10-year chunks
I think over the next five years you're going to see them in criminally
you'll get those they will figure out a way to get one day Prime to cost the same as two different and get it to scale first but then what's going to be killer is once they figure that out then they can probably just turn the dial on same day Prime,
and probably without too much cost.
It's not going to be as big of a jump it probably like half or less the jump from two to one day the same day I'm so so if you listen to this in your thinking how do I compete with Amazon that's that's what you're up against you know so they're they're going to be because they know that this is.
So clearly created so much demand for consumers they're going to continue to turn the dial on on this in a lowering the the shipping time on Prime,
and clean more and more season 2.

Jason:
[26:20] That. Hundred percent agree I feel like the
they're very confident didn't however much pain it takes them to get to one day shipping if it will be orders of magnitude more painful for anyone else to match them cuz no one has close to there
there's a film in infrastructure right so you know if if they give themselves a cold by doing this like they're giving their competitors Ebola.
So very good play there was an interesting comment from Bezos he was playing up the fact that one day delivery is greener than two day delivery.
Which it was not immediately intuitive but what he saying is,
ultimately the only way we'll will cost-effectively get to one day delivery everywhere is.
Way better Logistics and staging more of what people want closer to those people like it just not going to be possible to put stuff on planes everyday.
For next day delivery and so,
so his you know it it's for your point it seems like they're just investing in the infrastructure to Stage more Goods closer to customers and get them there quickly.
Via cost-effective delivery mechanisms mostly their own sew-in the interns chimed in while while you were chatting in the
but that data point we had from rocket on intelligence has Amazon at 47% of their own packages so just.

Scot:
[27:48] Daniel is kind of round hat that's a little bit I haven't seen an update that and it's it's kind of like the spring so.

Jason:
[27:55] Ya no soy it very likely has passed and that that update still have 1.6% of packages being delivered by FedEx which is no zero so yeah so.
Yeah all interesting stuff that one of the things I knows about the earnings call they hired a hundred thousand people in Q3.
Which is a big number and it's very likely that a lot of those people are.
Delivery drivers and extra shifts in warehouses.

Scot:
[28:29] Those are 1099 they wouldn't show up in here I got to get spyware house and they're adding to AWS like crazy right now.

Jason:
[28:35] Yeah but that's so not all delivery drivers are 1099 so for example a lot of the the Chicago delivery Force are W-2 employees.
So there.

Scot:
[28:47] Hi some Union thing.

Jason:
[28:48] There's a blend.
I'm getting there as that has all the teachers on strike here in Chicago this week but yeah so huge hiring thing, and Sebastian I'm from Baird like he called that hiring number
the most surprising metric in the room,
I always like to keep an eye on the brick-and-mortar number which in the overall scheme of Amazon isn't isn't a.
Is usually financially relevant number but it is interesting because it is.
Absolutely going down. The rate of growth is like brick-and-mortar sales than Amazon actually declined and when we say brick-and-mortar sales what we're really saying is Whole Foods because the rest of the Amazon free is in.
Really economically significant enough to impact the Whole Foods numbers so whole food sales are lower today than they were in 2017 when Amazon acquired them which is pretty interesting.
And obviously there's a lot of Buzz about some new retail formats that are you seem like they're very close to opening and you know I've been speculating that there's a new grocery format that's going to open in Los Angeles here imminently.
Going to be interesting to see.

[30:04] What they do because you know is we both of observed Amazon doesn't always win with their first effort in something but you know they also don't tend to tuck their tails between their legs and retreat.

[30:20] So that's going to be big you mention AWS that is also a declining its growth rate which you know.
Pretty prodigious so they were they grew at 37% last quarter and then they drop down to 35%.
Let you know there's a method gets repeated too much that all of Amazon's profit is AWS that's not true retail is profitable but but AWS is the,
biggest contributor to profit and so is the fact that it still growing at 35%.
Is certainly very robust and obviously the law of large numbers is that you would expect that rate of growth.
To be slowing and what's interesting is you know they have two competitors Google and Microsoft who they sort of had a six-year Head Start Over.
Until they have much bigger share than either of those two competitors we've actually seen those competitors.
Rates of growth which are you know they're much smaller business is slow and worse than Amazon so it seems like.
There's a little bit of plateauing in these cloud services and it's you know in Amazon is the least affected by that Plateau so.
Yeah I would call that mostly positive signs for them.

[31:39] I know you are a big fan of the marketplace side at.
The Amazon business and you know that the marketplace sellers have for awhile accounted for over half of all sales.
On Amazon but the it seems like the Knicks slightly to Klein this quarter so it went from.

[32:00] 54% last quarter at to 53% this quarter and I'm assuming that's because.
100% of Amazon stuff is probably one day Prime and a lot of the and in some you know a significant amount of the.
The 3p is not one day Prime and so the the.
Shift to one day Prime probably uses a first-party sales a little bit disproportionate.
And then the last thing that I always like to follow in his earnings calls is the advertising business right and so this is
you saw the famous we listed as other in an Amazon parlance
but other Groove 45%,
so that was 3.6 billion dollars in Revenue in the quarter and Brian the CFO like answered a question about ad revenue and he kind of.
Confirmed what we had all been saying other revenue is principally advertising advertising grew at 45% and you know.
Advertising is the biggest part of other in fact,
advertising had to grow bigger than 45% to cause other overall to grow at 45% so so the ad piece of business and Amazon is actually growing even bigger than 45%.

Scot:
[33:28] Yeah there's some kind of in this kind of rough on the add thing there was a couple reports out there is a is this a competitor of yours or part of your sperm dick Merkel put out some stuff about,
yes I'm trans they saw I thought it was even more interesting though emarketer had a report out where,
for the first time that I've seen how you can fax at me on this they did talk about search ownership or search.
Pie chart of of search this kind of always been boring look at this cuz it's kind of like Google it 90% then you have like a little bit of
Microsoft in a little bit of Verizon and like you know ask to use her ass or something like that
so for the first time Amazon is listed as number 2 with about 13% share of search I'm So it seems like there now, expanding the definition of search from what we would think of is that you know that you know ask Google anything kind of a search to include
product search and when you do that Amazon has cross the materiality threshold we've all known this
because there's been surveys that just look at product search and Amazon's ahead of Google in that so this is another kind of interesting Awakening out there in the ad world that you know
Amazon is actually compete with Google and it really interesting way that a lot.

Jason:
[34:54] Oh yeah and I think it's very clear that Amazon is taking advertising dollars from Google the.
Like I am slightly skeptical about some of the like surveys that say,
Amazon is leading Google in product search cuz I would just point out those tend to be tiny surveys of i2000 users and they're just kind of these like silly stated surveys like they just ask people
and nobody has a consistent definition of what a product search is right so if if I die Pizza.

[35:28] Is that in your definition of a product search or searching for a product of pizza you know there's a lot more pizza searches that happened on Google then that happened on Amazon,
so you don't really have Amazon surpass Google you have to have a pretty narrow definition of product but but I absolutely think like.
In that narrow definition Amazon is very big they're generating a bunch of dollars those daughters are clearly coming from Google and what super interesting to me is.
Amazon actually had their first.
Conference for advertisers this year is very beginning of October 2nd and 3rd in in Seattle and the big take away from this conference was.
That they don't just want to be a search advertising engine so that the huge Focus was,
I9 using Amazon for what we would call top of funnel advertising so like high-level brand-building not just the very specific product searches.
And you know they're they're one of the biggest media properties out there with traffic to Amazon and all their video properties and everything else so it's.
It's a little bit of stretch but it's it's totally credible that you know Amazon has it set set not just on Google's product search but on it so it's entire at business.

Scot:
[36:47] Anderson.

Jason:
[36:49] So that being said there's actually a fair amount of other interesting Amazon news over the last couple weeks that we should we should cover briefly.
I mention Amazon had their their first advertising con conference adcon.
So that's interesting you know Amazon's conference for for AWS is actually quite big event now so it won't surprise me to see this advertising show start to expand dramatically as well.
I actually saw an interesting article this week from a former guest of our show and I I'm going to Massacre Joe's last name do you know how to pronounce it properly.

Scot:
[37:30] Concha.

Jason:
[37:31] Yes we're going to call in a joke a and he'd been studying all the private labels on Amazon and he noticed that like,
32 of the hundred apparel brands that Amazon has launched are no longer for sale on Amazon so it sort of highlighting the fact that that a lot of those.
Those like quickly launched house Brands like don't appear to have a lot of legs in the Amazon has has taken them down which is interesting.

[38:02] Another news item that really caught my eye first written about by Jason Delray and then confirmed on the earnings call today.
It seems like Amazon is scaling way back on.
Sort of enforcing what they historically have called crap which is the acronym for can't realize a profit.
You know historically Amazon you know his put a lot of pressure on manufacturers to make products profitable of the cell and what that usually means is.
They don't want to sell items that are difficult to ship and that are inexpensive so you can't buy a single roll of paper towels for example that you don't cost $2 and it's pretty Bowl.

[38:43] And historically they would do things like at make that an add-on only sale that you can only add to a box when you had a bunch of other stuff in the box or they'd asked the manufacturer to provide a bigger bundle or things like that,
and it now seems like Amazon is much more content.
To sell one or two dollar items and include them in the Amazon Prime one-day shipping.
Into it a lot of items that were formerly add-on only are now available for sale with free shipping witch.
You again says that like Amazon appears to be willing to forego some profitability in exchange for.
Fulfilling customer to man and catching more more share your point earlier.
And I assume that the strategy is you get a big enough share of wallet you do a bunch of deliveries they all become much more cost-effective I just you know habitualized in the customer to buy everything from you.

[39:40] Amazon has been expanding this program they call Amazon counter so there now a bunch of retailers in addition to Kohl's with that you can.

[39:50] Have your packages shipped to and pick up so Rite Aid is in there.
A number of other retailers are now providing the amenity of letting you ship Amazon packages to their store and come pick them up there.
So that's an interesting play I think just today Amazon announced that they bought a new health company which is called Health Navigator.
So listeners may remember that Amazon bought pillpack a couple years ago so this is a second acquisition in this space and my understanding is that Health Navigator is primarily like.
Online symptom checking in remote diagnosis so.
It sounds like some sort of friend in tool that you could imagine Amazon building into a future health offering and you know Amazon is already announced that they're doing a health pilot for their employees and they said they'll use this as part of the.
The offering for their own place so it seems like there as everyone expects continuing to invest in hell.
The most interesting private labeling as when I seen from Amazon in a while as a product I wouldn't have necessarily expected them to private label they launched their own,
brand of gin last week so we may have to do a,
a test on on the shelf or whenever episode Scott but they invented a new brand called tovis in their they're now selling their own premium gin.

Scot:
[41:12] Yep seems like a deep dive we could tied into a fun drinking game.

Jason:
[41:15] Exactly I'm sure they're already are some bad drinking games for a podcast drink every time Jason says um for example would be a good one and I just got two drinks right there so.
When they got a bunch of Buzz that I don't think it's so surprising Amazon prints this a holiday catalog every year physical catalog that you know mostly focuses on what all the hot toys are going to be and it came to light that Amazon sells
slots on the internet catalog so you can you no pay to have your product listed as the hot hot toys for the holiday.
Retail have been doing that for a long time it's not super surprising the the slight Nuance here is when someone buys an ad on amazon.com,
Amazon does the note that is a paid at like they they put a sponsor badge on it and the catalog.
Doesn't have a disclaimer like that so it does sort of look like Amazon's claiming its editorial content and so you know it may surprise some listeners or viewers to know that they could.

[42:19] That a lot of the products in that catalog to be in there because the the manufacturer paid for them.
And then the the final thing that I think it's worth pointing out to our listeners is there were two really interesting long-form articles.

[42:35] Primarily about Amazon and maybe even more about Jeff Bezos that came out in the last couple of weeks it's all put links in the show nose to both of them but one of them is called Jeff Bezos master plan.
And that was in the Atlantic and there's a really long form article kind of talking about.
The five phases of Jeff Bezos Evolution from juice or pre Amazon aged.
Sort of his is space in Hollywood age today and that it's a really interesting Deep dive into some of his personality traits and how they've helped.
Help the company grow and then there was also a really long expose in the New Yorker that was called is Amazon Unstoppable.
And you know the big Travis there was Amazon is dominant not because they have a particularly you know a single.
Interesting product or capability or piece of Ip that the real secret sauce on Amazon,
is the Amazon culture and the business process that they've adopted and so it it focuses a lot on Jeff in the leadership style and the culture and process that they didn't still on the premises.
Did that that culture has served them really well to dominate a bunch of different Industries so both really good reads if you haven't.

Scot:
[43:54] Yeah the spoiler alert the answer is Amazon's probably Unstoppable.

Jason:
[43:59] Yeah I think that might be the conclusion they're both a little balance so they both like in Meijer lot of Jeff Bezos traits and they also probably point out some.
Some things that like some of us might be was personality flaws so I'll leave it to the two listeners to draw their own conclusions but.
They're pretty interesting and Scott that's going to be a good place to leave it cuz we've slightly surpassed the amount of time that we budgeted for tonight show but as always is
we've spawned a question or comment feel free to continue the conversation on Facebook or Twitter and as always if this is the show that finally got you over the hump
we'd love it if you jump over to iTunes and give us that five star review that's really the best way to thank us for producing all this content.

Scot:
[44:46] Things are what we hope you've enjoyed this Q3 Amazon hot take.

Jason:
[44:52] And until next time happy commercing.

Oct 23, 2019

EP193 - Hershey's CDO Doug Straton

 

Doug Straton, Chief Digital Officer at The Hershey Company.  In this broad-ranging interview, we discuss Hershey's digital footprint, the challenges of temperature-sensitive products, incumbents versus challenger brands, Amazon, Hershey's data strategy, and the future of digital grocery.

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

Episode 193 of the Jason & Scot show was recorded on Tuesday September 17th, 2019, live from the Grocery Shop trade show in Las Vegas, NV.

http://jasonandscot.com

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

Automated Transcription of the show

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this episode is being recorded live from the grocery shop
trade show in Las Vegas on Tuesday September 17th 2019 on your host Jason retailgeek Goldberg and unfortunately Scott was unable to join us today so I am solo

[0:41] but I'm making up for it by bringing you a great guest welcome Today Show Doug straighten he's the chief digital officer at the Hershey Company Doug welcome to the show.
Doug I know there's probably no listeners that are not familiar with her she but I sometimes think you're,
a broader company Than People realize can you give us the the elevator pitch for Hershey.

Doug:
[1:03] Yep shirt so first of all this years are 120 V birthday.
And you know that's iconic I think we're number of reasons it it it's it's both accounting the fact that you got a brand that means so much to people,
it's been around for this long and why they recognized as both being still hip and cool yet by the still being you know you know I'm kind of a legacy brand.

Jason:
[1:27] But you surpass the fat stage.

Doug:
[1:29] Yeah yeah so retro is cool again and you know so so you know her she's doing it's doing its part,
so that I think the the other couple things about Hershey that I think I really really amazing so the first thing is,
Milton Hershey to quit this entire Fortune to the Milton Hershey trust and the Milton Hershey Trust,
funds the entire education housing I'll room and board frankly for disadvantaged kids so originally it was orphaned boys and Snell been expanded to disadvantage Shop Boys and Girls,
it's an amazing School located in Hershey Pennsylvania for thousand students and the Milton Hershey trust is our biggest shareholder so in fact.
We all work for a greater good Beyond just selling candy,
and making a profit where are you never actually that money goes to a very very good cause,
which I think is amazing and in terms of being brought her you know we have sister companies Hershey entertainment Resorts so we have a hotel we have an amusement park we have retail experiences,
in addition we've been expanding into adjacent cat snack and categories so we've added Brands like skinny pop,
Pirate's Booty crave,
bark thins in a number of others so dark chocolate we are expanding into areas where we think we have the ability to win.

Jason:
[2:50] It's very cool and it's it's funny because I feel like these purpose base companies have become super trending now and everyone's I go Millennials only buy from these purple space companies it's it's clearly not anything you guys been doing it for a hundred 25 year.

Doug:
[3:03] Yeah like we have been doing it and it is interesting because it's it's it's both fun and maybe a little bit hilarious.
To watch companies try to evolve a purpose when they've never been Purpose Driven and it's interesting to see who becomes who seems authentic in terms of the purpose of,
and who doesn't and I don't think I think there's no question it went to review the story of Milton Hershey,
how iconic and how amazing and how purpose-driven he was as an individual and how that manifests itself and what we do every single day so yeah it's it's it's very cool.

Jason:
[3:39] If it's if it's not authentic it's a pretty amazing ruse.

Doug:
[3:42] Yes exactly right yeah it's like a right.

Jason:
[3:44] Long Pond.
The name names but it is funny cuz they're even other big confectionaries that have like recently tried to embrace.

Doug:
[3:52] Yes yes.

Jason:
[3:58] Baton at the end but this is not your first digital Rodeo the listeners are always really interested to know how you came to this position can you share a little bit.

Doug:
[4:11] Yeah you know that I've been.

[4:14] Part of it was decisions I made part of his timing and you know not all the decision was based on I would say fully-formed back some of it was was you know,
instinctual but in essence I started I started my career in Beauty and with some of the big Beauty players and then moved into luxury,
is it a good luxury watches and then took a flyer in my early thirties to go to start up and help build run a startup which we've been sold to Unilever and it was exactly that experience which was most fundamental to the way I actually approach digital,
it was a very agile organization you know look at the data too quickly don't overreact SAS on getting that data perfect,
but take a look at direct me what's going on make a decision and move very quickly and so I brought that style along with kind of the bigger company professional chops and that lingo,
to Unilever when I was acquired when the business was acquired.
And and then essentially picked a couple couple consult internal consulting jobs that were interesting to me and digital always been interesting to me,
I'm in technology and Generals kind of a coder geek when I was in high school and college and I used to take this at the classes for.

[5:28] Music credits and so what I've been able to do in the last 7 years just going to reinvent my career,
I'm beyond the traditional cpg and into a really interesting space and be successful at it so it's been yeah it's been an interesting ride I'd like to say it was all thought out but.

[5:45] Some of it was and some of it wasn't.

Jason:
[5:47] It works it works best in hindsight which is totally fine and some of these times like we wouldn't take these gigs if we knew all the facts.
I'm so sometimes ignorance is a good thing but I do feel like my sense from the outside is that you were really at Unilever while they were sort of inventing a digital cou which is sort of fool like you didn't necessarily inherit a Playbook from the last,
last digital guy.

Doug:
[6:10] There there was none and so it was very much like the way I looked at it my wife asked me if I was nervous about it.

[6:20] And I said well the good news is there's nothing really to compare it to so you know it's got you know the sky's the limit,
and I think the one thing it was already obvious it was already growing as a very small business was always already growing double digits and the reason I felt confident about at least taking the business component,
digital is that I actually haven't been in a business that's that's grown less than double digits for like 22 years.
So the business the volatility in the high-speed of the business in the high growth rate really didn't bother me and make it in feeling comfortable about the ability to turn that growth rate into a a scalable and profitable model with him.
The broader cpg space didn't warn me where it would probably would have worried other people.
But I just kind of felt that why wouldn't why couldn't it be me that,
that would do this as opposed to somebody else and I think it was a really wise choice I think you're the most that the career track at a Unilever was very much like go working Ron and be the general manager one of the categories,
and I was taking a bath that actually my job would be more important than some of those jobs and I I felt that you know when I left that that position and join the Hershey Company,
that it was actually the best job in the building and more people probably wanted to get into my my job that was initially shunned then.
Then into the traditional role.

Jason:
[7:43] That's interesting in the traditional roles you probably would have had to like relocate to Brazil and also learn like. Share something in order to keep her progression.
What are things that is interesting though is Unilever is pretty cool because of the portfolio brands.
Pretty did you advance friends you got some you know in comments that are probably wait to digital with a lot of opportunity you bought at least one very well known to join native brand.
Dollar Shave Club exactly and then you also owned some direct consumer Brands like Ben and Jerry's and others that owns a bunch of stores and stuff so you had somewhat like my Consulting role like you had some of that.
In the portfolio so then you moved out of her she and you know her she's like mostly in the grocery space which is.
Got a very brutal margins like we're just starting to get penetrated by digital like low average sales price is and then most of your stuff melts when you ship.
So it seems like you you took the level of difficulty from Unilever and maybe even ratchet it up a notch coming to Hershey.

Doug:
[8:51] Yeah did you leave it as a beautiful portfolio nothing but good came out of you know getting that experience with Unilever the the beauty and,
otherwise some some of the categories migrated online before other categories and so you have this disability to kind of learn in.
And and food was the last to go but the interesting thing I didn't like most people would have thought like why would you join a company where your.
Core portfolio is something that's going to melt in the summer,
and how's that going to get delivered through e-commerce but you know what we'd already known is either you live is a big global company with a lot of insights from the grocery models over in and Europe in the UK and we knew how they were solving for those problems.
And in fact something like an ice cream which melts over in Texas online.

Jason:
[9:38] I did my bullet does not.

Doug:
[9:40] It does not yet it but it is online and if that was like a big guy you know like a you know clouds are opening up and the god beings came down and we're shining on people that they couldn't believe that an e-commerce of all places that things are over index,
but there's a component of you know hey it's going to be delivered.
It's going to be protected in some way shape or form or it's me click and collect and it's going to be staged in the way that the product Integrity is going to be maintained,
and as it turns out people may be more comfortable with buying ice cream that way and I was I was out I was going to head unit that fit and confection yeah we would have to solve for certain models,
with an e-commerce I shipped to home model but some of the other models that there is actually the way that they were being addressed at the the meltability would not be an issue.
And then in terms of you know average selling prices and whatnot that's just a matter of him playing your portfolio the right way across the different e-commerce models as opposed to just one portfolio for e-commerce Broadway,
I want you to do some of that work you can you know you can make the economics workbook for you the customer and the consumer.

Jason:
[10:43] And so it's talk a little bit about Hershey's digital footprint I would assume.
Bulk of it is not put cases of chocolate and coil packs and shipping will consumers home that the majority is,
like digital influencer sales use peroxide pick up like all of the sort of new digital experience that retailers are now.
Enjoying some success with that require fuel from you.

Doug:
[11:07] Yeah well the interesting thing is.
You know we do just as well and kind of like those digitally native e-commerce jams after play channels as you would expect we would do in the offline and in it and some of the core parts of the the portfolio,
which took a lot of work and I wasn't so sure that that that could be done you know it or there'll be some some other level of success we get there,
what is a turns out there are ways to to make that happen so that was it that was actually a pleasant surprise and it was working the strategy and doing the foundation of work really really well.
The flip is the the models Beyond ship to home is generally what my experience has been both from understanding what happened over in Europe,
and then early raise from some of my Retail Partners for my experience with the last 7 years,
is that online Shoppers overall over index and so what I would and you knows what I was hoping is that,
in fact we would over-index online but the worry was is what component of that basket for example in physical grocery was impulse,
and is that method or that that kind of thinking around impulse categories goes away will the.

[12:23] Will the bigger online basket translating as it turns out it did,
and if it wasn't for unexpected ways and so what we did is we just took a look at what what are the digital insights driving the behaviors,
and we double down on those instead of taking a look at what happened what what works in physical and trying to do an analogy online I think that's maybe the fallacy of a lot of the categories in the physical spaces,
are you the insights over here and some serve an allergy of an end cap and that's going to solve my my my issues online and that's not the case it's fundamentally different behaviors and if you can figure out what's driving those then you should be able to.
You know basically replicate your business successfully online.

Jason:
[13:04] That is a super interesting because that that comes up a lot right like two of the church side pickup in particular there's a double-edged sword here right like there is,
there's no impulse cash wrap in so like a lot of these unplanned purchases are harder to do once a consumer build a list they tend,
repeat that last tour manager that was so it's tougher to get on or off that waist but then the flipside for your point like I talk to a bunch of Brands the buying behavior is very different and.
I somewhat speculate that there's a slightly different Mission but for example I've talked to ice cream companies in there like yeah we saw a lot of courts in the store,
a lot of gallons curbside which is funny to me cuz I'm assuming part of that is that customers don't want to push the gallon of ice cream around the store and Heather their neighbors see their ice creams and consumption habits.

Doug:
[13:56] Yeah for those plants are being consumed in the car before they get home one of the two.

Jason:
[13:59] Exactly one of each one when the go and one for show exactly.
Into what I am free from your answer is your sort of Leaning into those those changes in consumer behavior and not necessarily trying to recreate analog impulse in the.

Doug:
[14:15] So the interesting get yaksha properly interesting things to pints vs. say gallons or half gallons so you know.
But we're working on is yes get on the list but the pact that we get on that list might look very different from the pack and impulse and,
you know it's interesting there's a there's an adage in the Inn in Hershey which is see Candy by candy candy.
And then you know they never Pete's but they think about it within the context of an Impulse a like you and check out and you see it you buy it and then you eat it right away.
And the bet that we've been trying to kind of or not too bad I would say but what we've been trying to figure out and maximize is well if I can get candy into a pantry more often because it's being it's being curated off of the list,
where they're going to see the candy and eat the candy is at home and it's an expandable category people just eat it,
I'm going to stay there and then it's time to list it's just going to come again so is there a magic that we can we can exploit in terms of bad behavior that fully mitigates maybe even improves upon what we have gotten from an Impulse perspective.

[15:28] I mean so far I think the strategy of looking at things that way is working I think we can continue to refine it,
I'm only be able to really truly refined it I think as the retailers continue to improve their overall capabilities because obviously we don't have soy,
on the technology stack so I can help us drive that.

Jason:
[15:46] Sure in it that we may talk about this later but it still feels like sort of the first inning of of all of these.

Doug:
[15:51] Yeah yeah yeah absolutely.

Jason:
[15:52] It's funny one of the like traditional Shopper marketing,
that you talk a lot about like the second purchase that way you'll really you haven't won until that consumer re buys your product from the shelf and you know it's a hypothesis with these digital list is.
First purchase becomes much more important and so it's almost like it fundamentally changes your customer acquisition strategy and where you to mess your dollars because.
Conquesting that first purchase and getting on that first list like it has so much more value attached to it than it did in the,
in the traditional model but let's move forward a little bit like what are some of the digital tactics that you guys use at Hershey's that have been successful if you have any sort of specific examples you can chat.

Doug:
[16:40] I would love to give you some bright and shiny amazing miracle cure for being successful in e-commerce but Frank.

Jason:
[16:48] Chicory with blockchain in virtual reality.

Doug:
[16:49] Yeah yeah you can throw they are in there too so that the the real trick is and it's going to sound you know rudimentary right is.
You have to have a clear strategy you have to understand exactly what you're what you want to do what you're going to expect to get out of that,
and then you make need to make choices and priorities within that framework that you design and that overall Vision that you're you're trying to enable and then you just make choices.
Really it comes down to just like anything that comes out of the fundamentals most of the time so you know people say well you know you going to need this technology platform in that technology platform you going to get this.
To certain extent it's true you need a baseline of of Technologies but what you do with those Technologies and how you you know.
The inputs that you provided those Technologies to get the right outputs is actually the critical piece so it comes down to having really Christian sites.

[17:48] And then designing assets or whatever it might be for the experience you're trying to drive and there for the sale that you're trying to create,
I'm in a way that's another really really effective and efficient and if you can figure out systematize that,
you know that will probably do more for any part of your business frankly not just digital but it certainly will do more for your digital business and anyone technology,
will do now technology still important and you need to keep an eye on what's new what's crashing and you know how the behavior is changing and so that doesn't mean you have to know from time to time look at your stack,
upgrade button a lot of cases it really comes down to is how well can you get your company to execute against broader digital and not just think of it as a downstream activity but think of it as a full value chain activity from the start of innovation all the way through to go to market.

Jason:
[18:41] It's interesting cuz I mean it would be way more fun if you just like made a list of sexy baubles that.

Doug:
[18:47] Plug for Adobe AEM.

Jason:
[18:50] Did you not go wrong the shows not sponsored by.
The.

Doug:
[18:59] It could be if we keep talking.

Jason:
[19:01] Yeah yeah we had lots of opportunities to monetize it but we love our audience so much that we we just we don't want to distract them from the amazing content we deliver,
some of those unsexy things seem like they they have the opportunity to make a huge difference in the value of the business so I guess I've heard a lot like about.
Things that you wouldn't think about but like Supply checking right and you got all these new demands signals from digital and in leveraging those for supply chain I know what Unilever you guys been a lot of times we're Reinventing the digital shelf like is the,
is the confectionery digital shelf like where it needs to be or could you see that continuing to evolve.

Doug:
[19:42] What you obviously everyone you know who uses their experiences and what they've learned in previous roles to inform what they're doing and a new Rolls if if the roles are related.
And for sure we took a look at you know what Unilever had done to drive the universe standards around you no hero images which I think you're referring to.
And you know the interesting thing was is.
Again you you would think it's a silver bullet but if you don't have the right insights you might draw the wrong conclusions and what we found was a version of a hero image does work for confection clearly but actually,
what really drives the engagement and therefore the sale is slightly.

[20:25] And then the other thing too is really really interesting is if you if you think about confection in the way infection is package,
it actually allows for some really really interesting things in a physical world sense where you can much more accurately.
Mirror the physical world in the digital world because you're dealing with luck lots of rectangles and lots of squares in your packaging and so then you can start to unify and harmonize a lot of the creative around pack.
To make sure that it really is a seamless experience,
where's the learning at Unilever was it you had to figure out what those cues were in the physical sense and then kind of replicate them in a new different interesting way so it was recognizable and a digital shell infections of a different,
so I'd allows you you know some benefits just from the the core packaging itself.

Jason:
[21:17] You're totally ruining our whole scam and Consulting where we just say.
Something's the best practice and everyone should know.

Doug:
[21:23] Yeah yeah yeah it is a best practice in terms of thinking how you're going to approach you know you should approaching the way I like it how am I going to maximize the the Shelf when people are engaging with my product.
If you can if you can take it one step further cuz I really want to do that but it might be different for everybody competitors that something else might fire for them because they have slightly different product.

Jason:
[21:47] Types of we talked a little bit about packs and early on I made a joke about stuff melting and being tough like you you guys have some specific learning about how to ship these perishables can you talk a little bit about,
how that came to be and what the solution is.

Doug:
[22:04] Yeah well the the the,
the basic business problem to solve for was Hershey itself obviously is a chocolate company I mean we have broader Confections we have no candy mints and gum but chocolate is a big portion of our portfolio and it melts in the summer,
and so we were never going to be able to realize from a digital Commerce perspective at least in some models.
The sales that we would yield in a physical presence with the temperatures control.

[22:34] And so we worked with a number of Partners one partner and specifically to come up with a way where we could ship these items very expensive,
and it was really only be done within the context of D to cease a really really low volume unit volumes and transactions and also very high average sale prices for the for the units at retail so you have the ability to absorb bills cost in any conomic,
but we had to work towards is.
In terms of like you know what is the size of the prize overall for our category figure out what that is and then figure out something that between the months of with depends what part of the country but in general between May and then end of September.
How can you disable something and make money and make sure that the customer experience in the Hood the consumer experience with the individual product would be what we would hope it to be which is not melt.
Yeah so so we work with a couple Partners one in particular that has done really really good work and kind of really fine tuned to the degree where,
they use different types of cooling mechanisms or packs depending on how far the product has to go,
I'm so further reducing your costs and a couple other Nifty tricks,
and they just kept refining that until we have the ability to to to literally deliver hundreds of thousands of packs in an economically efficient way during the summer months and and in a way that the consumers experience.

Jason:
[24:02] Nice and then you guys use that for your direct sales but you also make it available to your retail.

Doug:
[24:07] Yeah absolutely yeah so it's as if they have the same problem and this is one of those things where you at we work at the retailers they really didn't want to deal with that issue and but you know because it's not,
a huge portion of business over ology is you take out you know basket composition but it's a big a big deal for us right so we said hey we can figure this out for you,
we have a model that work,
economically for your consumer economically for you and you cannot make way for us to make some choices and maybe leave some dollars on the table but but.
Necessary to make sure the experience for the consumers I'm going.

Jason:
[24:43] I like it I noticed that you have a URL shop. Hershey. Com where your.
Selling direct it's always interesting to me to talk to Brands about their direct efforts is that,
a green eyeshade play to grab higher margins and cut the retailer out or is it a opportunity to get some insight from customers or what how do you think about the.

Doug:
[25:04] So if you went if a consumer wants to go to shop hersheys.com the portfolio is radically different from what they're going to see in one of our retailers and there's a reason for that you know of the week and the people that going to go there I really Hershey diehards.
And what we are attempting to give them is something they couldn't find anywhere else something that's unique,
and we charge you know it's been a very different threshold area average transactions is in the mid-60s,
and it's not anything that would be a high-value mover at a retail store and so so the retail was really don't have any interest in it but they recognized it actually,
what's generating that loyalty and that Equity is important both of us but but but obviously to them,
and so we don't think there's any conflict nardwuar retailers ever bring it up as a conflict because we've said this is exactly what we're trying to do.
So since we're loyalists do we make money on it yes we make money on it,
but the real reason we do it actually is it to understand better who are loyalists are and what makes them tick and then we can use those insights in that data and apply that to other marketing efforts,
both of you know it's why are individual marketing and media arms or actually even with the retailers themselves.

Jason:
[26:22] Yeah I was going to ask are there any examples where you like gathered an inside or or learn something that you didn't been able to use the benefit the retail account.

Doug:
[26:33] Yeah I think there's a couple I think you nothing more lies maybe we brought another conversation with her and brought her dad up so we've been able to take that data as well as data that were grabbing tomorrow
our websites are brand.com so whether it's Reese's., Hershey's., Hershey kitchens,
I'm take that information we've built out profiles we've done so we have,
best video the way you look at it you got addressable known you know so you have an email address or phone number of those type of things and then we've got a dresser but unknown but still have the ability to attach attributes to either one of those and in some cases you can merge some of those together,
and then we take that and because we have such good relationships with our retailers we even in some cases have the ability to gather inventory at a store level.
And we can marry up our media,
targeting activities to specific zip codes where we know that those stores are maybe I had a hard time getting the inventory off the shelf.
And then we would lighten up and zip codes where we know the inventory is selling through appropriately so it's highly efficient for us to drive to media that way and it's also really great for the retail but that only comes when you have the appropriate kind of dad and son,
a message to people in those zip codes.

Jason:
[27:49] And that's in that's amazing because that like that's a perfect example of these things that like we're not in the old cpg Playbook.

Doug:
[27:57] Yeah yeah totally.

Jason:
[27:58] The digital totally tables.

Doug:
[27:59] Yeah in the beauty of the beauty is too is people like they always they always focus on the the consumer one to one data and they're like consumer one-to-one consumer Wonderland.
Yeah that's important but but actually what we're doing is actually using the profile smart first-party data store,
some third-party data information that are sales people are gathering in funneling into our supply chain cuz we use those inventory the data points for other use cases within the business,
that's where you're kind of like time consumer customer internal together in a really interesting new way and this was a use case it was fairly obvious to to some of the Geniuses we have in video we got some really sharp.
But until they actually knew some of that data existed because we figured out the government's tube to marry things up and make things more transparent it would have never did it happen.
Since it's a pretty interesting this case all the way around.

Jason:
[28:50] Yeah I know for sure.
When did Jason and Scott show if we didn't talk about Amazon been so I know firsthand that I can get all my favorite Hershey product from Amazon I'm curious where you guys are in the Spectrum there's some people that are like,
Amazon's amazing partner and they give us access to all these customers and sell all this and criminal stuff we would otherwise not sell and there are other people that are like gosh there a race to the bottom and they're they're taking all the margin out of our product and enjoy dinner places with a private label version.

Doug:
[29:21] One could argue that at any given point in time over the read the history of retail that other companies have actually been cited as driving those types of outcomes.

Jason:
[29:30] I feel like there's always been a retailer that was accused of driving that out.

Doug:
[29:31] There's there's always one driving that I can think of one action the physical space that people are very worried about it and it's not called Amazon,
but it does have an A at the beginning of the of there their they're store shopping there and we have to figure it out the trick for us is how we make sure that they made make money and we make money,
and the consumer for the mission that they're on is getting what they want so for us was a lot of insights work figuring out what people were really going to Amazon for,
doing some work and having honest conversations both internally ourselves but also with Amazon around,
why we might not want to have our entire assortment online is it I think that's a fallback position though a long tail and,
but you cannot have it didn't make any sense so you know once you do those things and you you prove that those things are working,
and you bring some insights to in this with you choose any retailer quite frankly whether it's Walmart Target or you know.

[30:34] Dollar or convenience if you have a Christian site around the behavior,
the cast that is interacting with that retailer and you proved it out and it works then it opens up the conversations to do more,
and so while you know a lot of times people would say this is a really difficult customer to deal with I would say you know there's a lot of customers that are there difficult to deal with.
You know but you know they're trying to make their model work and you're trying to make your model work so you have to figure out a way that makes it.

[31:06] People and what I found is that if you can prove,
success on Amazon in new and novel ways you get the same kind of dope I wouldn't you know it's a different type of openness maybe but that's different for every retailer to do a few different things and so we have to have the ability to influence,
how they're bringing in product,
you know giving them good dad of the back backup you know that they're leaving money on the table and we've also been able to be sharp around what's the portfolio you want to have on that retailer that doesn't leave the type of disruption,
in the marketplace my pricing or whatever it might be and so it's a balancing act it's it's you're always going to be working on it in some way shape or form,
but I think there are ways around it it just takes a lot of thinking and a lot of execution.

Jason:
[31:52] Yeah yeah it's it's funny because you know there's a lot of medicines that are good for us but don't taste very good,
and then in some ways I think of Amazon is being a little bit of that affect that like you guys enjoy a ton of benefits from being the ultimate income then and owning the shell space in brick-and-mortar retail,
and so you got this like for great moat around your legacy business that you know frankly is mostly thanks to your predecessors.
On Amazon remote is a lot shallower,
and so it's like in some ways it it forces better execution and in better development a new school skills and makes it easier for those income instead or those those sort of Challenger Brands to,
that sort of them eating your business and infant survive you have to like learn new skills and build a new playbook which is.

Doug:
[32:45] Yeah totally right and I think you know the way the category at least in that ship to home model you know the core amazon.com out of now and not fresh not prime now or anything,
you know is you know it looks really different from the physical world anyway right so the Dynamics of a different soap ensuring that you understand that your Dynamics going to be a little bit different is really key cuz you have to send the appropriate expectations,
with your leadership and with your shareholders as to what you're going to get out of out of that retailer if they're concerned about it,
I would say though that the most were shallow or 5 years ago than they are now so the,
you know there's a lot of press right now around how Amazon has been changing their algorithms to favorite profitability so that means that to the degree that you can serve them with a portfolio that makes sense for the mission.
And the consumer makes money for them and you.

[33:41] That's a good thing and an MD it because you know if you think about the algorithm if you've got the probability thing kind of like mapped out appropriately then you should be in a good place you shouldn't worry about that too much the other thing is is Frank would they have paid search,
and so paid search my mind is is you know it's like taking up,
you know what I'm cap or you know it's it's it's different manifestation but actually the smaller Challenger Brands you know they don't have the scale or the ability on bass or maybe even the insides to actually.
Do some of that work so I actually think that while 5 6 7 years ago that the motive and Shout I actually think it's deepening a to a certain degree and that actually is is actually good for us now there is always that the the Spectrum say I'm available but that's true anywhere.

Jason:
[34:30] So in an interesting point about the the paid media opportunities obviously it's it's become economically meaningful and Amazon the right the third largest advertising platform now it's over 10 billion dollars or whatever.

Doug:
[34:44] Disinterred but still.

Jason:
[34:45] Yeah and way better margin than their actual retail business.
Like it's also becoming more important to every other retailer that's why pebble ate heavily economically challenged so we're like right now seeing every retail are double down on building their own media offers and new jeans and.
Like replacing vendors with in-house teams and all these things.
Manufacturers funding retailers marketing initiatives is not a new idea has been around for a hundred years like you know they've been all these Coop models and Merchandising and accrual model.
Yeah but historically I would I would almost argue it was,
sir the quid pro quo like you buy a million dollars of my stuff and you get one and a half percentage of that to invest in marketing and so do you want to put in a circular fine if you want to put it in in cab that's fine too,
these new media opportunities what's interesting to me about them is.
Feels more like Brands like you are investing those dollars based on an Roi model rather than it being,
cost of doing business or I'll punch you are a part of that account management their months is that true or am I being overly optimistic.

Doug:
[36:00] No it would be true I think you know the.
You have to do a lot of work with you is you're starting to engage with the retailers are doing that you have to do a lot of work up front in terms of the puts and takes,
and the messaging that we've really been focused on and and Charlie Chaplin who's our head of media mentioned yesterday.

[36:19] What has mentioned another conversations is if you're going to become a real media player that means you're competing with the big media players and so,
you have to be able to prove that are alive you have to be to surgically more open with your data because what you're saying is if you want to access that pot of money.
Then you need to be able to compete because what we're going to do is because.
There are scenarios you think you like I'm going to have me invest in this new media platform but it's not going to yield what someone of these other platforms and he'll probably across the entire Marketplace,
that would affect that said retailer in retail sense so while they might be getting more dollars in media if it's not if we're actually spending in the wrong place or not able to drive the appropriate amount of traffic,
indosat retailer because they're not efficient and effective then both of us lose.

[37:14] So a lot of the conversations are around like how do we make sure that we're taking all of those things into consideration,
and ensuring that you know everybody wins as a post everybody loses the other than that we think about a lot is it yeah everybody's thinking about becoming a media partner but there's there's certain retailers are never going to be able to do that.
They don't have any Rich at your they might be Regional players and so I think their point of differentiation becomes even more.
I important and I think there's a couple details out that they are making you know they're like like we're not be able to play that game going to different chicken other ways and I think that's how they could possibly win mut most likely will,
but not everybody can become a media player and they have to if they're going to become one they need to understand they're going to be competing with you know some real heavyweights.

Jason:
[38:01] Tell for sure but I think you're exactly right like every decision any of these companies May,
why does a decision to move towards one choice and away from another into that other be creates a white space or someone else and so it's like even,
is Amazon's monetizing search and they're selling those like top search results like I I was somewhere I might have been here yesterday Walmart was talking about like yeah we're monetizing our side but we will never,
satellizer top search results because we think that's a customer experience thing and so it just it just creates opportunities.

Doug:
[38:31] Yeah totally and I think.
Yeah it's really interesting, because I didn't you know my understanding of this is again this is so you know from the press and just reading over the past couple days is there was a lot of internal debate at Amazon around,
do we want to put this attributed or algorithm and use that to drive some of the search results because they were so focused on,
the consumer experience and my guess is you know up maybe it'll stick maybe it won't they're very smart they're going to test it out and if they get plaque in some way shape or form their very quick,
to adjust but it is fascinating to watch a show to watch after the other thing that I think is fascinating is you know the media companies that are threatened by the retail companies in some way shape or form and how they're reacting,
and now who they partner with us to make sure that they're getting their fair share of you don't some cases what is a major Revenue stream for them.

Jason:
[39:22] Yep no absolutely like it that you know that readers are kind of become media companies the media companies are trying to figure out how to.

Doug:
[39:27] How did yeah that's right.

Jason:
[39:29] It's it's funny all the old all the old Twin Lanes are breaking.

Doug:
[39:33] Stop breaking down.

Jason:
[39:34] I want Japanese grocery shop today and you just finished up a panel that was entitled connecting customer data points and first of all I heard of the moderator for that panel was amazing.

Doug:
[39:47] He wasn't credible.

Jason:
[39:48] Yeah I don't know who that guy was but the date they should get more.

Doug:
[39:51] Michigan Adventure could give him another go.

Jason:
[39:53] Exactly what are we taking off of probation can you tell listeners a little bit about like what you talked about in that panel what was.

Doug:
[40:01] Yeah I think we did a lot of it here in the podcast the you know the focus was on you know you know.
Connecting customers and consumers in this case via data,
and so we had Scott from Wakefern to talk about it more from a retail perspective and I think he really focusing on the individual consumers and how that relates to Wakefern as a retailer,
my focus was a little bit different is you know we're very focused on the consumer as well,
but from a broader data perspective where of the believe that being able to connect are both our internal data and our external data actually yields,
some goodness with him in terms of the consumer experience that you can't get if they're they're disconnected in some way shape or form and and I was a little bit remiss action the conversation to to bring up,
you know how does that impact consumer engagement if you're talking about internal information and I guess one of the one of the ways to kind of think about it is,
we've we create a huge amount of content.
All that continents are being digitized in some way shape or form if it is in a digital from you know.

[41:14] And we have to categorize that organize that and pump that out into individual channels whether their retail channels or whether their media channels and other marketing channels to get to the right consumer so you threw the right create a have the right call to action to that right consumer.
And that's very difficult to do in a in a world that's going towards you no more contextualisation and personalization that will have to be automated in some way shape or form.

[41:40] Getting your dad and a good place allows us to actually run algorithms over that and they will categorize and organize that and eventually they will just spit out the right messages to the right people at the right time that's just a few years away and Technology really exist,
it's how you get your data foundations in place to an able.
Is actually more a job once while people talk about the other customer care the consumer experience and personalization and what not what they sometimes ignore is that if you need to systematize that,
in a way that's scalable so you can still have the efficiency of a mass media but just do it in a new and different way then you can have to do this data Foundation,
first and that's what I was kind of pushing at in the conversation around restraining things together in a way where,
it's not isolated nothing takes the the examples I gave you earlier around using data that was being originally connected,
or I take an an ingested into the organization to drive supply chain decisions is now being used to sit to do supply chain decisions but also to engage with consumers directly,
customers and I find that fascinating so that's that's what we were trying to push on.

Jason:
[42:50] I like it and I think you're exactly right I got you know I work for a big Ad Agency in so there's a ton of 8
a bird in the air in that agency around Dynamic content what you were talking about in it exciting and people and work on it but for your point it's garbage in garbage out if you don't have the data governance right.
The content will be dynamic but it won't be relevant to the right person and.

Doug:
[43:09] Yeah there's a there's a bit of a risk to in terms of you know when you're thinking through overall data strategy that you need more.
I need more or you need to do and I think those things are super important I think they need to be thought about as part of your overall digital strap are digital and data strategy,
but more specifically you need to understand what you already have and figure out if you're even exploiting that to the degree that you can and that might be more important and give you more kind of home then the sexy new data goes back to the shiny things.

Jason:
[43:43] That's a great Segway.
Takeaways I thought was really useful from your panel you kind of talked about these three tracks and in data and,
I'll let you explain it but like you and clients are asking for the like highest our Ally initiatives like it's it's almost never to get more data it's usually to get a smart person,
to do something better with the day that you already have.

Doug:
[44:08] That's right so that the way we think about it is basically three tracks and you know it's it's.
It's a version of people processing tools you know but the way we think about his data technology culture process would be within the culture Buckhead,
and around a damn what we think about is you know what is the dad of the way I actually did goes back to what we just discussed a few minutes ago what do you really need and and and what do you need to keep and what do you need to bring and use them and just dispose,
that's actually a thing to think about the most people down the second second thing there is the health the garbage in garbage out making sure that the health is there in that one edger harmonizing and merging data sets,
and in the last pieces why do you make that even accessible to the organization because sometimes if you recycled it it's difficult to find out you might even have the data but you might not know it's there are,
where to go to get it,
I'm so sorry for that is really really Foundation important only then can you build your technology platforms on top of that and I'm a fan of simplifying that making it much more modular.
Point Solutions and letting the marketplace dictate the Innovations and being a little bit last song.

[45:22] And then around that you know there's you know the passwords route optimization and automation that they are buzzwords but they are also true so have the be joyful in the tools that you're going to bring on the platform you can you bring a gun while you're going to use them,
obviously make sure that they can plug into the data but then as you're using them making sure you're optimizing them before you bringing out a new feature sets and what not and then to the degree that you can know a lemonade,
repetitive process is a knot that scan your first step in automation as opposed to going for the Big Shiny thing,
the to be really difficult to solve for the final piece of sculpture which I take you don't have to really think about that is,
how do you make sure people are actually thinking digital and data first and thinking about how are they going to adopt the tools that you put in place with them as opposed to going back to their spreadsheets and everybody does a slightly different way,
and then think about the types of people that you either need to train for you know the kind of the new roles you have to train for with the with the workforce that you have and then think about how you,
recruit and bring a new new thinking and do Talent your digitally native town if you want to call it Dad or dad a native to.
That's the way we think about it three tracks around the dad out the technology and then the culture get out and then there was no one here goes around those three years ago was around those and five-year goals around those.

Jason:
[46:42] I I love it. We are coming up on time I want to squeeze one more question if I can.
If you put your crystal ball images I think I'm mixing metaphors so I got think you would.
You wouldn't wear a crystal ball but if you get out your crystal ball do you have any sort of pod about how all this is going to continue to evolve over the next several years.

Doug:
[47:05] The first if you were to wear crystal ball you'll be Mysterio,
that's true all right we can agree on that. Ok the I don't know to be frank so the most wanted right after the panel out of I had an analyst Piper jaffray ask me questions like what's going on I I I really doubt.
What we do know though is you would have continued convergence or I would say metamorphosis or transformation retailers in the Media Partners I think that is happening already.
And so the thing to watch will be out of the incumbent media players react.
So that that's going to be a really interesting space I don't know exactly how they will.
But I think got to be extinct the other thing at least in the US market is clear is that the the retailers are not Playing for Keeps in the groceries.
Space rights in the last 2 years you you saw a massive increases in click-and-collect operations both at Walmart and Kroger Target making moves with Cher.
I'm kind of the rise of instacart as you know what kind of about third-party solution for the retailers that maybe can't afford or don't want to go into those those areas themselves differentiating different ways and they do that to a third party.
So I think I think that I think the the cards are out on the table now now it's a matter of.

[48:26] How does everybody make money from that scenario you know because it is diluted at least and it's in the near-term and it's going to cause everybody to rethink how do they address things in a way where.
Consumers are happy because they're getting what they want the customers are making money and the manufacturers are making money I think.
That's going to be really fun space to to watch.

Jason:
[48:52] For sure I'd I couldn't agree more and that's going to be a great place to leave it because we've used up all our a lot of time Doug if there's one on contact you or are you somewhere on the interwebs are you.

Doug:
[49:02] Yes I keep a minimal footprint on LinkedIn so you'll find me know where else but LinkedIn.

Jason:
[49:09] I like it with the aggregate all your juice that there's nothing wrong with that and as always want to continue the conversation they're welcome to
hit us up on Twitter or post a question on our Facebook
page as always if you enjoyed the show the best way to assist a jump on iTunes and finally give us that five star review we've been desperately begging for Doug has been a real pleasure I appreciate you taking the time.

Doug:
[49:33] Thank you so much.

Jason:
[49:35] Until next time I'm happy you commercing.

 

Oct 17, 2019

EP192 - Macy's VP of Innovation Parinda Muley 

Parinda Muley (@parinda), the VP of Innovation and Business Development at Macy’s.  In this broad-ranging interview, we discuss a number of Macy’s innovation initiatives including ThredUp, Macy’s Market @ Macy’s, B8ta, Story, and Style Crew.  We also talk about the strategies for fostering innovation, and how retail innovation is likely to evolve in the future.

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

Episode 192 of the Jason & Scot show was recorded on Wednesday, August 21st, 2019. live from the eTail East trade show in Boston, MA.

http://jasonandscot.com

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

Automated Transcription of the show

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this episode is being recorded live from the etail East trade show in Boston on Wednesday August 21st 2019,
I’m your host Jason retailgeek Goldberg and unfortunately Scott was unable to join us today so you’re getting twice the Jason for half the usual price which as I understand it is a bargain but the sweeten the pot we have an awesome guest adjoining on the podcast is
parinda movie.
Malay thank you very much she’s the VP of innovation and business development at Macy’s prenda just finished a keynote panel discussion entitled
fostering Innovation rethinking the omni-channel organization today thanks very much for being on the show.

Parinda:
[1:09] Thank you for having me.

Jason:
[1:10] We are thrilled to have you you have a slightly unusual title to me
and I mean that in an exciting way what does a VP of innovation and Business Development do for someone like Macy’s.

Parinda:
[1:23] Yeah so the whole team is fairly new to Macy’s on this group is about 2 years old and I think it was when retails really
focused on how do we continue to drive change in an organization from the inside and I think that was what about 2 years ago and they were looking to establish a team that was focused on
Innovation and what’s new what’s next which is one of our pillars and so I think establishing this group was really around
focusing on new business models new initiative how do we solve for a customer for tomorrow’s customer and we are opportunities that we can continue to play in a game chair in if I knew Sharon and
play it with an authentic voice.

Jason:
[2:04] That sounds fabulous and I want to dig into that a little bit before we do what’s her background you have to have to get real like that can you talk a little bit about your background.

Parinda:
[2:13] The absolutely so I very new to retail I have been in the business development Innovation function for a very long time but mostly within the media sector I came from timing.
I’m where I served as a sort of a business development lead mostly on the digital side.
Prior to that I was with MSNBC and then with a startup before that and Consulting before that but I’ll really in the media space and so I think I spent a lot of time focusing on
driving new revenue streams for companies and how do you start
relying Less on the core and sort of innovating in the news of the function and the you know start of shift to retail was actually not that big of a job after I did it and it stopped
felt a little daunting initially but it was the same problem different industry and I think you know
there’s a running joke in my family that you moved from one struggling industry to another but I think that’s what’s so exciting is that there’s so much opportunity to to reinvent and change and that’s sort of the perfect time to do that I’m in the perfect role to be in to help.

Jason:
[3:11] Well I’m super excited to have met you because I feel like I have a bunch of Industries I can recommend for you.

Parinda:
[3:16] What’s next.

Jason:
[3:19] Erica rejected have you thought about the buggy whip at all.
If you.
Not done. I teased I have to be honest you give me hope I feel like this the new trend on the show is all the gas are reformed Consultants.
And as a current practice in consultant I like to see that there’s a chance for me to redeem myself at some point so so thank you for setting a good example.
Question about Innovation cuz it comes up a lot in retail in my mind there’s there’s two opposing philosophies you you mean a lot of retailers that have set up these dedicated.
Innovation functions and I’ll call it the Ivory Tower approach like hey.
Protect these people that just focus on Innovation don’t distract them with the day-to-day rigours of the organization you know when the normal profitability kpi is and let them really focus on.
Innovative stuff and you know ideally iron interdisciplinary team that have a lot of complementary capabilities and on the other end of that extreme is.
Dodge for Innovation be valuable it really has to be grounded in the organization’s unicor problems and we really got to develop Innovation organically from.
The company’s practitioners and I suspect the answer is somewhere in between but like how do you guys think about Innovation at Macy’s.

Parinda:
[4:43] Yeah I think it’s it’s it’s a great question and when we started it was probably the former in terms of what you describe we were working very much and isolation and we were able to do big things we launched very big Concepts
we spent a lot of time studying that space and we were able to do it with our own budget our own team and we went and ended stuff I think well that was exciting I don’t.
The rest of the organization is is onboard completely because you’re working so much and isolation.
Version 2 was well that’s kind of come more towards the middle but we probably song a little bit too much and we started doing a bunch of tests and and more smaller impact but it wasn’t.
It also wasn’t the right solution to when I was swinging a little bit in version 3 of this
sing a little bit more to the left I don’t think there’s a perfect answer I do believe that you need a dedicated team that focused on this day in day out because it doesn’t otherwise it’s not top of mine they’re still obviously we have.
Afloat until focusing on the core and making sure we’re delivering for holiday and that’s it has a very important it’s always going to be in.
How do you balance that with making sure we’re solving for tomorrow and I think there’s a bridge in between but you do have to infuse that mindset and bring your stakeholders in
earlier and get them onboard earlier because I think that’s the only way that you can have the greatest impact is getting more people aligned to the vision in the way that were that were working.

Jason:
[6:05] No I think it’s a universal retail conundrum that revenue is always urgent and Innovation is always important and if.
One human being is left to prioritize between urgent and important unfortunately important I was going to list.
So can we talk about a couple of the cool examples of things that have come out of your department.

Parinda:
[6:27] Play so I think one of the ones that are very that I was very excited about was you know we’ve been studying as
most of the details had been its growth in on direct to Consumer brands are these digital native brand and there was a flood of them and I think it was exciting to see was a lot of them were manifesting into.
Spaces and they were using their physical space and wanted to be in physical space to to get to the customer to allow the customer to touch and feel their products in a different way and so that’s real kind of studying that and started talking to more of these
digital brands and we recognized that they were struggling with finding the right real estate is expensive to find the right real estate then they have to
figure out a way to Garner the audience to come to them so they were spending a lot on marketing activations and and and getting customers to come to them they also we’re struggling it’s running a store when you’re kind of doing it.

[7:17] Hopsin I’m having the right teams in place to operationalize the space was also challenging so that was put me putting Macy’s in the perfect position to say we have.
Real estate everywhere Best in Class we have,
operations and Logistics is what we do that’s our bread-and-butter and we are able to we have staff we can we can put a lot of resources against these guys and we can give it we can give them space that’s
economically viable for them and they’re going into space where there’s cuss inherit customer traffic and so I think being able to take that to some of these Brands and actually really
quantify they’re spending 345 exmoor on a weekend pop-up forces being in our space.
4 a month in in with the same value proposition and I think that opened up a really interesting opportunity for us to take could we create.
Retail as a service and it was a mice in my shift for the company because we’re such a sales heavy organization that sort of our our our core and now we’re saying what let’s.
Feel the secondary here let’s try to create this package and bundle package for the digital brand would they can come in and a very flexible model that they want to come in for a month they can come in from us if they want to come in for 6 months they can come in,
100 square feet 65 it’s really up to them and what works best for them.

[8:33] But now we’re giving them away to literally just all that we needed their inventory and we will staff at we will educate our staff on their products we ask for a lot of what differentiates their products that we can speak to it in the right way,
and you know the first version of when we launched if we want chicken tenders when we started and we didn’t mark it at all and it was called The Market at Macy’s.

[8:54] And we really just used our internal team of four or five to just go out to our own connections and see if there was interesting,
and demand for coming into our space and what was really fascinating as me again I’m coming from the
mediaspace I didn’t have a ton of retail connection then all the sudden I started hearing that media companies were interested in coming and testing Sony Pictures came in to say
we don’t get customers watch a movies we’d love to activate a trailer in your space Downey came in to say I know your customers by detergent but I don’t get the same visibility in your stores as I do in the visibility that yet in cpg or Target,
is one of many verses no one else is in your space and I can tell a different narrative and so we started getting a lot of different types of companies wanting to come
and in addition to the digital native Branson say this is great for us I cannot be in 5 locations and not just wanted I physically don’t have to be there and so it was really kind of flipping the lid on on the business model
and saying we think they’re still profitable model here
I’m which is what I sort of live by I don’t want to just launched for the sake of lunching there’s a compelling business model around it but there’s value to the brands that are coming in and it was just a happy medium to say Let’s test and I’m since then we launched into Mordor then once things are sort of.

[10:09] We have an initial model that’s when we like to push it back into the business and so at the same time we had acquired story until Rachel shechtman leads our brand experience and it made sense a ton of sense for the market at Macy’s to live
I’m in that world so now she is she’s managing.

Jason:
[10:24] Very cool so.
Like I couldn’t see the value to these brands are getting access to like the enormous put traffic that you guys have and I would assume it’s a nice surprise and Delight moment for the mini z shop.

Parinda:
[10:40] Solutely and that’s what we wanted to make sure you know when you go back to our other than here at what are we solving for it’s this freshness discoverability
being able to what you see today might not be here tomorrow and that sort of
in a surprise and Delight was really important for us to continue to make sure that we have a way to Showcase these was also a really great way from Macy’s to test Brands to say now we have an ecosystem that allows us to see what’s our customers,
for some of the stuff they’re seeing and then could we actually move it into a larger relationship partner relationship I’m in that’s happened within the.
Case isn’t so it’s been really an interesting sort of way to test and learn for us as well as any other compelling piece of this was.
I think there’s an expectation with digital brands to
and turn to the metrics that they get in the data that they have at their fingertips when they’re online and how do we make sure we deliver that in-store until we outfitted each of these faces with,
with cameras that allowed us to measure and customer engagement allowed the brands to access in real time
who is spending time with our product what’s the dwell time in that space what’s 12 to conversion and again giving them that data allowed them to a b testing her in a real time in a physical store in a way that they couldn’t do.

Jason:
[11:48] Yeah it would just totally awesome.
Now I’m imagining that the relationship does brands have with Macy’s is also somewhat unique in that it’s not the traditional wholesale model where they’re just telling you goes in your setting a price in your merchandise.
That they’re I’m assuming they’re sort of renting space from you.

Parinda:
[12:06] Play it is 8/8 a retail as a service so it’s a service offering we are they keep 100% of their sales.
I mean that’s what we had to sort of change the mindsets it’s not about the sales for us it’s about giving our customers the right experience with new brand it’s allowing activations to happen in our space and it’s allowing Brands to
tell the narrative that they want to do in a physical in a physical store and I think that that new proposition is what sort of
it was very different from Macy’s but it also was very compelling to Brant because now they are allowed to come into a space where they can keep 100% of what they.

Jason:
[12:40] Shirts and when the things I appreciate about your execution so this is becoming some sort of a popular Trend and I I won’t put you on the spot by asking you to comment on other Zedge execution but there is
a lot of sort of retail is a service targeting these digital native brand so I think I would like the neighborhood Goods or showfields or
Four Corners in WoW,
the assortment in the product selection in those doors can be really interesting in a similar way to Market to Macy’s the retail execution is actually very traditional,
I just a shelf put yourself on the Shelf figure out how to do some static merchandising and we have some salespeople and the.
The market at Macy’s execution has those components but then there is also some digital storytelling for every product and there are these Richard Analytics
you know a lot of these products that tend to make it in the marketplace feel like products that require.
Some demonstration enter video storytelling they benefit from this more digitally enabled shopping experience than.
Simply like sitting in a box on a Shelf.

Parinda:
[13:54] Absolutely and I think that’s what was what we are trying to achieve is its first understanding what’s
what’s your goal like talking to these Brands and saying what are you trying to get out of this expense are you testing right now are you trying to understand what
what demos run it resonate with your product are you are you just focused on sales are you trying to do a marketing activation and I think,
we could help Taylor that for them because it’s really about their experience and we want them to be successful in that in whatever they’re showcasing because.
That would prompt them to want to come back and I think,
defrost it if you looked at the market when we launched it it was very plain vanilla I mean it was not we didn’t focus a lot on the Frills of what it looks like it also wasn’t overly curated it was a little bit like.
A market right and it was you would see Ferrari next to a barbecue sauce I mean that was
the reality of what we were showcasing having some of that has to change and we are as we serve in the next version of it it’s now how do we Elevate the space how do we make it
stand out from an experience perspective it makes a lot of sense to live in Rachel’s world because she does that so well until I think it’s that’s the next version that needs that will come out but I think it’s a.
It’s a little bit about us making sure that we’re delivering what is and managing expectations of what these Brands want out of there.

Jason:
[15:05] For sure that’s going to be fun to see how that involves wheat we certainly have been pulling her stuff so that that’s a great success story what else have you done.

Parinda:
[15:18] So I think one of the other ones will one, that I’ll add about
aftermarket is I think what was really interesting from a business development Innovation perspective is nowhere very limited with how many Brands we can on board and there’s a technology that you know just from a technology perspective.
Dbrand so quickly and I think that was when we were started looking at the market today is there a way that we can onboard that brand and manage the entire brand experience perspective
beat at the time was doing the same thing in this
that technology space and speed actually came into Macy’s at the shop and shop and we started having more dialogue around here are very similar philosophy how do we serve work together in launching.
Rocket Macy’s so we invested in beta and they became the platform that sort of.
Operation behind the market at Macy’s to make sure that we could scale this in the right way and I think that was a really great partnership to bring to life because it was say it was.
A company saying we recognize that we have limitations in our own technology let’s bring in the right partner to make sure that we can operationalize this in the way that we need to.

Jason:
[16:23] It’s funny so they boo one of the founders of it has been on the show and we have this
good natured ribbing so I was one of many people to be able to talk to early on when he was thinking about this concept and I told him I thought it was a super interesting concept I said I think it’s particularly interesting as an enabling
technology that could be leveraged inside of traditional retail stores that I might oh and by the way that probably is your exit strategy and a focused on.
We’re going to be way better than traditional retail we’re going to put all the traditional retail out of business and this is the new model we’re for sure not going to want to partner with any of these right so in my mind.
I gave him some Sound Advice he wasn’t ready to hear and now he’s very successfully following so I like had this sense of satisfaction,
she remembers that conversation slightly difference.
And he he remember some other suggestions I gave him when he was asking for other business models to protect potentially pursue and he’s not one of them was particular wacky so he tells everyone this wacky advice I gave him and I may I tell everyone this this
you know Savvy business model advice I give him and I suspect the truth is somewhere in between,
but I digress so awesome story certainly been following the bay. Concept closely and and it seems like the collaboration with you guys has been particularly interesting but we were going to give it to another win.

Parinda:
[17:50] Yeah and I think you know again I think the way that the bd-team really starts and thinks about any initiative is.
Where’s our customers standing there time their share of wallet their energy and do we have the authority to play in that space and if we do what are we bringing to the table and I think that’s a piece that a lot of.
Other retailers forget is just because we’re an older company and we’re trying to innovate into from the inside how do you balance tradition with disruption,
and I think it’s really interesting to see that we have such valuable and Rich assets that sometimes need.
Theory utilized in a more creative way and so one of the other initiatives that we launched which I’m super excited about is something we’re calling Macy’s style crew and essentially was saying me a hundred thirty thousand employees can we actually make them,
sort of sellers of our brand in a completely new way
we’ve been following video Commerce in as well and we’ve been studying that space a lot of players were coming into that space we’re following the influence our world and kind of seeing
what’s happening in that space and
we think and we can emerge the two and create something new that allows us to activate video cameras in a new way but use our own assets to do it and so
what we did is we started with a pilot of 20 colleagues across the company so you had engineers and developers yet accounting.
People you had a lot of people in the store and said let’s just start with these funny and let’s give them the tools to create content.

[19:15] Any content that they want that somehow talks about their Macy story so it could be a walk down the street and they’re showcasing what they’re wearing it could be we had one person that does animated stories and and somehow incorporate the product but we wanted to make sure that they have the tools to tag products.
And put them in their videos and we said let’s just just show them to your own network when I’m going to put it on Macy’s anywhere that’s one of the biggest challenges
want to take down the guard rails we couldn’t fully take them down but we said you don’t see it with your own network and let’s see what happens.
Our numbers were pretty outstanding and we and what we did as we’ve said.
Everything that you said we kind of bake them into the reward so there is an incentive to salad and and commissions and what was what was fascinating is a lot of them didn’t care about that a lot of them just wanted to.
Wanted to expose their voice to create their followings or to add to the following.
We are now close to almost 5,000 employees and it’s just unlock
so much for us in terms of now having sort of a geographically relevant marketing tool that we can that we can use at a moment’s notice in real-time so if.
You get a really warm day in the middle of December in Chicago you could actually talk about shorts and you don’t have to activate this big campaign but you can do it in real time with.

[20:29] With the Macy’s style crew and it’s been really fun to see the type of people that are interested in being in this is unless of it for like a new love for the brand and you know people are talking about you good and bad all the time so why not give them a forum to talk about,
your brand in a new creative way and it’s been exciting to create this community which is essentially what we’ve done to
to Showcase new brands that they loved it also been really interesting cuz we’ve been hearing from The Venture Community to say it is an interesting can we participate in this do we have Macy South we talked about our brand we haven’t activated that in a a a formalized way yet but.
We certainly can we can we did a test with Clinique and with it was an opt-in program and and you know it allows RR
our colleagues to be able to genuinely talk about products the way that they like it and it gives
real content for some of these Brands to use and so you can imagine where we can go with us if we can scale to not only our employees are our colleagues but
then our best customer that can be a loyalty play and there’s a lot I think that’s
that this program could enable down the road and we again as a BD team with built it and now it’s living in our marketing world.

Jason:
[21:38] Yeah it was just awesome I love style crew.

[21:43] It’s funny because I can we talk about influencer marketing a lot for like a lot of people’s mind goes to these Mega in the Kardashians of the world and to me that’s mass-marketing
people understand that she’s Hocking product that she’s paid to and so like.
I can be a good reach play for some opportunities but I’m really excited about the micro influencer space and they these more much narrower markets but much more authentic advocacy for products
and this huge challenge with micro influencers a scaling them.
Ride that to get a reach it’s meaningful for Macy’s you know it’s very hard to go scraping YouTube to find.
Thousands of people like in a particular genre that each have I don’t know you know $10,000 or something like that.
So turning inside and saying hey we have all these brand loyal as they like shows to work in our store instead of some other retail store because they already have an affinity and gravitated to a pretty good apartment like.
It feels like the perfect audience to evangelize as influencers.
And it’s crazy I’ve done some shopping in China and you go to like these luxury experiences in China and you meet these super high-touch sales associates.

[23:03] That might have a hundred thousand followers on WeChat.
And it’s like you got oh my God there’s like so much power here so I feel like that’s a super exciting initiative I’m eager to see how played.
2 questions so.

[23:17] In my experience when you when you have a you know when you come into the office and say hey we have an idea we’re going to empower a bunch of our in-store Associates to start publishing content.
There’s some
institutional inertia that the typical corporate antibody start flowing in like God forbid there’s a lawyer on your Innovation team
it can be very hard for an organization except that was that the case at Macy’s or was.

Parinda:
[23:45] Absolutely and I think
we’re public company so we have to be smart about the stuff that we launched and we have to be strategic and I think there was there’s always red tape that we have to go through I’m legally even using initially we have the idea of could we leverage Macy’s handles
does showcase some of this and that was you know we said no and then and I understood it said we don’t know the type of content that’s being created and so okay well then let’s put it around that and so it hasn’t prevented us from doing things but it absolutely is something that we have to overcome now that we’ve launched a few initiatives I think building The credibility internally has
made it easier for even our legal team to get behind some of the stuff is a okay well let’s let’s focus on that the stuff that we think are really showstoppers then and we can talk about the rest or we can you know
we can. We can figure out the rest and I think there’s just more openness and there has been a little bit of a shift in mindset internally to say we can get on board with this or we can Fidelis
Cat Tattoo in a smaller way but let’s test it and I think the appetite for doing more has been as an incredible this past year.

Jason:
[24:47] That’s awesome and I was like to remind people like all of these dialogues and content are already happening.
Like it’s not like they’re not happening because you don’t put some guide rails around it and structure it in so like I’ve been having these programs gives you an opportunity to.
Put the appropriate guide rails on a 10:00 amplifier but it’s not like it’s that there aren’t Macy’s employees with social media,
so then the other challenge is there some new technology enablement that you would need like in organization like Macy’s.
You go out and find like startup partner that’s interested in that same experience and kind of Leverage their their tools or do you build tools from scratch or what do you do.

Parinda:
[25:30] It’s always a conversation so kind of going back to the store the process that will use a weirdo customer spending their time and energy third share of wallet
do we have the authority to play in that space if we do what the business model around and with the value of bringing and then it’s saying okay
do we need to build this internally or do we partner with someone to help accelerate or to enable something that we don’t have or to build credibility even if it’s whitespace opportunity that we’re not in we need to partner with the right.
Great company to help Drive some of that credibility in that space and so are
our team is very external focused so we are keeping a pulse on what’s out there who’s out there who’s doing what that will never start with the technology were really starting with the concept in the initiative and then saying is there a partner that would help
drive this forward and that’s sort of how the beta partnership came about we’re partner with a company called TV page on for Macy’s style Crew That’s.
A very small company based out of San Diego initially but they were allowed they were able to customize a lot of the program for us which house.
Is because there are a lot of video cameras to hold out there but a lot of them are geared for marketing teams and we want to put the tool in front of the
user that’s not necessarily A sophisticated as a marketing team until how do we want to make sure that it was.
Seamless it was easy to use and so there was a lot of custom work that was required so it’s a little bit of a bridge but when you find the right partner who’s willing to customize for you it makes it a lot easier.

Jason:
[26:55] That’s awesome and I I particularly like digital shopping vendors emerging and San Diego I grew up there and so I feel like I.

Parinda:
[27:03] Amazing.

Jason:
[27:03] I need a retirement Opportunity by Journey.
Turn vibrate companies I can work with in San Diego one day so those are two terrific examples I’m super excited about I’m going to go out on a limb and say like not every idea
turns into a.
That kind of sort of public-facing success Nike are there any examples of either Runnings Macy’s had from trying things that may be like weren’t valuable to the customer or or even just like General pitfalls you think about an innovation.

Parinda:
[27:35] Yeah I mean I think there’s
there’s always ones that we will go after that you know that need we launched the wine club early in our days I mean wine is something that people surprisingly search a lot for on our sites and it’s not it’s a very litigious space
and it we couldn’t figure out a way we actually have a lot of liquor licenses but we can’t activate in all of our stores in the right way so it’s how do we get around this problem and
how do we solve for what people are asking for it so so what if we launched the wine club as opposed to actually selling wine in our stores.
And so I think that was a really interesting task we found again I read the right partner that has the distribution and all of the the rights and all of all the states to be able to service that and we launched and I think launched successfully,
at the end of the day it was a really was a marketing Ploy and if you don’t have the right marketing tactics and place you’re not going to be able to get it to the right consumers and consistently it’s a clubs and I think he’s a scription recurring.
Revenue in all of that so I think that one is one that it’s still alive and it’s still good but we have to do a lot of work to continue to revamp like how are we getting this event of our customers in the right way and I don’t think it’s perfect.

Jason:
[28:39] I do have it on good authority that how often is one of the highest volume users of the Wind.
I’m just saying I don’t ask me how I know that but just when you you reference Macy’s having a lot of liquor licenses that’s predominantly on from for your food service and what not.

Parinda:
[28:56] Absolutely and we run a very big food food group you know it’s people don’t.
Look at us as a food destination but I think that’s another one that’s a really challenging one that’s been on my radar in terms of Engagement we think I’ll wear to customers spend their time and their their energy a lot of times It’s associated with food and so how do we play in food in
olestra dishin away because food is a very infrastructure heavy offering and so and the
the price points are very low submerged the business model around food is not always great until can we activate food in an interesting way that
less infrastructure heavy but we can think about ways to engage the customer is it pre-packaged is it is it things that we could is it
instagrammable moments that we have to share around food and and how do we continually conceptualize around that we haven’t landed a great answer to that yet but we’re working very closely with our food seem to say how do we make sure we can bring food to more location because we know that.
Just one coffee offering coffee in our stores amount of radiated sales that it drives it’s pretty significant so how do I activate that and more location.

Jason:
[30:00] That know I’m certainly very grateful to your food team it’s a cohort of one but I spend an awful lot of time doing store visits and I’m well known for having a significant Starbucks problem.
It’s a wagon traditional retail I had to always like visit a Bass Pro Shop or a Macy’s in the middle of my day because I could rely on that that Starbucks fix
I’ve been doing a lot of working grocery lately and that’s why I like revolutionary for me because they all they all have a Starbucks franchise.
That that is a totally fun and a great example of where there’s maybe opportunities that people haven’t.
Haven’t totally figured out yet.

Parinda:
[30:39] Yeah there’s so much disruption happening in the food space everything from the delivery side to just Innovation and food Concepts as well so I think there’s just opportunity.

Jason:
[30:47] Yeah it’s I feel like one of things we talked a little bit. The show is as a result of digital disruption in the old days you had restaurants that mainly focused on on frame consumption you had
Quick Serve that mainly focused on these like
eat utility-based me occasions and you have grocery that you you know focused on it at home consumption and
digital is blurred the lines between all those Concepts in so you now have people like using mobile order and pay to get fast casual food faster than they used to be able to get quick-serve,
and you have grocery store serving Ready-to-Eat meals and doing home delivery and in like the good news,
addressable market for all those Concepts just wildly expanded the bad news is the competitive set for all those landed at the same time.

[31:37] Awesome I can talk about this stuff all day
but I am giving your your role in Innovation and I know you have to always be looking forward and I’m I’m always interested
get other practitioners povs about where the markets going so if you were to put your sort of Futures hat on or jump in the hot tub time machine with me and come to etail East,
I know that was just a bad visual you didn’t want.
I should have done the DeLorean Bedouin tells me when I do the time machine DeLorean that I’m dating myself so I’m trying to have more contemporary references
but I digress 2025e tail has the shopping experience involves like like any any premise about you know sort of things that may be on.
Typical today that will be common or what.

Parinda:
[32:24] Yeah I mean I think probably no surprises here but I think the concept of personalization is increasingly important convenience is increasingly important,
I think connected experiences so you know just what we were talking about in the panel
this morning is really about making sure we are everywhere
I’m along the customer journey and making sure if she’s on her phone if she’s at home if she’s in the store we can deliver the same experience throughout and that’s connected I think that’s increasingly and important. I also think what,
exciting for me is just their new places that our customers are hanging out or they’re spending their time when you think about there in rideshares there in.
Places that we are not there and so can we be there or do we have the authority to play in that space and so I think there’s a lot of more white space than there was before I think our traditional competitors are no longer our only competitors and I think that,
that the volume of where you could be it has increased and I think that’s just more it’s more that we could be doing and I think,
using our space continuing to use our space differently so I think there’s going to be a lot more activations and experiences I think that’s.
Something that our customer is asking for and so how will the retail shopping experience I don’t think it’s going away I don’t think physical is going away but I think what they see in the store could
be wildly.

[33:44] And so I think that’s what’s exciting about continuing to operate stores and having really Prime real estate to say how can we use this differently and how do we start thinking about activating new things.

Jason:
[33:55] Jansen what sounds like that’s some job security for you.
And that’s going to be a great place to leave it because it’s happen again we’ve used up all our listeners a lot of time so if you’re dying to continue the conversation you can always hit our Facebook page
or I reach out to us on Twitter as always this would be a great time to jump over to iTunes and finally give us that five star review that you’ve been holding back
but Brenda if folks want to find you online do you live anywhere on the digital web.

Parinda:
[34:23] I mean I do I’m on LinkedIn is probably the easiest place to find me a 4 in the Malay it’s a pretty straightforward there’s not a lot of friends out there but what.

Jason:
[34:32] The exact right amount.

Parinda:
[34:33] Pretty easy Vine.

Jason:
[34:37] Awesome so we’ll put that your LinkedIn Link in the show notes and thanks again for coming and spending some time with us today.

Parinda:
[34:44] Thank you for having me.

Jason:
[34:45] And until next time happy commercing.

Oct 10, 2019

EP191 - UNTUCKit Chief Digital Officer Lockie Andrews

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

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

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

http://jasonandscot.com

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

Automated Transcription of the show

Transcript

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

Lockie:
[0:59] Thanks for having me.

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

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

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

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

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

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

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

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

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

Lockie:
[4:27] Yo absolutely.

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

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

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

Lockie:
[5:18] Yeah yeah.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Lockie:
[13:36] 75 stores right now.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Lockie:
[18:19] Absolutely.

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

Lockie:
[18:33] Exactly exactly.

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

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

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

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

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

Lockie:
[21:29] Oh yes yes.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Lockie:
[33:17] Absolutely.

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

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

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

Lockie:
[33:34] There you go.

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

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

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

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

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

Oct 4, 2019

EP190 - Marketplaces Deep Dive

 

This episode is a deep dive into Marketplaces.

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

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

http://jasonandscot.com

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

Automated Transcription of the show

Transcript

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Jason:
[28:00] Fair enough.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Scot:
[56:18] Coco Rico.

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

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

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

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

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

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