EP217 - OfferUp CEO Nick Huzar
Episode 217 is an interview with Nick Huzar (@nickhuzar), the Founder and CEO of OfferUp (@OfferUp). OfferUp is the largest mobile marketplace in the U.S, facilitating consumer to consumer sales of second-hand goods.
In this interview, we discuss OfferUp’s recent fund raise, the acquisition of LetGo, and the state of C2C Marketplaces during Covid-19.
Don’t forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.
Episode 217 of the Jason & Scot show was recorded live on Thursday, April 23rd, 2020.
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.
[0:24] Welcome to the Jason and Scott show this is episode 217 being recorded on Thursday April 23rd 2020 I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-host Scot Wingo.
[0:39] Hey Jason and welcome back Jason Scott show listeners we are still recording during this fun pandemic shelter at home period and
because we normally when we’re not she’ll bring it home have day jobs record the podcast late late at night it really restricts people that are crazy enough to come on the podcast so we’re using this opportunity to go through what I would call our Marketplace bucket list.
So today on the podcast we have another bucket list guess this is pretty exciting.
One of the biggest Trends in US market places that’s kind of under the radar and if you go to like a lot of trade shows and stuff
but it is if you look at traffic data you realize there’s a really big movement here,
is what I would call a new family a new innovation around smartphone app based consumer to consumer or some people say person-to-person marketplaces.
So today on the show we are really excited to have the CEO of what I believed to be the largest one of these these new kind of mobile market places we,
the CEO of offer up Nick who’s are welcome to the show Nick.
[1:43] Thanks for having me it’s great to be here.
[1:45] Do you prefer person-to-person consumer-to-consumer or do you use some other lingo.
[1:50] I think it’s I think it’s all the same that the the main idea is you know leveraging this technology that’s in all of our pockets to kind of reimagine local Commerce as we know it.
[2:05] Awesome and Nick we may be the only ones in the planet that have a Marketplace bucket list but we’re we’re.
[2:14] Everyone needs one.
[2:15] Yeah everyone should have one but I feel like we’re the only ones that are cool enough to actually have one so thanks for helping us check one one off but before we jump into OfferUp in marketplaces
we always like to give listeners a little bit of color about your background so can you tell us what you’re doing and how you came to OfferUp.
[2:35] Yeah happy to so I’ve always been in the I’d say the Internet space pretty much since I graduated college.
[2:42] Kind of dating myself now but I used to I remember coming out of school I had to explain to people on companies why they needed a database connected to their website so that’s kind of gives you an idea of when I graduated college.
But I’ve always been fascinated by I think the the endless possibilities with the internet so in some way shape or form of.
I’ve been in at various startups you know throughout most of my career I did some briefs tents at T-Mobile.
Spend a little bit of time at Microsoft you know I’ve done a few different companies my previous company too,
OfferUp was called connects most people have no idea who the heck we were I’m not surprised but we started.
[3:26] Connects pre Friendster and so sometimes I’ll server after remind people what the heck was Friendster or Friendster came before my space and my space came before Facebook so we were very early I think I’d like to say I learned a lot of a.
Mistakes kind of how to build a company and a startup.
And you know ultimately I had no plans on doing another startup there a lot of work but I had a daughter on the way and I was so excited I went into this room full of stuff.
That I had in my house and I was going to turn it into her nursery and that became the spark,
and that ultimately turned into OfferUp and you know for me would you know I had I didn’t jump on it right away I mean clearly you know I think there’s a long as a graveyard of companies that have tried to.
[4:15] Compete locally but.
I think what what what drew me to this opportunity was this device that is now in all of our pockets but back when we started off her up you know very few people had smartphones in fact there was no Android phone.
So you know what I what I could imagine at the time was like look I just wanted to make these.
I just wanted to clear out this room like quickly and there was no easy way to do that so,
again looking at this device that had was now in my pocket I just kept wondering to myself can we is it time to reimagine what local can be.
You know through these devices so that’s what ultimately you know created this spark for me to want to you know pursue this this this opportunity.
[5:07] That that’s awesome and it’s it’s probably a coincidence I feel like I probably shouldn’t even lump the two of you together but
there’s a prolific track record of entrepreneurs coming from T-Mobile and being very successful at raising funds and I know this because,
the the guy I’m thinking of has the same name as me Jason Goldberg fab.com so.
That may not be good news for you but you’re following in his footsteps.
[5:37] So what year did you found OfferUp is this like 2010.
[5:43] I lose track of time and to be honest I thought like.
[5:46] We’re all doing that now.
[5:47] I’ve years ago I think 90 now yeah.
[5:50] Okay so yeah right when the iPhone one came out so I was good timing
talk us through the funding history I looked up on crunchbase and they were very specific they said you’ve raised 381 million that was funny they couldn’t round up anyway congrats on that that’s that’s always you know,
fundraising isn’t the best measure of success but it is one so congrats on all the fundraising walk us through kind of the funding history there.
[6:17] Yeah well I mean you know going back again to that that moment in my doorway in a room I wanted to clear out I think like like any entrepreneur
you have this big aha moment and then reality hits that you have to actually go build it and that’s when it gets hard and so.
You know again just you know why and I like to remind a lot of people that it people kind of tend to put us in this bucket of oh it’s mobile classifieds and I think.
That’s a fine public perception today but
that’s not to be clear not at all what I set out to build what we set out to build was you know to become the largest local Marketplace period
and that’s you know we what I saw as an opportunity was just unlocking local value and what I mean by that is you know 25% of.
Us households with the two-car garage it can’t park in the garage you know our homes are 30% larger than the 50s but we’re having less kids and so,
just so much stuff stuck in in our homes if you look at storage you know 10% of our population our at storage units but even beyond that and especially now
what about local retail what is what is in these stores like you can never you can’t visualize those things today and I think
the opportunity that I saw was you know again how do you.
Unlock all this value and my belief was it’s locked up because there’s a lot of friction in that experience and so.
[7:43] Anyhow that’s my long way of saying it took us a while to raise funds like the first year we only had a hundred thousand dollars raised,
and we just you know luckily I can code and design and my co-founder could you know set up AWS and set up the back end so between the two of us we pay ourselves literally nothing.
And just coded for basically a year straight.
Um and then year to we had to figure out how to get scale and I’ll spare all the details because I could go on for hours and all the failed experiments that we tried but that was very hard I was a very very hard time so ultimately.
[8:23] Scale from a technology standpoint or scale from a user buyer-seller son.
[8:27] Yeah buyers and sellers and so you know I used to show up to people who pretend you attend to your.
You posted your couch and OfferUp I used to show up and I’d buy it from you,
because we had very few post back then and I wouldn’t tell you that I worked at OfferUp I just wanted you to believe it worked and then I’d bring it back ultimately we had a small office I’d stick it in her office so you can imagine Five Guys coating it a few desks but just junk everywhere that’s what it looked like for a while,
you know it’s one of those fake it till you make it moments but it took us almost two years before we raised our series A,
and I think that was you know I think it was it was very hard I think a lot of people thought we were just trying to replicate,
and what had been done on the desktop you know I think,
you know we are all so early that was another lesson like you know we started really early and so there was no Android phones for a while and so I think that was another.
[9:24] You know I think it was one of those things where we just had to see smartphone adoption take off and then clearly we had to prove to investors that
we actually could get the flywheel to move in a Marketplace we could get buyers to potap by and sellers to post and just continue to get that final to work and so you know and when we raised our series a we were only in Seattle it was very very intentional
there was a handful of competitors at the time and I think they were probably really smart folks but,
on the technical side that I don’t think they were met you know really measuring and thinking about what is success and success is like its liquidity that’s everything and so,
we stayed in one ZIP code until we got that flywheel to Mu conversely we had competitors that were then launching,
they launched an app and so you can use it anywhere in the country and I you know I thought that was disastrous I thought that you know they were not going to.
Have success on liquidity so I didn’t worry too much about them so.
You know where as we raise more Capital over the years a lot of the focus has been early in the early days we just launching
new markets you know we stayed in Seattle for a year you’re so and then register a and with that Capital we wanted to prove that,
we could then roll into numerous other.
[10:38] Yeah so you’re very knowledgeable out Marketplace is to just grind this out yourself or did you know how did you learn so much about marketplaces.
[10:47] Yeah I have I have zero history in marketplaces that and so I actually think.
[10:51] Scar tissue.
[10:54] Benefit you know I remember hearing a podcast once with Reid Hoffman talking about.
Why PayPal was such a success and he said like look I didn’t come from banking like I didn’t know any better I just and I think that was the same.
The way I looked at this like I literally I can’t think of any time where we ever pulled up any desktop websites and marketplaces,
as an example of how to design OfferUp,
it was all just what what was the experience we wanted to create and let’s just design what that is a good example would be,
you know if you open up OfferUp today it’s going to show you items nearby you with some personalization.
And just like this infinite list of pictures when we launched nobody was doing that I mean this was pretty Instagram right so
it was a it was kind of a novel idea at the time and you know we wanted to kind of simulate this treasure hunt right we wanted to have this I just want to visualize
what’s in my neighbor’s garage or what’s in a business down the street so you know I think we’ve taken a lot of just approaches completely different and.
And back to your question I think that’s it’s probably just because we didn’t know any different.
[12:11] Um so I noticed on the crunchbase list there you had some of the some of the late-stage guys some of the mutual funds that have kind of gone early that’s interesting and then I saw Max election so he’s a co-founder of a firm and then also part of the PayPal Mafia has that has he been a good
good addition to the team.
[12:29] Oh yeah Max I’ve known Max just you know over the years and he’s always been very generous with his time and thoughts and.
Clearly very knowledgeable about payments and you know.
So I leaned on him periodically just to kind of pick his brain on what’s happening in the world and how he thinks about.
Your transactions and payments overall.
[12:56] That is terrific Nick for listeners then might not be totally familiar with OfferUp can you kind of walk us through the basic buying and selling flow and kind of what pieces you you help facilitate.
[13:11] Yeah for sure so I think on the buyers you know as I mentioned just briefly a moment ago our our view has been,
you know we want to you know we want to build the simplest largest and most,
trusted local Marketplace and that’s that shows up a lot in the product so you know when you open up the product think of it like walking into a retail store.
And we wanted to make it a very visual you know visual experience and luckily over the years one of our our.
Our beliefs was the cameras would constantly get better and we could you know really show these beautiful pictures you know it within OfferUp and that that has been true and so
you know that’s the first thing I think you notice is a buyer that it is a very different experience than going to a lot of traditional say desktop.
Marketplaces and that’s very intentional we wanted it to be kind of the treasure hunt we wanted it to,
be some elements of serendipity where you maybe are looking for a car and you end up buying a pair of shoes that that happens quite a bit you know on OfferUp,
and so you know our our average buyer you know is on OfferUp like three times a day they engage in OfferUp more like they engage in social media than they do in the traditional.
[14:32] Commerce and so yeah so if you’re a buyer and say for example you’re looking for,
I don’t know what’s popular right now like a lot of things are like like fitness equipment is on fire right now and think a lot of people are stuck at home and they can’t go to the gym,
let’s so let’s say you’re looking for some weights you scroll through you find something there by you then can then you can then read the profile about the cellar like how many radians do they have how far away do they live
do you have trusted connection through friends to that Cellar and you can read through just some overall profile information to make sure
that there’s somebody that you trust and her wanting to do business with and then the process of engaging on you know say those weights is actually very straightforward you can
if it is a shipping item you can just hit a button and have it shipped to you if it’s a local item you can just send them a message and say hey can we meet up tomorrow and,
you know the whole idea from the buyer standpoint was to make it you know a really simple experience but also back to this trust element having a profile and understanding who you’re interacting with,
not giving out your phone number like you know I think in a lot of traditional local market places you have to get your phone number to close the transaction,
um you know OfferUp is really Commerce wrapped around chat so you can communicate all the way to the point of cell without having to give it out personal information.
[16:00] And then on the seller side it’s literally as easy as taking and sharing a photo so like this chair that I’m sitting on right now if I wanted to sell this on OfferUp I would just pop my phone I would take a picture I would give it.
You know a price and maybe a short description and hit post and and less than 30 seconds my chair is now available for the local community to discover and we tend to find that,
people get engagement extremely quickly you know we’ve heard people that you know taking pictures and within a minute you know they get a whole bunch of Engagement.
And you know itself things very quickly so you know like I said that’s that’s a big focus of the product and will continue to be which will be removing,
friction and in the experience and so I think we’re far better today than I think the desktop players just because we’re leveraging.
The power and the smartphone but I still think there’s plenty of plenty of ways we can reduce friction for buyers and sellers.
[17:03] Awesome so so your to set the marketplace buyers sellers can list items buyers can find items they negotiate amongst themselves on pricing,
do you offer an option to facilitate the transaction or do you get into the payment element at all.
[17:25] We do if you enable your item for shipping so when you post an item as a seller there’s a toggle on there to enable shipping or only do local
that is a very fast growing part of our business we launched that in 2018 especially right now with,
with the people stuck at home it’s growing very very fast so you know and that case we take a small percentage,
of the transaction to be able to facilitate payments between buyers and sellers.
[17:55] Gotcha and by the way you made me super nostalgic in the beginning when you said imagine walking into a store because that
we haven’t been able to do that in a few months and it’s like you know it seems trite now I know it was like a much bigger bet in 2010 when you jumped on it but like the the Insight that,
The Experience on the mobile phone would be dramatically different and lower friction than than the traditional desktop one is kind of big and I feel like.
Optimism around the camera I like it keeps paying dividends because I know the new Apple phones that have lidar enem I could imagine you’re gonna be able to get the dimensions of that that desk or chair that you’re selling.
Now or in the in the near future up those kinds of devices.
[18:46] Oh yeah I like I said I think there’s.
We will continue its I always say that we’re kind of Reinventing herself every year so we’re going back and we’re going yep we can make this process better we have let’s save some time here so they’re just so much more we can continue to layer on the marketplace that we have but
back to the point.
You know it’s just these devices continue to get more and more powerful and we can leverage that to make it a better better experience for our customers.
[19:17] Wrinkle so you guys recently announced with your last round that you’re acquiring one of your competitors called let go tell us about that and how that’s going and why you’re doing it and.
It’s always imagine you’re in the midst of integration that’s always fun.
[19:36] Yeah so I mean you know I think the there’s a huge opportunity in the US and I think any time you’re going after a large Market you’re going to have competitors so as I mentioned even when we started we had a handful of competitors,
but I think we were the first to really start to get meaningful scale in a pretty big way.
We tried to stay as quiet as we could for as long as you could we delay doing press for a number of years we just kind of.
Hung out in our office which is in the swamp in Bellevue Washington and didn’t really tell a lot of people what we’re doing but ultimately,
you know we saw that go enter the US and.
You know I think what became interesting over the years was just kind of how we approached you know the market we’ve gone very
deep into many of the top 30 dmas and the country,
as you know as OfferUp we have markets like Phoenix and La where over 17 18 percent of the adult population in those markets is using OfferUp every single month.
[20:41] Um and with let go they you know they are as I said have more of a presence and other parts of the country and then so I think that right there made it.
Pretty intriguing to explore working with them more as we think about how do we how do we grow in other parts of the country even more how do we kind of drive a local adoption where we’re already strong.
So we thought there were quite a few synergies and not a ton of overlap I think people tend to gravitate.
To the market places where they have the most success I don’t think most users are going to use you know a whole bunch of these I think they’re just really going to focus on the ones that,
is producing the best value for them so you know I think that right there was you know as we spent more time with them it became more intriguing that there was a good you know Synergy in our in our businesses.
And then on top of that you know as we wanted to come together we just have a lot of you know I think,
product development ahead of us and things we wanted to build so you know raising capital on top of that was was intriguing it as well and so we’re feel fortunate that their investors invested and,
you know we have I think some of the best investors on the planet and OfferUp and they also participated it in this financing to.
[22:06] Are you going to there’s one strategy and mobile apps to have kind of two apps out there because it’s almost like more virtual shelf space are you guys going to have kind of two apps a little bit of different flavor are you going to consolidate them into one.
[22:19] Yeah well we think there’s a lot of opportunity ultimately in having one experience but we are definitely going to,
tread lightly and into as we explore integration with them the best way to do it so we don’t want we really want to make sure that,
you know we’re taking care of the let-go users and taking care of the OfferUp users as best we can but we’re,
I guess the point is we’re not going to just flick a switch we’re going to spend quite a bit of time and making sure we’re being thoughtful about how we how we come together.
[22:51] Yeah the mobile app stuff is always very tricky because obviously like it’s super hard to get customers to download an app and be and particularly its even way harder to get them to be a regular user of that app and so.
Fragmenting your audience amongst multiple apps you know comes with some baggage but first God’s Point like it also potentially.
Boost your visibility in that App Store.
A random side no just because it’s so sad it’s funny but one of my big clients is Walmart and they’ve had this.
This multi-year debate about if they should have two apps general merchandise and grocery or one and I’ve always strongly felt they should have won,
a few months ago they finally agreed to do that and then a month before they merge the two apps covid-19 pandemic hits and the way it 10x is downloads of their grocery out.
[23:46] Yeah you can’t you can’t predict that.
[23:49] No no so I briefly thought I finally won that argument and then the the community the world spoke.
But I do I noticed that you like to increase the level of difficulty you were just having a kid and you decided to throw in a start-up and like you decided to do a big round of funding and a merger in the middle of a pandemic so.
Props to you for that.
Um the you know to set of marketplaces are super interesting from a marketing standpoint like there’s a lot of debate one big debate is do you expand geographically or not and it sounds like you guys made a.
Intentional decision to get a concentration in some Geo’s before you expanded but the other big question is.
Can you know can you really lean into marketing to one side or the other right so are you no do you try to in hand.
Entice Sellers and then that will like pull in the buyers or do you and try to you know do you try to get buyers and that’ll pull in the sellers like has there been a.
A strategy that’s been particularly effective for you or how do you think about that.
[24:58] Yeah so you know in the early days if I was to say what was one of the harder periods and.
It’s going OfferUp it was definitely getting the flywheel to move and I’ve heard a lot you know a number of people say building marketplaces are really hard and then they’re also really hard.
To kind of break down and you know I know that pain because not only did we figure that in Seattle but.
Every time we entered a new market essentially we were creating a brand new Marketplace so you know what
I used to know what we used to spend a bunch of time on was looking at kind of the overall metrics that really mattered and I used to always say hey we need to get neighborhood sick we need to create the zombie apocalypse
like how do we get you know how do we get you know how do we get the flywheel to move where the seller post something then the buyers there and the buyer has an amazing experience and then they tell their friends and family and it just kind of keeps going and going and going and you know,
what what are those attributes of those markets that are really material and what we found early on was.
Population density definitely matters to a certain degree.
[26:04] You know whether matters like do you really want to move a couch and in Chicago,
in the dead of winter we actually you know we’re thinking about that and then we said no like nobody wants to do that and,
and so luckily we found markets that that we thought you know just had the right attributes and we really over invested in those markets and Allah is a great example I mean I always had massive Market a lot of people have cars they can move Goods around
the weather’s nice most of the year it’s very viral most of OfferUp s’ growth is we spend dollars on marketing but to be clear most of it is word of mouth and I think that’s it goes back to the obsession over the product and,
created a really simple experience between buyers and sellers and and because of that you know most people I run into ask them how they heard about OfferUp and it’s usually friend friend or a family member.
[27:02] Yeah those were I think some of the harder learnings in the beginning you know today where I you know I really give kudos to my marketing team like a lot of the work they do I mean we do all of our marketing in-house a hundred percent,
um you know and that team.
All kind of works together external marketing internal Communications and we’re constantly call them day Traders they’re constantly
um you know looking at markets differently and sometimes they’ll try to drive more Supply and Target sellers more sometimes they’ll pull back but they are constantly iterating all throughout the country
sometimes at a national level but many times on a local level to kind of make sure that,
supply and demand balances is where it needs to be.
[27:50] Awesome and then we talked earlier about like when they check that that available for shipping option that you potentially can facilitate payments,
I forgot to ask.
Right is that exclusively through I could traditional credit card processor or do you guys offer like I imagine consumers could do this outside of you but do you guys facilitate any kind of digital wallet like a PayPal or something along those lines.
[28:18] We don’t today but again this is a big growth area for us and I think there’s a lot of opportunity.
To make a much better payment experience in the US.
Especially now if anyone’s gone shopping recently who the heck wants to carry cash around anymore who wants to touch these POS systems at now like the one at the store down the street from me has like a piece of Saran Wrap over it,
and then it and then it right next to it it has a bunch of hand sanitizer so an egg.
[28:54] Was already unappetizing now it could kill you.
[28:57] Yeah now I can kill you right and so.
If you look to the rest of the world I feel like we are so far behind in the US and you know I’ve had people ask me well why is that and my response is usually you’re asking the wrong question to be asking who what company.
You know is going to be the one that helps to drive this and and I think you know because of our local presence and how many millions of monthly meetups we have and.
You know we have more kind of merchants Now using OfferUp you know I think there’s a big area there in the US but I get I get more and more frustrated.
Week after week of trying to figure out you know another new POS system I could go in there well if I put the chip in all y’all do the chip and then you hit this button why did I gotta do this and I’m.
I just want to pull your hair out every time it’s not a great experience and it needs to needs to evolve.
[29:49] Yeah I actually have an Instagram feed that is exclusively pictures of handwritten notes on POS terminals explaining how to use them.
[29:58] I gotta I gotta I gotta follow you then because I hear hear.
[30:00] It’s Saturday it’s not hard to find.
[30:04] Now how to find material and yeah it’s funny because it’s like people forget but PayPal and the US and Ali pay in China they you know their original purpose was not necessary to digitize cash it was,
to you know create a more robust trust system for peer-to-peer transactions and so I could certainly see that playing out.
[30:28] That’s and that’s a big part 2 I mean that is that is a big part is really,
bringing trust into local transactions you know and and online you know it’s,
it’s already there anyway if you’re shipping things it’s already you know that’s that path has been proven again and again so this is definitely an area where we’re pioneering and there’s still a lot to figure out but something I’m definitely passionate about.
[30:53] Nice and then unfortunately is like it’s things start opening up from the pandemic we’re likely going to be in a.
Some flavor of recession and you know a lot of consumers could be tighter on credit so you know I could even imagine things like like the installment model and things having a.
Having a role but in addition to that the other thing that would.
Maybe fit at some point is do you guys think about ever helping to facilitate that shipping when that’s an option.
[31:25] Yeah so so today we as I mentioned we introduced this in 2018 we have payments and
we’re presently enabling shipping for items under 20 pounds and under $500 so you know part of that was simply just to kind of get the foundation and get the Kinks figured out and there’s been a lot of work,
as you can imagine when we first launched that but over overtime like I envisioned that anything on OfferUp should be,
deliverable in some way shape or form so I think there’s a lot of work to figure out how to do that the right way,
so that will continue to explore different ways to do that.
[32:09] So if you’re if you’re not in the payment flow then unlike a traditional Marketplace like an Amazon or Ebay then presumably you’re not taking at a crate
so explain to us what is the business model where are people paying the list or our walk us through kind of the different areas where you make money.
[32:31] Yeah so there’s there’s two different I’d say kind of buckets for monetization today at OfferUp and the first one is promotions and the second one is paying so
you know when it comes to Promotions our Focus there simply to help sellers to be more successful.
So you know we have first party ads for example where you know you could come in as a seller and you know you can pay it increase your visibility on the platform
just helps you sell things quicker there’s also a reoccurring subscription model there where you could say okay
myself quite a bit you know I’m going to I’m going to pay a monthly fee and I’m just going to keep rotates a five items into that into the feed
and we and we help to that seller to sell those items faster,
we also have a Autos business where you know this this was
I’d say a vertical that just blew up on us that we had we had wasn’t like we were Geniuses I swear there was probably just a convention
one year and I think Vegas and I think somebody must have stood up and said hey I’m selling a lot of cars on OfferUp and all said and this vertical just beginning.
[33:46] Huge for us across the country and so in the last few years you started to spend more time
thinking about how we can help auto dealers to be more successful so that is another promotional tool where we integrate with their their dealer management system so they don’t always have to use the app you know if a car goes on the lot the magically goes on OfferUp.
We also give them advertising analytics they get a special badge on their profile there’s a handful of things we do to make sure that
this they stand out and so we have thousands and thousands of paying car dealers and that’s growing very rapidly,
and then on the payment side it’s you know today mostly shipping as I mentioned.
And that’s that’s why we’re taking a small percentage of transactions there.
[34:36] I’ve also seen some ads like a big Star Wars fan I see game stock advertisers bunch of cool stuff in the Star Wars category is that is that if you guys built your own ad Network or is that pulled from like another ad network of some kind.
[34:49] Yeah so we incorporated you know the third-party ads that you see in there are a number of years ago primarily because it was easy one and two it actually.
Helped buyers and it was one of those where I was saying we’re never going to put ads in there it’s going to ruin the feed.
But I found actually the opposite was true where buyers were finding that hey maybe if I couldn’t find that kids bike down the street that I wanted but maybe I could see one you know,
from a you know some local retail store and have it shipped to me or go go buy it.
The other thing that it did was also enabled people to do some pricing comparison right so they maybe they see that brand new bike and they see one very summer,
in the feed and they realize they’re getting a really good deal on that so we do do some third party advertising which you can kind of see through out the feet as well.
[35:47] Yeah I think you guys do a great job at it there’s a price and it’s very clearly an ad where it’s not like you know someone named other marketplaces where you’re kind of like you know
Max why is this showing up and you’re targeting is really good to other ones you’re kind of like why am I seeing this random iPhone accessory when I’m over here looking for couches.
So so that’s super helpful you mentioned earlier a bunch of kpis to get the liquidity going give a give lister’s any metrics you can share and you know I don’t want you to
get it any uncomfortable space but anything you can give us about the scale of the business to help them understand I think that would be interesting.
[36:26] Sure yeah so I think the you know what I would say you know going back to.
Be buying things from people in the beginning liquidity and my mind is everything you know the switching cost to join to try any marketplaces,
is not not that high so we wanted to make sure that we were we were the best Marketplace we could be for local buying and selling so,
you know what I could say around that is you know on a monthly basis we have billions of dollars in GMB,
from transactions happening on OfferUp and so it’s great to see that we’re providing that value and success for buyers and sellers.
You could also probably glean this from the App Store but you know the OfferUp app is now but installed over 90 million times we’re only focused on the US.
So we’ve been a top I’d say we’ve been a top-10 shopping app for many years now so I’m pretty proud of that considering.
You know we’re up there with giants you know multi billion dollar publicly-traded companies so it’s pretty happy to see that.
You know people have been telling others about OfferUp at such a high rate that it’s kind of.
You catapulted us to the top and we’ve been there for for such a long time.
[37:45] And I think I think the other thing again but I’d share is kind of what I said before is we have markets a lot of our special you know top markets where you know we’re close to 20% of the entire
adult population using Opera every month and I think that’s only going to get better as we continue to improve on the product experience and drive more,
you know adoption there.
[38:09] Let’s try to think again maybe something worth sharing with listeners around just what’s happening you know with the marketplace today and so,
you know if anything you know I really feel for.
[38:22] You know a lot of people and what they’re going through out there right now I think a lot of businesses are hurting not just for additional but also tech companies and.
Fortunately for us it’s the opposite like we are we have been growing so quick over the last number of,
months and the categories are really changed like I think part of the challenge is people can’t you know they can’t go to the store down the street so how are they going to get certain Goods,
and so our shipping business or seeing a lot more people shipping things electronic specially videogames I think video games are very you know trying to keep the kids busy.
You know locally we’re seeing a lot of what I call kind of porch pickups where people said hey let’s stay stay stay safe as socially distance but hey I’ll just leave the you know just leave the dresser out on the.
[39:17] On the on the on the patio or the door and just leave my knee or the matter.
Ring the doorbell and show me that you’re leaving the money there so I think there’s,
you know I think people are behaving differently but we’re definitely seeing a shift in categories where like I said like Fitness is way up household goods Electronics tools,
things around the yard so not I don’t think surprising for most people but definitely seeing it’s been great to see how OfferUp during this time is able to really you know help help people and how those categories have changed.
[39:57] Sprinkle the so we saw such an advisor when I say we is interesting we saw the
the stimulus checks hit like starting on the 15th and it’s we saw this kind of overall lift this is all public from webinar we saw this overall lift and then like this really interesting kind of taking off into another gear around then,
did you guys see anything around that stimulus check time.
[40:23] Yeah so the you know this is an interesting time of year for OfferUp heart of it is usually spring cleaning,
and that’s definitely happening quite a bit but we’ve also noticed
around stimulus and and tax time it definitely a lift you know you can you can tell when people are getting their taxes or tax refunds and stimulus check so by the day as you can see like this huge,
step up and overall engagement.
[40:55] Yeah like on the flip side of that are you finding any extra challenge like you know a lot of your goods were we’re sort of handed off person a person and I imagine there’s extra trepidation about.
Social distancing and stuff like that are you having to take extra steps to make people comfortable with with person-to-person transactions right now.
[41:19] So we you know we spent a lot of time just kind of thinking about this and we have a Blog where we posted kind of our overall points of view and guidance on that I think the challenge clearly is it say,
it’s a local city by City,
decision and it’s still shocking to me that there’s still a number of cities that haven’t really quarantined so you know I don’t think it’s our call to be specific.
On exactly what you should and shouldn’t do but we did have some overall high-level guidelines and encourage people to pay attention to what you know your city and officials are saying locally and try to adhere to those.
But I think it’s a definitely a kind of a,
get a thread the needle lightly because we want to be able to help people but we want people to be safe and especially when stores and resources are close like where can they get things right now and so,
I think in one level we’re providing a service to help people but we want them to be safe and adapt.
[42:26] You know we’ve seen auto dealers for example selling cars right now and you’re kind of like well how is that working and what you’ve seen them do.
You know the post an item on OfferUp and they’ll communicate around it and then they’ll jump on the phone with the the buyer and they’ll do title and they do all the paperwork and financing.
And they just bring the card I just bring the car to the buyers house and they just wave at him out the window here’s your car congrats and I’ll leave the key right here for you and.
So this you know you’re seeing people you know adapt during a time like this to figure out how to how to make it work.
[43:05] Yeah that’s fascinating and you mention Auto which is a an interesting category to me like you you don’t necessarily think of that as a.
Peer-to-peer ton of play but it really is right like is that a category you guys entered intentionally or was that a pleasant surprise or how is that played out.
[43:27] Yeah so as I mentioned a little bit earlier it was it was a pleasant surprise I would love to say we were Geniuses and really figured something out there but,
um I think it’s again back to,
trading this this very easy to use local experience I think a lot of dealers started jumping on our platform because it was so easy to list cars and attract a lot of buyers,
and so we just move clearly benefit benefited from that so you know I think I definitely think today we’re probably one of the top places in the country,
to buy a car I mean we sell.
Millions of millions of millions of cars on offer up every year and so you know it’s definitely a big vertical for us that will continue to invest in.
[44:15] That that’s awesome the like another one that I’m just somewhat curious about so I try to follow the Platforms in China pretty closely and obviously you don’t taobao is,
is a huge consumer to Consumer platform there and one thing I’ve noticed over the last like four or five years is.
They have dramatically pivoted from being super product-centric like being a catalog of product to being very content set direct so they’re like really leaning into the microblogs and the short video and all those sorts of things,
like I haven’t seen that as much by anyone in the u.s. like do you think that could work in the US or do you think there’s just a different sensibility or.
[44:58] And just to elaborate on what you’re saying are you are you talking about where people are showing off products and are these short videos.
[45:07] Yeah yeah it gets it’s like a seller would you know now is likely to have their own page on you know I like think of it like a microsite on taobao and they’re they’re doing like HSN Style,
you know what a little 60-second product demo videos to sell their goods.
[45:26] Yeah I mean I think that’s definitely interesting you know I think that’s something that we could continue to explore and play with overtime,
you know I think there is a time and place for that
especially if you’re a power sellers selling you know a lot of items and you want to build some Affinity around what you’re doing you know today at least you know the majority of OfferUp is really kind of overall,
you know peer-to-peer so.
I wouldn’t say your I could see your average seller doing that and depth but I could definitely see I think more powerseller spending the time to do that and then again like I said before these,
phones keep getting better right the quality is getting better all around and so I think it’s just a more engaging experience versus what,
you know what it may have been in the past.
[46:18] That’s a good let’s let’s explore that so you obviously spend everyday kind of marinating and the e-commerce juice of marketplaces and transactions or anything where do you think things are going to go in the next three to five years or we’re going to have like.
AR VR or do you think it’s just going to be better kind of experiences along the lines of what we’re having here.
[46:39] Well I mean I definitely think there’s a big there’s a big movement happening it’s already been happening but
I think because of covid it’s probably going to move quite a bit faster and that is just the overall again unlocking of local value in my mind you know
85% of Commerce,
it’s still not online today it’s local and I think for everyone that’s in Tech we’ve kind of scratch our heads and like Oh I thought we all used you know the big e-commerce players that are out there and,
um I think they will continue to evolve and probably grow and chip away at that number,
but I think there’s just a lot of Locked Up value all around us and you know part of our vision is how do we create the best experience and help.
You know sellers to bring those those things online so I think that that moment is going to happen,
at an accelerated Pace especially right now you know I think there’s a lot of struggling businesses that,
you know soon as covid hit and their physical store closed then the answer was like well now what do I do and so,
you know if they can bring product online we can help to facilitate those those transactions in the pretty meaningful way so.
[47:59] My vision for OfferUp has always been I just I just want you to open up the app and for almost anything you need locally we have it and we’re able to help you facilitate that in the easiest possible way that we can do that,
so you know again it’s great to see
that we already have you know huge percentage of the population using the product and buying and selling things you you know billions of dollars worth of goods every month but I still think we’re in the first inning I think there’s just a lot more we can do,
you know for our customers.
[48:30] Cool nigga you know one thing that we haven’t talked about yet is,
our friends at Facebook like they obviously have this Marketplace platform is that a direct competitor is that like how do you think about Facebook Marketplace and is that getting any traction.
[48:46] Yeah I mean to be clear Facebook has had some type of Commerce even before we started OfferUp I mean you know I think,
Facebook has definitely been,
you know a large Network and there’s there’s a zillion different things you can do on there including Commerce so you definitely have to take them seriously you know as a competitor.
You know I think the other thing that I think gives me you know some level of comfort is just how many different things they have to focus on as a company like it seems like.
For every competitor that comes out they immediately have a solution or they’re trying to create their own there so I think they have many different things they’re trying to do and we have one and we’re going to go very deep and do that thing.
The best that we possibly can and obsess over that but you know definitely a competitor and as I mentioned.
Anytime you’re going after a large Market you’re going to attract competitors so.
Yep they’re the out there and definitely definitely spending time on Commerce for sure.
[49:55] Yeah it’s usually a bad sign if no one else on the planet ever wants to go after the same Market you see.
[50:00] Yeah your idea is probably not a good one.
[50:02] And Nick that’s actually going to be a great place to wrap it up because we’ve used up our allotted time but if listeners have any comments or questions
we encourage you to continue the conversation with us on Twitter or on our Facebook page and I really want to thank you for
taking time out from this crazy pandemic to talk with us about marketplaces.
[50:26] Thanks for having me it was good to finally talk to someone else because I’ve been hunkered down in my Den now for seven weeks so thanks for getting me out of the office mentally.
[50:39] So we really appreciate it and then if folks want to follow any of your thought leadership or anything do you are you a Twitter or you still on prinster you mentioned that was that earlier.
[50:51] Yeah you can find me on Twitter at Nick huzar.
[50:56] Awesome and we’ll put that in the show notes so everyone be safe and well out there and until next time happy commercing.
EP216 - Marketplace Pulse founder Juozas Kaziukenas
In this interview, we discuss the state of North American marketplaces, their trajectories, and current impacts of Covid-19.
Don’t forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.
Episode 216 of the Jason & Scot show was recorded live on Thursday, April 17th, 2020.
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.
[0:24] Welcome to the Jason and Scott show this is episode 216 being recorded on Thursday April 16th 2020 I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-host Scot Wingo.
[0:39] Hey Jason and welcome back Jason Scott show listeners
Jason we’ve had on our list of folks who want to have on the show for a while our guests today,
but because we have a weird recording schedule because you and I have day jobs we usually record late at night and that’s inconvenient for most guests we were excited one of the Silver Linings of the pandemic is we can now
record during the day so we are really excited to have Joe Kazuki – also known as Joe Joe is the CEO and founder of marketplace pulse
welcome to the show Joe.
[1:14] Hey Jason and Scott thanks for having me.
[1:17] It’s awesome to finally have you on the show Joe and as Scott pointed out I’m having trouble adapting to this giant Yellow orb that’s facing me while I record a podcast that feels very unusual for me.
So Jo I know you’ve listened the show before before we jump into it
what we always like to get a little bit of background about our guests so can you tell us a little bit about what you you did prior to Marketplace pulse and what led you to start.
[1:49] So I think all the way back in 2008 me and a bunch of friends started the books e-commerce company.
Kind of Amazon 0.1 and then 10 years forward from that I’ve been much more focused on marketplaces stand of understanding the markets both here in the US and.
And what right.
[2:13] That’s awesome and so then like what gave you the actual inspiration to launch launch the like sort of editorial side versus being a practitioner.
[2:26] It’s funny because I was reading about biggest stars and YouTube.
And it kind of meat it’s kind of made me think like who would be the biggest retailers and the biggest merchants on marketplaces specifically being Amazon so Marketplace post ended up starting off as literally a list of top Amazon sellers.
Thank you used to be called Doubles in size that’s calm and since the launch I started noticing that a lot of Sellers and other brands in this space,
kept coming to the site to check the rankings to see how everyone’s doing and since we were kind of collecting so much data and through that data getting so much Insight that overtime kind of blood more and more towards the story of content as you can.
The trends we’re seeing the changes we’re seeing that the data we are seeing that all about that content and.
I think I spent the next three no it and it sort of content and kind of sharing articles on our side became a pretty big Focus.
[3:28] Very cool so tell us where does the data come from so so I think I have an idea but I kind of want to hear it from you and you maybe include what marketplaces does your technology look at and then what types of things do you look at across those marketplaces.
[3:45] So we try to look at all the major Market places both in the US and Europe and elsewhere so like Amazon eBay Walmart cool shopping target market place which at Sea and I’m sure and others as well.
And the data you collect is kind of center around probably two main areas.
First one being open merchants and sailors on marketplaces and the second one being Brands and products.
And so to understand that and kind of get the data we just run a pretty.
Pretty large set of data ingestion operation which relies on scraping and apis and all the partners and other sources of data.
We collect as much as we can we can of clean it we store it we are private obviously over the years,
and value whatever use case becomes the we are able to look back at the data and provide that because I actually as a business we work primarily with other companies for building marketplaces themselves,
so we help them that that by providing data on the kind of a leading Market places.
But also since we look at this data all the time and we talked to people like yourselves on the time being we also kind of get questions asked and we try to answer these questions from our data and going to publish them on our site.
[5:05] So if Jason and I opened up a Marketplace for our podcast that featured travel coffee and Star Wars stuff we could come to you and say hey what are the top selling.
Star Wars items across these categories and what’s big and coffee and you can you can look into that data set and then make recommendations based on what you see across marketplaces is that a,
instead of good use case.
[5:31] Are we going to help you figure out the categories that Brands you should be selling where would you be sourcing these Brands so it which sellers can provide you that assortment,
as well as getting into more specific details like hey which Partners you should be working to help you with the onboarding of sellers or like what’s a partner ecosystem even looking for you so it’s kind of a multi-dimensional,
problem for a Marketplace because it’s it’s really not just a product you can on board but also the core we sponsor coming from who is fulfilling them who are Partners in the software space etc etc.
[6:04] Even without your data I’m pretty sure travel is not a good category during the pandemic.
[6:08] It’s definitely not it’s definitely not.
[6:10] Making a long-term I’m thinking long-term.
[6:13] I like it and so like do you have full-time developers that are constantly like having to sort of tweak your your data acquisition tools as the marketplace has sort of changed,
[6:30] So we are a tiny company but luckily we rely on a lot of automation to kind of validate the data they’re ingesting as well as to notice any sort of changes in the kind of ingestion pipeline so,
that’s usually not a big problem for us any sort of changes these marketplaces make and getting Hands-On pretty pretty quickly.
[6:51] You ever just sell the data so I know from my experience at Channel advisor there’s about a bazillion Wall Street people that want to build hedge funds off data like this and do all kinds of crazy things is is that part of your business model or it’s really more
kind of advisory Services based on the data.
[7:07] So we do some data but primarily to marketplaces and kind of software and services companies in the space of e-commerce we had had many conversations with Wall Street companies as well but.
I guess so far we found that there are much better sources in this kind of alternative data space for the Wall Street Market.
Primarily being like most of them utilize kind of credit card and email processing data.
Robbery been potatoes about the marketplace itself so it’s like if you if your what if you’re involved with anyone understand Amazon you’re much better off acquiring credit card data than what we can provide for you because they’re sort of things they’re looking for are much more.
Going to particular to the noise and I guess our data would just have too much noise for them but we had kind of.
Be honest we had to leave the try to come and help them understand what this even the Amazon Marketplace because of all the kind of award e-commerce players in the space that you still find that it’s going to the most misunderstood player in this space,
given how large it is.
[8:11] Yeah isn’t that interesting just to follow up on the data so I think of you like,
your methods you’re going to get much better visibility to the digital shelf like what products are offered like the velocity that stuff is moving on and off shelves,
Like in any of the attributes about the products that are on the shelf that that like credit card data set you mentioned is going to see a lot more about the consumer Behavior so it almost seems like.
They’re there to sort of different data points that like together tell an interesting story am I thinking about that right or.
[8:48] Yeah that’s true that’s true so we try not to spend too much effort in trying to estimate sales velocity for anything because that’s really.
Well done from credit card data and of emails and all the other alternative data sources I guess we spend much more effort collecting data on the covid building blocks
it’s like a products themselves and Brands themselves with all the merchants and sellers and categories and how all that’s kind of space looks like on a kind of very granular level.
[9:14] Yeah now I’m curious you started out as an e-commerce entrepreneur and now you your super deep and knowledgeable about.
The the sort of opportunities that you know emerge in marketplaces like where there’s a gap between,
demand and offers and you know where there’s a good source of product all these things I it has to be tempting sometimes to want to act on that data yourself versus.
Showing that insight to others.
[9:48] True true but at least for now the focus has been much more in the data side of things as well as like the market self understanding the market,
and I think having been in in this kind of in a position of selling things before I both miss it and don’t miss it at the same time.
Especially especially in times like these where kind of sales are compressed for everyone in marketing budgets or cough I’m I guess I’m someone happy not to be selling any products I think given moment.
[10:18] Yeah fair enough and then I did one other granular question about the data so like of the people that are,
like watching marketplaces and sort of extrapolating data from marketplaces it seems like you you do extrapolate data about the products but what,
you’re also getting a lot of data about the sellers of the product and so I actually think of there’s some other companies out there that also.
Monitor the digital shelf and they focus mostly on product data and they sell that actually back to Brands so I think of like.
Edge essential or profiteer or companies like that the kind of monitor the digital Shelf,
to tell Procter & Gamble how you know how their product is being presented versus someone else’s but the data source that I see like you ever go out that I’m not familiar with anyone else that provides is,
information on the actual sellers like how many sellers they are you know are they domestic sellers are Chinese sellers like what categories is the seller based growing things like that am I.
Am I accurate or am I misinformed there.
[11:29] Absolutely Services business has been kind of the core dataset we’ve been building since we started,
specifically being all the sellers and Merchants on these marketplaces and we try to,
beside you basically collect data on every single Merchant on all these marketplaces to have.
Like a full understanding of what’s working for these Merchants what are we selling who are the top Merchants where do they come from like how to be fulfill things etc etc because again on marketplaces.
Differently from an online retailer on the marketplace it’s not just about the products it’s also about the kind of a supply side of things and where does that Supply inside of things comes from.
For example a question B we tried to answer before was like.
If you shop on Amazon you notice that there’s a lot of items which look like me came from AliExpress or Alibaba.
And yet it wasn’t clear that I’m weak how many of these items are actually sold directly from China as opposed to US based sellers importing them so,
we spend some effort trying to figure out okay covid mountains on Amazon or of all merchants on eBay how many Alexei come outside of the US and others like a surprisingly large number,
large number especially coming from China.
[12:50] Very cool and just as I thought on that one I mean that was one of the trends I feel like you uncovered is there’s this perception that it was a lot of domestic importers and and you’ve really been able to track the growth of,
of Chinese sellers on them on the platforms.
[13:07] Yeah I think most people have this impression of Amazon Marketplace as being largely like a platform for,
people who drive around to Walmart stores and buy Closeouts and then sell them on Amazon Marketplace.
That’s that’s very clearly completely not true and not only is there are many many different types of businesses here in the US we also have an incredibly large.
Portion of a marketplace coming from I thought our countries as far away as China when kind of helped by the Amazon Fulfillment services.
[13:43] Yeah and then the last question we’ve been just talking a lot about Amazon but your data isn’t exclusive to Amazon right like what marketplaces are you guys tracking right now.
[13:53] Amazon eBay Walmart Etsy Google shopping which target market place and a few few Smiles as well.
[14:03] Scot and then mostly the North American iteration of those marketplaces or are you trying to look globally as well.
[14:11] We try to look globally.
For example for Amazon of course we look at all the countries animals and is running the marketplace and should be leaders not 15 15 countries obviously eBay is a global platform at least a global platform which is a global platform,
we don’t spend too much effort yet on looking at.
The properties of Alibaba like Timo and taobao but that’s much more so because we just don’t have a big business case for bath and,
I think most most us Brands don’t really care about them too much yet that’s why we focus much more on like what’s relevant in Europe and the menu in the US.
[14:48] Gotta okay well let’s jump into it so obviously all our listeners are pretty familiar with the
the big Marketplace is right so in the u.s. I think mostly of eBay and Amazon like what what is the high-level story with sort of the tier 2 marketplaces like the Walmarts and wishes and targets are they.
Growing are they getting traction are they like losing share to the Amazon like what’s what’s kind of the,
the macro view of Market places in North America.
[15:21] To me I think tier 2 only has a single company and that’s Walmart.
They’ve launched their Marketplace all way back in 2009 but kind of really got into it.
In 2016 and probably over the last couple of years made it an actual important part of Walmart itself.
Just from an announcements you saw about the company as well as the seller acquisition we’ve done I think just very sweetly finally surpassed 40 thousand merchants.
Which we acquire my very very differently than Amazon so that number is actually pretty,
pretty large because they acquire an approval to join Roman marketplace so woman is on a very good job at integrating the marketplace into the.
Kind of overall Walmart selling experience and buying experience you can return items from the marketplace into Walmart stores as well as all that other stuff and then you have,
to me I think like a baseless third-tier,
of marketplaces the likes of wish and go shopping and target market places which are basically either trying to do similar things like Walmart or or Amazon is done,
for our very strong in their in their own niches like for example XE is obviously not trying to compete with Amazon but at Sea on their own right is an incredibly strong Marketplace in the handmade and vintage Goods.
[16:40] And and to me it’s probably the most exciting kind of development in the spaces it’s probably all the niche market places marketplaces which focused on the particular category of products for a particular use case,
obviously at seize the most known now,
but you see many more and clothing and sneakers in streetwear in any sort of imaginable category,
and they tend to view the content around the marketplace much better so they’re not only being debate Supply they also kind of build content and tutorial content around it which tends to work really well.
And and then you probably have even more so kind of.
Kind of traditional retailers still trying to launch their own marketplaces but to me that’s.
Probably an old strategy kind of companies trying to be much more like Amazon but they’re probably not kind of strong players at the moment.
[17:38] Gotcha so just to kind of put some rough orders of magnitude to this like like how many sellers are on Amazon right now.
[17:46] What Amazon has over eight million sellers worldwide so three million just on amazon.com in the US.
[17:55] And then in do you have an estimate for the number of skus that are offered or a.
[18:02] It’s funny because we get asked about this on specific on Amazon school calendar all the time and as of probably the last two years we have stopped tracking that number because it became completely meaningless,
I think the last number we had from years back was 550 so 560 million skus.
And since then it became even larger and yet.
It doesn’t it kind of it no longer represents any sort of meaningful metric to track because Amazon adding a hundred million more skews no longer represents in any sort of measurable sales growth because these skills get kind of.
We stayed in there in the vast Universe of battle sounds good.
[18:43] Yeah and I assume there’s a tremendous amount of churn in there too so I they added a hundred million skus about a hundred million skus died and no one’s ever going to see them again.
[18:52] Yeah I was going to Amazon’s assortment this is the most chaotic assortment in retail probably ever invented,
because it not only are we having thousands of new sellers everyday all these sellers are bringing probably tens or hundreds of thousands of often new products new private label products.
My place every day so like a sort of changes in the SKU count are pretty much meaningless.
[19:14] Yeah but it’s still helpful to me in this one context this sort of order of magnitude context so so Amazon’s got three million sellers in the US and hundreds of millions of skus,
and then you kind of cat characterized Walmart as a,
growing tier 2 Marketplace so put that in perspective for us you said that was forty thousand Merchants verses.
[19:36] Walmart has 40 thousand merchants and they have much less an Amazon because they’re kind of an invite-only approval Marketplace so you can’t just join Walmart they would have,
ten times more Merchants if it was open and Walmart has 15 million skills at the moment.
[19:54] Yeah and and if I’m not wrong 50 million actually represents tremendous recent growth from them because before they really leaned in in the marketplace they probably had under a million skus.
[20:05] Yeah so one of the numbers we always tracked about Walmart is how much of a catalog comes from Walmart itself and how much of that comes from the marketplace and.
Pretty much since 2016,
all the girls that’s something the marketplace like Walmart itself still only sells I believe three million excuse and all the other skills have come to the marketplace.
And so then like what is your sense is there and so you kind of you gave us this nice framework Tier 1 Amazon eBay tier to Walmart and then tier 3,
General Merchants wish Google Target and then Niche niche market places.
Is there more opportunities for General Merchants marketplaces like could you see a Google or Target catching up to Walmart and being a tier 2 player,
could Walmart like ever catch up to eBay and you know be a alternative to your one player or do you feel like.
I assume you’re going to say there’s plenty of opportunity left for niche market places but like for the general merchants.
Like is a his that played out in your mind or do you think there’s still a lot of opportunity for people to capture share.
[21:24] Three other ways going to stores in this first it’s very clearly that.
What kind of establish large retailers like Target and best bikes should be able to fairly easily to grow Marketplace similar like Walmart.
And achieve the same sort of kind of merchants Grove as well as well as you growth I guess for companies like Target the question is do they actually want that.
Because if you look at their latest quarters they’ve been saying that most of our sales growth is coming from store delivery.
You can’t really integrate the marketplace into store delivery as easily.
And no actually no one has done that to me you are still so technically you could do that on target but in reality they probably won’t covid at least not going to try it because the stores are working so well for them.
[22:12] And then on a second-tier I think like to me Google’s attempt it’s probably the most exciting because they are also at a company like Amazon and they also have,
theoretically unlimited amount of capital to go after Amazon so if Google really push the pedal.
To the floor and actually tried to go after I was on the thing they could do a pretty good job given the sort of assets we have the given the sort of the user traffic may already have,
but I think for all these companies the question is like do they actually want that because you can become,
like I’m not a couple of billion dollar a year Marketplace launched by Google somewhat easily,
but like Google wants to build a hundred billion dollar business has not been done and our businesses so,
competing with Amazon or launching another meaning for business for all of these companies means having to wait many many years before it becomes meaningful and it’s unclear yet of like is anyone willing to actually wait.
[23:15] Yeah interesting and it is it’s funny like,
you could imagine an alternative reason Google would want to grow it besides just the revenue like they have this super important you know hundreds of billions of dollar Revenue stream called advertising,
that they need to protect right and and if,
if the marketplaces are stealing the eyeballs on the advertising from Google like when one reason Google might want you no more a stronger Market Place would be to keep the eyeballs in their echo system and not have weakened.
To an Amazon or someone else.
[23:51] I think you’re completely right like a lot of shopping already happens at Google,
just Google itself doesn’t really monetize it as much as it wants to nor it can control it as well as it probably wants to,
they always have Google shopping and they have some rich content that Google as a company has done many many things from like they’re all kind of in parts and none of them are connected to an actual shopping entity people can go to,
and the Outlook over the last couple years again Google shopping and still the marketplace they’re adding Merchants all the time they’re going to school calendar trying different things but there.
They’re not a sort of all out it hands as you probably would expect from a company as kind of as big as Google.
[24:33] Yeah and I will see how it all plays out but one thing that get that makes me want to watch him even a little closer as you know like four months ago they did hire Bill ready from,
PayPal and created a new role they didn’t have a Google prior so he’s president of Commerce a Google and so you know you sort of bring in a credible,
e-commerce Weider create this new title like there’s these endemic reasons they might want to do better at Commerce so like that that at least.
Gives me reason to believe that they’re going to lean more heavily into this base.
[25:07] To me though I think there’s one kind of important caveat is how can Google do this and not upset and I trust Watchers.
Because for Google like then adding shopping usually means adding shopping elements in to search for all the other properties we already own they were already find for similar terms in Europe a couple years back,
anything more meaningful with probably risk some of these finds again so for goo is the kind of a balancing act of like how do you actually do that without upsetting the kind of an ecosystem of people who now rely on Google search traffic for the shopping.
[25:46] I know for sure I feel like that’s the one of the new normals right is is sort of balancing your business growth aspiration with your antitrust risks.
[25:53] I would argue that kind of did this with travel to so so they did this in travel where you can actually book right in Google and they got away with it so I don’t I don’t know.
[26:01] For example like if Walmart join school shopping Marketplace and people can just buy through Google from Walmart.
Like does Walmart want that or do they want people to go to actual Walmart and then buy from there it’s kind of.
All these has the advantages and disadvantages But ultimately the larger the retailer is the less they want to be aggregated behind an aggregator on Google so,
I just I could never foresee Google being able to aggregate large retailers like Target or Walmart they will always refuse to be a part of this.
[26:38] Yeah I guess the one Edge case where it seems like there might be some leverage for them to aggregate the big retailers is.
Literally just as a foil to Amazon right so,
you know if Amazon you know if Alexa gets the most traction and Alexa gets built into all these appliances and everyone’s you know now everyone’s appliances as reordering Pantry items,
exclusively from Amazon if your,
Walmart or Target you’re unlikely to build your own smart speaker echo system to compete with Alexa and so you know you may look at Google as the less competitive more friendly partner,
that you might try to enable to be a more complete competitor against Amazon.
[27:24] That’s some people from Google Cloud which is the competitor of AWS and their business Stitch to retailers is basically.
We hate the Amazon you hate Amazon how about you just move all your Cloud infrastructure to go about and this works really well so yes I completely agree like.
Kristen kind of players in this space who will driver who we do anything else but work with Amazon that’s an opportunity.
[27:50] Yeah I think that’s actually the official sales pitch for Google Cloud platform and for Microsoft Azure so.
[27:56] Aggressive very easy fish I’ll take it.
[27:57] Yeah yeah so one other topic we want to talk about in general in the marketplace is is what if any role you CD to see companies playing in this whole Market Place Evolution like,
intuitively like if I took a real literal definition.
It doesn’t seem like d to C in Marketplace like are super compatible but it seems like in practice a lot of D disease think they’re directed consumer play is via marketplaces is that.
Do I have that right or how do you think about it.
[28:31] I think it depends on the kind of the purity of a brand is trying to be I had I am seeing a lot of.
Small niche market places in the DTC space to focus on a particular category so for example sorry I was talking to these guys maybe last month who build a Marketplace specifically for Street Wear.
And all the brands inside of it are already PC Brands because the marketplace can bring them,
obviously Shoppers as well as data they couldn’t get on a traditional marketplaces like Amazon and yet but if you see Brandon has a more manageable kind of acquisition path than just trying to do it themselves.
[29:10] Because to me the reason why kind of DPC doesn’t work on Amazon or any other of these major marketplaces is the fact how how these marketplaces handle data exchange as well as kind of user interactions.
It doesn’t have to be like that so the kind of the more modern Marketplace has built for the DPC space do share a lot more data than Amazon does and douche and do give the way for Brands to talk to their consumers through but Marketplace.
And I’m sending in all this becomes possible so think like is Amazon a great home for DDC brands,
it was fun enough nowadays because we live in a pandemic and some of these Brands will inevitably have to kind of rely on Amazon to get some sales out of it but,
once we have passed that I said I do see that like a lot more Market I just Google built so informative to see space because all these markets can do is basically aggregate,
demand and then the brands can benefit from that much more easily than themselves trying to acquire this in users.
[30:08] It’s like marketplaces are the new virtual retailer you just don’t have the store element.
[30:13] Yeah so I think it’s always been the case that like if you’re Nike you can build a store in the middle of a desert and people will probably come to you,
like most brands are not Nike most brands who built stores in the desert will never see anyone come to them they can’t force people to come to them if they just spend a lot of money on marketing,
but that’s obviously has limited time Horizon so as Brands try to acquire users at much more favorable costs,
like Michael please do play a pretty important role and I think they also allow Brands to kind of acquire the same user.
If I would have to compete with other brands also trying to acquire the same user like a lot of Brands and travel.
Like Barrel raising advertising costs because they’re all trying to acquire the same user even though but same users probably buying from all these branches anyway.
[31:02] The one exception is if that desert is in Las Vegas or Dubai people actually will come to it.
[31:09] I forbid we should wish Italian brand I think it was proud of the builders store in the desert in maybe outside of Texas.
[31:15] Yeah you’re exactly right it’s a fake store but it’s a very funny photograph yeah.
[31:20] But I think to me like my lesson from areas like yes those great yes product you did,
no you’re not a product like most brands are not product most breaths if they tried it will just lose my clique,
to me like that’s kind of the marketplaces versus writing your eCommerce site and tribe you do your own acquisition is shopping mall versus Your Own Story the desert.
Like yes either ghosts can work but I guess basically decide which one will work better for your kind of capital constraints I guess.
[31:49] Be cool so that gives us a good overview of the landscape and it wouldn’t be a Jason and Scot show if we didn’t talk a little bit about Amazon here when we’re recording Amazon’s flirting with new kind of all time highs around,
2400 and change definitely flirting at well over the trillion dollar club and kind of nipping at the heels of apple and Microsoft,
which during a pandemic is kind of an unusual thing so
seems like they’re seeing a pretty big surge they had to turn off FBA Sellers and a bunch of those kinds of things do you have any data that indicates how they’re doing through,
[32:30] What’s most interesting about Amazon is event over all their sales are up and yet any individual brand or seller is either very negatively impacted by this for very positively impacted by this so you have this incredible.
Kind of spread of people and companies were very happy about their sales and very upset about their sales but like Amazon overall is their cells.
And there are enough that some people like sometimes I talk to sadly it’s basically they’re having a friend day every day.
And I mean it’s I think it’s still hard to judge just how much sales increase on Amazon because given how large they already are but they clearly have increased.
[33:10] Yeah the give us an idea of the winners and losers is it is it kind of category based on dimension.
[33:19] Yeah I mean it’s kind of obvious the thing that keeps you look at Travel,
nobody’s buying that if you look at swimwear no one’s buying that if you look at sunglasses no he’s buying that and yet everyone is buying the things you would need for your house the things you would need to work from home the things you will need to get entertained while you’re at home as well as work out the home,
been of essential items like all the health items as well so I think this spread of categories is probably the same across all the different retailers.
[33:49] So you did a blog post where bandanas were hot.
[33:52] Amazing amazing I haven’t bought one yet but I just think about it because I tried I tried buying face masks now for a while and they’re obviously sold out everywhere and if they’re not,
they’re like they’re shipping from China it’s going to take a month to get to you so I think I think I’m going to get some bananas and try to make a,
try to make a face mask for me because one of the other items we’ve been looking at is weekly look at search traffic on Amazon and see how they train Trends have changed,
and like for example one of the trends I saw maybe now three weeks ago was in fact that like I stole it paper sold out,
many many people are started by the days which wasn’t even like a popular category before and Amazon and all of a sudden became hugely popular.
And then maybe in early February the biggest explosion I saw,
friends of mine manage kind of Amazon in sizing for a few different brands and one of the Brand’s we manage out of energy for so kind of survival food kits and that brand went from selling,
is this a couple million dollars a year to selling a couple million dollars a day on Amazon.
And that’s that’s when I knew I’m like this is this is this is serious crisis as well as people are really scared about that so to me of him nothing like looking at that,
kind of different changing consumer than an Amazon kind of has been killing an interesting insight into what people think they need to kind of push through the days.
[35:17] Yeah you had another blog post we talked about some of the negatives of this surge walk us through some of the data on that.
[35:25] Yeah so one of the things we always look at is how many negative reviews are these merchants and animals and receiving and,
usually that number overall that number tends to spike as Christmas approaches,
because people have placed the orders but order is not getting to them before Christmas and then they realize it’s never going to get to them in time so they leave a negative review and they usually cancel the order.
But then as of last couple weeks ago I started looking at that number again I started noticing that it’s it’s spiked even more and then it usually does.
And what about spiking in negative feedback on Amazon is coming from sellers who bought face masks hand sanitizers toilet paper and all the other essentials from Merchants who often don’t have those products.
And are using fake tracking numbers to kind of basically hide the fact that they have never been to ship a product or being shipped the wrong products like cheaper alternative is of the face mask,
for when it all the toilet paper which triplet completely different item all together so as much as I was in is increasing in demand.
[36:32] A lot of that kind of issues within policing of the marketplace as have resurfaced as kind of merchants are trying to insert themselves into this massive wave fourth increase the man,
and since I mean if you go to Amazon today you will find that there’s no face masks or hand sanitizer some toilet paper in stock.
But yet as a merchant if you claim that you have it in stock you can try to kind of weasel your way into that search results page,
and because that serves our page is receiving so much traffic you will get a few sales in before Amazon realizes we need to come need to kind of block you so Amazon has been in this.
[37:09] Kind of.
Crazy position of having to deal with actual issues of like fulfillment operations as well as employees and now also having to deal with this sort of marketplace chaos which is doing with all the smaller Merchants trying to kind of
benefits from the marketplace not necessarily saying something but also sometimes by selling something they don’t actually have.
[37:32] Yeah it’s I mean the level of difficulty was already complex now it’s almost unimaginable like,
pivoting slightly I’m sort of curious how you think the pandemic is influencing how Brands think about Amazon is it,
is it potentially driving Brands to Amazon or off of Amazon or what do you think.
[37:55] I think that like don’t really I think all of us would probably agree that now you’re starting to see Brands go back to Amazon go back to selling on Amazon Branson previous every excuse that obviously we’ve all seen that announcement from Birkenstocks,
we seem to be going back to Amazon I think we’re at that point in time now where the sort of ideological refusal of selling my Amazon in a past.
Is probably being questioned by Executives now because as we see their own sales in their own channel is decreasing their trying to find other channels too,
do something items through and if they’re not selling on Amazon it’s an obvious choice and it’s an obvious channel to have immediate sales,
so it’s very clear that,
it’s not yet mr. of acceleration Brands jumping back onto Amazon is definitely going to accelerate even for Brands who have previously.
Refuse the blatantly bit like they will have to change their view because it’s
it’s wild for the last decade they could have made this kind of strategic choice of not to be on Amazon,
bad choice and things just kind of been taken away from them now because of just the sort of crazy conditions we are living now where so much of shopping is kind of centralized on to Amazon
as and limited budgets they have to spend on marketing means that.
Like I wasn’t all of a sudden became probably one of the better choices they have to have any sort of lemony.
[39:22] Yeah there’s almost this odd Paradox at the moment I think you’re you’re exactly right like if you had decided you were staying away from Amazon,
some of your resolve is probably eroded and there’s there’s there’s more arguments in favor of you being there and I certainly think Amazon is going to emerge from the pandemic with greater share than they had going in and so,
Same reason people rob banks that’s where the money is like if you want to sell you probably need an Amazon presence but the one Paradox is,
there is a cohort of brands that maybe weren’t very digital Savvy and they almost looked at Amazon as a hundred percent of their digital strategy,
and if you’re an apparel brand and you thought the mean way you’re going to sell digitally is on Amazon and you suddenly became,
a an essential product that couldn’t get you know your FB a product replenished you probably were getting being,
exclusively dependent on Amazon so it on the one hand I see a lot of brands that had been resistant moving towards Amazon and on the other hand I see,
number of brands that were kind of single Source on Amazon you know trying to diversify their portfolio little bit are you seeing that as well.
[40:38] I think I’m seeing the same thing like this sort of increase in demand for 3pl their Housing Services has definitely skyrocketed,
as brands are even trying to find other ways to,
selling on Amazon or going to average over their houses they can use to sell on Amazon and I mean for many many of these Brands we can’t really do that on fulfillment as effectively,
as they kind of new to now because often they don’t even have this sort of that house capacity,
or staff for it so yes absolutely I think many Brands who have either relied on that wasn’t before,
for having sold on Amazon before but now can’t even ship out instead be a are all flocking to 3pl logistic companies to do it for them.
[41:25] How about private label Brands you’ve done some interesting reporting there what are you any updates on what you’re seeing there from the pandemic or any other thoughts on the the plethora of Amazon private label brands.
[41:38] It’s that one of the guess one of the most infamous reports you’ve done was last year about that the Amazon private label brands,
the kind of the cord Discovery from that was the fact that like they are attempts are obviously very wide but most of the brands that launching and haven’t been as successful as most people the still they are,
and to be honest like since then Amazon itself as a company has really been as aggressive and launching new brands,
they are so launching amazonbasics products all the time but in terms of Brands they would be launching especially clothing brands which kind of comprise most folio brands that trend is definitely die down,
but in the same space a lot of the private label Brands and Amazon are launched by the smaller smaller merchants and,
as much as that it’s still happening that obviously has been hit very hard by the pending first by.
Not being able to Source items from China as effectively as before that is mostly recovered but there’s still some issues with the logistics from from the point of view of costs and state but also a thing,
many many many companies in the space who previously relied on data to figure out what we should make.
I think are finding that they can’t use data as effectively anymore because the trends are changing so so fast that by the time they’re able to Source it say.
[43:02] If you see that the bananas are becoming high demand from the time you’re going to be able to Source them and get them onto Amazon it’s going to be June and the man has gone so I think the sort of the the stability of demand.
Has previously allowed private labels to be built and I think now that the stability is gone I think it’s much harder job for me small images good and also,
access to Capital now is much more constrained Amazon lending itself as killed their program and are not issuing a new loan so when we smaller companies to get Capital to launch new brands it’s a much harder job.
[43:39] Well let’s let’s pivot over to eBay they just sent out some new CEO and I’m kind of excited about that it’s a guy I think I’ve met him a couple times when he was there and kind of Circa
V 208 I believe.
Jamie iannone so you know they’ve been kind of rudderless for a while but do you know
to their CEO departed about six months ago they’ve sold StubHub they’re about to sell their classifieds are talking about it and what not they’ve been distracted by a lot going on do you think Dave benefited in the same way that Amazon has during this pandemic.
[44:16] I don’t think so and I don’t think so for two reasons first.
Yeah I was looking at that traffic across all the different retailers as well as eBay eBay doesn’t seem to have any sort of measurable lift from this which I think is pretty disappointing for them and I think second of all.
I don’t think many people think of eBay as a great place for Essentials.
And that’s why it’s so much of shopping is happening on Amazon as well as other kind of traditional retailers.
EBay is much stronger and other categories but many of these categories are not that important anymore so I’m sure we’re going to have are having some increase in demand in some categories but overall,
I would be pretty shocked if they having an actual and measure measurable major increase in sales because of the sort of,
this sort of weird positioning they have as a company visually I think only became more apparent than any more visible during this visit the spend the night.
[45:12] Any other interesting Trends on eBay that to speak of are they losing sellers in this kind of sideways area that they’ve been for a while.
[45:21] I think eBay has not in like Amazon has has been trying to Police Products on there on the catalog as well
but since its eBay to me is also the most the most fun Marketplace because you can buy a single toilet paper Square on Amazon concert on eBay pretty pretty easily,
which always doesn’t sell in a remarkably so if you if you search for toilet paper on eBay it’s a much more eclectic mix of products than other retailers would have,
and in terms of like seller seller leaving you may tend to have a pretty unique set of sellers a lot of them are selling collectible girls a lot of them ascott sorry memorabilia following selling car parts so like none of these sellers,
have clear path to other marketplaces so I don’t based on measurable kind of,
leaving of Sellers from eBay or onto a onto eBay I think that’s that’s been mostly stable.
[46:18] Interesting today they’ve sort of got those they have an advantage with some of those incumbent categories but they seem to be struggling in the categories where they overlap a lot of other marketplaces is that their summary.
[46:32] I think they dig has the biggest jobs or when you see CEO.
Is figuring out just exactly what is the direction and what’s the core focus of eBay.
I think you bae hasn’t been able to answer that question for the last decade as it kind of try to became closer to Amazon.
But like after all the years of efforts is now just a worse version of Amazon,
without any sort of benefits of Amazon you you would have just literally by shopping on Amazon so eBay is basically figure out like where where does it want to be,
because it’s still want to be in the same competition as the sort of the real real or the stock X or Etsy or just want to be more like Amazon your more do more general merchandise because now it’s tries to do,
all those things at the same time and doesn’t do a great job at any one of them.
[47:28] Yeah yeah it’s going to be any I mean that’s a fundamental challenge for a lot of companies but yeah you definitely have to be able to have a clearly articulated,
reason for existing and so that’s going to be a challenge for Jamie when he he gets to eBay you know he is coming from Walmart Sam’s Club he had a lot of success sort of running.
E-commerce for Sam’s Club and then got promoted to be I think I think it’s official title might have been like.
Co overall of walmart.com so it will be.
[47:57] EBay eBay has to disrupt itself but I don’t know anyone who has an idea of what that would look like I personally don’t have any idea as well.
It’s unclear what do they actually do to kind of to find New Growth but it’s very clear what they’ve been doing for the last decade doesn’t actually work,
and you can look at their sales growth is non-existent and we sort of incremental changes are not going to get them to the growth they want to see so they can keep extracting more and more revenue from the salesman having,
and that will continue to increase their stock price as a public company but like in terms of growing Marketplace and growing place people go to shop at.
It’s not going to happen unless they have like a major change and covid around the platform.
[48:42] For sure it’s no it’s no fun being the one losing share in a rapidly growing Market the what about some of the other players I think of wish for example is kind of being an interesting situation like it,
it seems like it’s not the most awesome time to be right between the US and China in terms of trade which you know it’s probably a negative but then on the flip side.
They’re very value focused and you know we’re probably gonna have a bunch of consumers in in the u.s. in a pretty deep recession you know and maybe those like sort of affordable indulgences are going to.
Going to be more popular than they have been in the past.
[49:21] I’m a big fan of wish because the thing is very Unapologetic Marketplace we’re not hiding that most of the things it’s are coming from China we’re not hiding that most of these things are low quality and affordable girls we’re not hiding that it’s going to take awhile to get those items,
well I come from getting bad but like as of to probably two months ago,
which is obviously completely collapsed because they rely so much on demand deliveries from China.
[49:48] That that which were first impacted by the all the men back exposing down and are still negatively impacted by the kind of increase in cost as well as decrease in availability of all the deliveries from China so.
I’m not going to put a number on it but their sales are down and it’s unclear yet of when they’re going to be able to do recover because,
like I uniquely some of these other companies which mostly operated by running around their houses here domestically wish,
while having some of the assortment here in the US most of it comes directly from China so,
like they’re having issues with the demand side of things by maybe some poison works on buying or much anymore as well as Supply things as a supply side of things which is,
deliveries and the assortment size from China so they’re in them very tricky position but at the same time I think,
like wish knew they could be trouble one last year we were all discussing import duties from China like wishes exposed to that very much anything now they’re very clearly exposed to all that kind of.
[50:55] International delivery as well as supply chain constraints.
[51:00] Yeah a potential long-term risk there is like so they obviously rely a lot on the US Post Office for the last mile delivery in the US and they’ve always benefited from these super favorable rates from,
a very old Global postal treaty that were a part of and at the moment like seems like the US Post Office is like on the verge of economic collapse.
I’m hopeful that there’s some some sort of last-minute save but it’s it’s very possible that that last-minute save involves like renegotiating or getting out of some of those.
Those International treaty so it may not be as favorable terms for wish.
However the US Post Office emerges from all of this.
[51:48] I agree I don’t think they’re in a good position at the moment they like me it was a beautiful business and obviously I’ve been able to grow it fairly,
well I think it’s doing at least 10 billion dollars in jail B which is obviously,
very major number that’s larger than most marketplaces would be doing but it’s also built on infrastructure made can’t like reliably rely on.
Part of that is obviously shipping from China but also part of it is like not having any infrastructure themselves relying on USB as well as all the domestic shipping Partners in all that every country’s very end so it’s yeah it’s not a great place to be in at the moment.
[52:27] Very cool it really appreciate you taking time during a busy pandemic time to come on the show any other any other trends
you know we had before the show we talked about you have some good hacks for making sure your Amazon order gets in and I’d also love to hear your thoughts on where our marketplaces in three to five years.
[52:46] So first of all if you’re relying on online groceries you have to figure out a browser extension to help you with that this is something I did maybe the last week and I’ve since then I never had a problem placing an order,
on Amazon Prime now so it’s a huge lifesaver.
[53:06] Just like a honey or you wrote your own.
[53:08] No it’s basically a Chrome extension which refresh is a checkout page on Amazon,
to try to spot a slot opening once my slot opens it sounds like a desktop notification to me so you just have to leave it in the running in the background and next thing you know you have the place your order.
Sebastian has been great and then in terms of marketplaces the thing,
they are having especially now obviously incredible time because most consumer shopping happens through marketplaces,
like marketplaces in the u.s. already are combined,
the largest online retailer in the US that’s means like the most interesting status that they all the marketplaces combined,
or in the kind of a slice of the market place of from Amazon is larger than Amazon is larger than any other retailer so Marketplace already play a huge part but the thing with the directions we are going into is.
Miche marketplaces which done which focused on particular categories and do content as well as coming user Community much better than Amazon eBay could ever do.
Second business to business Market places that’s a huge area of growth.
Obviously have Amazon business is falling all over my place watching this space I’ll do the business buying is now being done through marketplaces and even on Amazon site that’s the part of Amazon which most people completely forget or,
don’t even realize even exist and that’s already a very huge part of the sales and then I think I think third there’s a lot of focus on managed marketplaces,
somehow he managed micro-business are remarkably says which help you not only by providing you a wide selection of Supply but also they pick the thing,
you are you want so whoever is a managed Marketplace because you don’t think the driver over its upsides driver is best for you,
so we will see this continuously going that direction is even,
as even marketplaces like Amazon and eBay will be much more kind of pressure to be in a position of trying to help consumers to pick the item that you want,
rather than providing them to just endless list of items available millions of items account of what in relying on the consumer somehow picking the thing they want so.
[55:21] Kind of super this deposit all in perspective like Matt like marketers is going to be continuously growing bigger and bigger but they’re also going to kind of change in shape,
to move away from these generalized marketplaces like Amazon to focus on their own strengths because I think
it’s your e-commerce business right now only trying to build up my confidence right now it’s probably a bad idea trying to go directly against Amazon’s business
or trying to go to the marketplace this follows the same model it’s a much better idea to do something differently or have a different model and examples like Etsy and exams like wish,
like they’re all doing really well on their own like truck by not trying to be like Amazon and eBay who did try to be like Amazon are obviously not doing as well.
[56:08] Joe you know usually people that are pro Marketplace on the show are really just pandering the Scott but it’s very obvious that you have True Religion about Market.
[56:20] They are great.
[56:21] Yeah no and clearly like globally they are winning like it seems like the the dominant most successful form of.
[56:29] Do me do me a favor like to kind of put it all like in the final perspective like to me a Marketplace is just,
it’s a reinvention of a shopping mall for the internet which means the aggregate consumers in a single place,
boss allowed single shops or single Brands to talk to these consumers much more cheaper than having to do their own,
kind of customer acquisition and inverse a Marketplace will always make sense and sure you will always have Brands and retailers who can run their own stores and current that on that position but ultimately a Marketplace could always do it much more efficiently the question becomes
like how do you do that and still retain some kind of brand value and not give up all the to do something like Amazon.
[57:12] Yeah well well said and that seems like a great place to leave it because we have used up all our allotted time as always if you had a burning question or comment feel free to hit us up on Twitter or Facebook
if this show is valuable to you we sure would love it if you jump onto iTunes and give us that five star review,
Joe real pleasure talking with you thanks very much for taking the time.
[57:34] Hey guys thanks for having me.
[57:36] Joe Fox want to follow some of the awesome content that you guys put out there what’s the best place.
[57:42] Marketplace post.com or if you want to find me luckily I have the one of the most unique names you can think of so if you just if you just Google my name and you’ll be able to find in two seconds.
[57:55] That is terrific we will put those links in the show notes and until next time happy commercing.
EP215 - What to read during a pandemic
This episode is a list of suggested resources to read for those looking to do some professional development in the commerce space. (all book links are amazon affiliate links)
The episode also features an interview with Rishad Tobaccowala (@Rishad) Rishad’s is the author of “Restoring the Soul of Business: Staying Human in the Age of Data” published by Harper Collins. Additional writings can be found on the Re-Inventing blog. The interview starts at 15:50 of the podcast. Rishad also has an amazing photography feed on Instagram @RishadT.
Another book mentioned on this list is Remarkable Retail: How to Win & Keep Customers in the Age of Digital Disruption – Stephen Dennis. Stephen is hosting a virtual book launch party (including @retailgeek and some e-commerce celebrities) on Tues April 14 at 4:15pm ET, that will include myself and some commerce guest stars. Pre-register here.
Here are some always updated resources:
Don’t forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.
Episode 215 of the Jason & Scot show was recorded live on Wednesday, April 8th, 2020.
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.
[0:24] Welcome to the Jason and Scott show this is episode 215 being recorded on Wednesday April 8th 2020 I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-host Scot Wingo.
[0:39] A Jason and welcome back Jason and Scot show listeners first of all we hope everyone is saying safe and enjoying some time with your family as we all go through this battle with the
one of the unexpected trends that we’ve noticed about this fun pandemic self quarantining time is that folks are trying to carve out a little bit of time for professional development.
So we thought you know let’s do a show where we talk about some of our favorite books for kind of listeners and starting with kind of the.
You know the colonel of e-commerce and Retail where we spent a lot of our time but then also expand out a little bit and talk about more professional development type titles.
Sound good to you Jason.
[1:23] Yeah that’s awesome but before we jump into the actual books I just want to get a couple things on record like I’m trying to ascertain how Millennial you are Scott are you a paper book guy or are you ebook / Kendall guy.
[1:37] I am strange I guess so I like to read
fiction before I go to sleep because if I read like one of these books were going to recommend before I go to sleep I won’t go to sleep I get so fired up I know that’s probably strange but that’s how my brain works
so then so I use Kindle for my fiction reading in the evenings and then most of my nonfiction
before working from home full-time I commuted to an office and this is back in those days if you remember so I have about a good hour in the car
maybe a little bit longer and I would audible the nonfiction stuff out for some reason,
you know that that combination of being on a commute and having it being read really lands well for me and makes a little more engaging.
[2:30] Yeah interesting so your moat so you’re very little Papyrus and your Kindle / audiobooks.
[2:37] Correct yeah
are the reason is I’m I read a lot and I don’t know I’ve never been to your house but she came to my house I have like literally 20 but cases full book so there’s a practicality of you know my wife and I are both Avid readers and essentially
every square inch where we can put books as full so we had to switch to digital.
[2:56] Yeah no I went through a similar Journey I’m in a condo and I imagine we have less storage space than you I say imagine but I know for a fact we have less storage space than you and.
Wait it just like I beloved I loved owning these books and I felt good about owning them but like.
[3:18] I just didn’t have the space and then when I travel all the time it’s actually annoying to carry books because if you’re going to finish one that means you have to bring to physical books with you and swept them around.
On this on the trip so I kind of have pivoted to only owning books digitally and I’ve actually started this.
Economically unhelpful habit what I like to do now is I buy the Kindle version and I buy the audible and for most of the books most of the business books that they have this great whisper SYNC feature where you can.
Toggle back and forth between the audio book and the Kindle version and it it keeps you synchronized to the place and,
what I’ve found that useful for is if it’s a book on listening to and there’s some super important Point that’s made in the in the audio version,
I like to stop the audio version crack open my iPad go to the Kindle and it’s already right what I just listened to and I can highlight that,
and then you know Kendall has this great feature where Aggregates all your highlights and notes so so it’s almost like I can do I can highlight text in the audio version of the book which is.
Kind of cool in handy.
[4:33] Be cool if you had dyslexia do this where you could say have it read it and then pause it and have a highlight like an audio could you do a voice on voice highlight.
[4:43] Not to my knowledge that would be a cool feature Alexa has good features for listening to audible books but I haven’t if there’s a marker highlight thing I have not experienced it yet.
[4:55] Jeff if you’re listening please take that as a feature request thank you.
[5:00] If he’s listening you know he’s listening so then.
[5:01] Yeah I didn’t want to brag but.
[5:04] Yeah I do I also want to address the elephant in the room before we get into the book list of books we were having this conversation offline a little bit.
Are books even relevant anymore like is it the like I feel like for a lot of my career books were super important and it was like you know their books that were.
Like really influenced how I did my job and things I learned and we’re super valuable.
Today like it doesn’t seem like the best source for for timely relevant information.
[5:37] Yeah yeah into that and then you know attention spans I definitely feel it personally and I see it in my kids the social media has given us kind of these
this snack size kind of appetite for content right and it’s increasingly hard to just sit down and open up a three or four hundred page
book especially like a business book and then you know things are changing so fast.
It is hard to find those books they really stand the test of time so so yeah I agree and then you know so because of that we’ve actually thrown in a couple more
you know we probably call this a media show not just books because we have a couple kind of streaming TV shows and movies that maybe kind of
were interesting to certain folks that don’t want to sit down with a book be it audio or or paper or ebook.
[6:28] Yeah and that is funny because I am.
You know I was thinking about the books I wanted to talk about in the show and we’re going to we’re going to go through a bunch of books I actually built a web page with a wider list of book recommendations and so I was like oh this will be my comprehensive list of all the books I’d recommend someone read.
And there are a bunch of books that are some of my all-time favorite books that I actually couldn’t bring myself to put on the list because while they were super important when they were written in 1990 or 2,000 or 2010.
You know I don’t think they did stand the test of time and so it was interesting to me like a lot of the books that were quote-unquote about retail I feel like retail has changed so much.
Heck retails changed so much from three months ago that I didn’t find that those books held up really well but there were a lot of my hall of fame books about like.
Customer psychology and those sorts of things which are Super relevant even though they might be 20 or 30 years old so it’s kind of interesting.
[7:30] Yeah absolutely let’s jump into it.
[7:33] Yeah let’s let’s do it so side note if anyone’s listening in the show on exercise equipment we will put a complete list of all the books in the show notes and I’ll put a link to the website I reference so
no need to try to take notes during the podcast and with that out of the way let’s jump in what are you reading right now.
[7:53] Yeah I thought we’d kind of
cut them into categories and and since we are talking about you know personal development thought we’d start with that category
book I read a couple years ago and I just kind of stumbled on this because I started following his daily Paris group periscopes he does a daily kind of a coffee
kind of periscope it’s got out Adams the author of Dilbert.
So he’s a cartoonist you may think what does this guy have to do with anything well he’s probably the most,
educated cartoonist well I don’t know if cartoonist are educated but he has an MBA he’s an economist he’s got you know a lot of different things there he’s a trained hypnotist oddly enough so he wrote a book called.
How to fail at almost everything and still win big I wanted to start with that one because it has two big ideas that I found really interesting.
So these things you kind of already natural
naturally do maybe but it was cool the way he framed him and talked about him so the two big ideas from that book are this concept of using systems versus goals.
[9:01] And and
this is super helpful because you know he uses a kind of weight loss example where it’s easy to set you know it’s very easy to say hey I want to lose X pounds and then you fall off that pretty quickly because it go like that
is increasingly hard to get to if you get off track it’s easy to throw away that goal an example of a system would be you know I’m going to measure my calories every day and make sure I come out Nets X calories and exercise to get there
that’s going to be my daily system and if you can kind of commit to a system it’s a lot easier because you can build it into a day it’s easier to track,
and then sure enough you look up and boom you’ve achieved your goal be it weight loss or whatnot this one’s really important because.
You know I talk a lot to Young Folks at software companies and things and the question I get is like how do I organize my day and that’s kind of part of the system to is making sure that your so let’s say you’re just starting out in a sales career or something,
spend time prospecting spend time managing your pipe and build a system and then improve that system over time and before long,
got this really great system for managing your life so that’s a really good one Hill goes into a lot more details,
the second framework I really like in that book is this idea of continuing to your life to build your skill stack.
[10:21] I have a computer software background and knew nothing about Finance marketing I’ve never taken a,
ticket some econ classes but I’ve never taken like the classes you would take for a business degree or an MBA so but I’ve learned all that over the years and you know it’s part of my skill stack now
so that it’s this really interesting idea of thinking and visualizing right you want to improve your life and your career.
What can you add to your skills fact that you don’t have.
The third point in that book that’s really interesting is he talks about one of the biggest skills that you can add to that skill stack as persuasion.
[11:00] So Persuasions
pretty important so you know I’m an entrepreneur so on any given day I’m having to convince you know an investor to invest in my company an existing investor to invest more customer to do something an employee to do something recruiting an employee
every pretty much all my day is persuasion convincing this random guy to do a podcast with me those are just examples of you know
things that we’ve that use persuasion for so you know
as an entrepreneur I use it all the time but even if I know a lot of our listeners you know maybe you’re working in a larger company as kind of a what I would call an intrapreneur you’re kind of on the digital side of a large company well you actually have a bigger
persuasion mountain to climb than I do right because a lot of times you got to convince some dude in a store to give you credit for a sale or fill in a word or whatever it is
so I wanted to also fold in here that Scott Adams has two books on persuasion once called win big lie others called Loser think that’s more recent just came out this year.
And then so I strongly recommend does to and then he actually I like his approach this a little bit better than some other folks because it’s very practical and he gives you kind of you know,
tips that you can actually start to apply like how to pay somebody in these kinds of things but then once you’ve read that then I’m more technical approach is by this guy that’s considered the Godfather persuasion Robert child Nene.
[12:26] His two books are influence the psychology of persuasion and then he has a newer book called pre suasion a revolutionary way to influence and persuade.
What’s kind of mind-blowing about,
this is what you get your head around persuasion pre suasion is you can actually Prime people to be persuaded faster and easier so that’s kind of interesting there’s actually a step before where you can actually.
You get pretty good at persuading people you can get better at doing it quickly by using pre suasion,
so those are two that’s kind of a whole class there in that genre of persuasion and the Scott Adams is a really good introduction into this if people haven’t really read on it.
Read about it before.
[13:10] Nice I love all of those and it’s funny persuasion I talked about a lot in presentations.
And there’s a funny backstory to to the book he was like he was a candidate for his cognitive psychology PhD when he wrote the book and he basically,
in his Studies have discovered that we are all hardwired with these cognitive biases.
And it dawned on him that evil marketers could use those cognitive biases against consumers and sort of persuade them to,
take actions and buy things that weren’t necessarily in their best interest so.
Supposedly he wrote the original influence thinking that like you know what have you made consumers aware of these cognitive biases they’d be less likely to be affected by them and so he had this altruistic goal of like informing people so they wouldn’t be,
manipulated and the book became a global international bestseller because every marketer in the world.
But the book has a manual to use to trick consumers into buying things.
[14:17] So I just love that story I’m a big fan of that category 2 and I actually am reading a new book that just came out last month that’s in the sort of.
Cognitive psychology space it’s called The Catalyst how to change anyone’s mind and it’s by an author I like Jonah Berger Joan has a professor at Ward and I think and,
he wrote a previous book called contagious and contagious was all about like what are the attributes that causes something to go viral and it became kind of a,
Bible in the social media space and so this new book,
is about how to actually convince someone to change their mind and like early in the book he makes the point that like you know most people’s inclination is to,
argue with people or debate with people which is an entirely unsuccessful way of getting someone to change their mind and so he.
He works across all these different Industries and he finds case studies with like.
[15:19] The FBI’s best hostage negotiator right and he makes the point that hey you think about this hostage negotiator and he’s got to convince.
Someone to do something that they absolutely don’t want to do that’s going to have a horrible outcome for them right so give yourself up,
and go to prison and so he talks about like the tactics that that negotiator uses and the approach they take,
the try to successfully you know have these like super high stress situations come to us more safe,
conclusion by getting the the criminal to change their mind and so it’s fascinating and there’s a bunch of sort of practical advice if you really want to change someone’s mind versus just,
feel good about arguing with someone it’s super helpful book so I think it’s a good tool to put in the marketing Arsenal.
My other recommendation in this category is a new book that just came out this year called restoring the soul of business staying human in the age of data and that’s written by Richard tabaka Walla and I think it was released this January.
[16:29] Hey Jason you know Richard Wright.
[16:31] As a matter of fact I do he’s a longtime former coworker of mine and I actually invited him on the show,
so without further ado,
please welcome to the show the former Chief growth officer publicists gentleman who was named by Time Magazine as one of the top five marketing innovators in the world and a guy who could get me fired with a single phone call,
Rishad tobacco Wawa.
[16:57] Thank you very much and I’m glad to be here.
[16:59] We are thrilled to have you Rashad you know we did overlap at publicist and a fun fact I don’t know you had a much longer and more storied career their than I have had but I have an annual review every year and I always sit down with my boss,
and he asks what my career aspirations are and I say well my ultimate goal is to be Rishad.
[17:19] Well who are you are you have you lack imagination.
[17:23] Yes I could see how that would be your perspective but my boss is perspective is that I should set more realistic goals.
[17:29] That’s great.
[17:31] But all joking aside you you’re someone that has done almost every role in boob assist your,
super beloved and as you are stepping down from a full-time role at poobah says you’ve had this like I want to call it like a year-long victory tour where I feel like you visited every office and all your old friends and you just have this.
Never ending stream of Twitter photos of you with.
10 20 30 year friends that you you worked with that are now all the luminaries and leaders of our industry and it’s like I think it speaks really well to you this enormous network of people you.
You’ve cultivated that all these act in public like they love you.
[18:16] Yes it’s either that or I have to like two pictures over the years one of the two.
[18:20] Exactly well I’ll let our listeners be the judge but I do want to get your book and talk about that but a tradition we have on the show is before we get into that we like to get a kind of brief.
Um synopsis of your career and how how you sort of develop the point of view that you shared in the book so can you share with our listeners your background.
[18:43] Sure absolutely so I grew up in India came to the United States after getting a degree in advanced mathematics to get an MBA at the University of Chicago.
And I started my career with a company called Leo Burnett which is that advertising agency.
And I thought I’d stay there for two to three years and 37 years later I was still there.
The last time my business card said Leo Burnett was sometime in 1994 which is about 25 years ago.
I worked in account service on big class like PNG.
And then moved into our direct marketing department and saw something called digital in 1994-1995 launch one of our first digital agencies.
Then helped launch Stockholm which is what about media companies.
And then we merge with another company eventually we got bought by publicist in 2002 which is about 18 years ago.
And over the years at Goldman says I helped build the case for some of our digital companies that we bought each digit SI cherries a fish and for the last five six years,
I served what was the direct wobblers sort of the board as both the chief strategist and the chief growth officer.
[20:03] At about two and a half years ago as Maurice Levy step down and he was the CEO.
And I’d work with more recent another gentleman coach actors who are 25 years.
I sort of said at some stage I need to do something different and once they were convinced that what I wanted to do was be a writer and speaker.
And I could still be related with the company we began a transition which is sort of that to are you talked about.
And I am still senior advisor to the group I still have an office my key card still works but I no longer am a full-time employee which means I have no clients to look after.
No boss and nobody working for me otherwise still connected in some way to the company and my focus really is writing this book which I began about three four years ago with Concept and thinking about it.
And the basic Trend was I was getting a little bit worried.
[21:02] That as the world was becoming more data-driven more digital more math driven.
That companies were making mistakes of becoming too left brain.
And I call that the spreadsheet will be coming spreadsheet driven companies and I believe that successful companies need to combine the spreadsheet which is obviously very important that the data.
But combine also that with the story which is the people that culture.
The values and and thinking about it over 3/4 years I began to realize that companies that combine the two,
what companies that actually did well and companies that tilted either two words the spreadsheet too much like let’s say a Wells Fargo you began to open Fake accounts or like Boeing ship the plane which wasn’t ready.
On the other hand if you watch was too much to the right you end up ended up with a company like we work which is all story but total bullshit at least from an economic perspective.
[22:03] It’s a story just not a true story.
[22:05] It’s not a true story exactly so the whole idea is if it’s all story without a spreadsheet you have we work it’s lots of spreadsheet without a story you’ve got to Wells Fargo.
But you combine the two industry after industry companies that combine the two.
Not only are more successful in the near-term but their stock price does well and in every sort of stuff and it says compared your Southwest United Airlines or,
you know Pixar / Disney to a lot of other companies or Costco to the old Walmart and you began to see that.
This this basic belief that was all about that data and math was actually very short-sighted.
And in fact heard companies more than help companies and given that I was a digital Pioneer have an advanced degree in mathematics and people think I know the stuff I’m not anti math anti data anti digital anti anything.
And so that’s how I read what I wrote for book and surprisingly it appears that I wrote the book for a post covid-19 world so people said you know this was going to happen and I said no.
The book is as in fact it resonates even more today than it did two months ago.
[23:21] That is awesome and it’s great that it’s even more topical I still have to imagine from your Publishers perspective it’s not optimal the launch a book when you like can’t fully go on a book tour right.
[23:33] Yeah well I was somewhat fortunate in the fact that because the book came out on January 28th in the United States and Feb 20th outside the United States and I had started sort of promoting the book.
Immediately unlike January 1 as soon as the holidays were over so I got to be on the road actually from Jan 1 to approximately March 7.
So I was had good eight nine ten weeks of doing so now we’ve somewhat slowed down but I have one particular advantage.
To really one is as you know Jason.
When I speak I speak without notes or slides or multimedia which basically makes me a very zoomable Sky possible.
[24:25] Speaker and so I’m still speaking which helps on the book tour without actually physically going anywhere.
But the second thing that helped you know to a great extent was the fact that my book actually.
Resonates with the times that six of the twelve chapters seems to have been written specifically for today’s world like I have a chapter on how you manage workforces.
When they’re not all together in one place have a chapter on how you lead when you’ve got tough times and so those two things which is my ability to basically speak without notes and the fact that people are very hungry,
in this including our chapter on when you’ve got time how to use it.
And also how to upgrade your mental operating system all of which what people are doing so it turned out to be.
I wish we weren’t in these circumstances but it’s turned out to be all right but I’m looking forward to going back into the work you know the world out there,
and and because I was writing about humans and not about an event in time the book doesn’t age so the fact that there’s a pause in the book tour doesn’t hurt because when it starts it won’t be.
[25:42] Be dated at all when you.
[25:43] It won’t be dated at all if I could be more relevant on the other hand.
You know it’s not pleasant to see what we as a society are going through some writing a lot these days and I’m trying to think of the positive side of the troubles we are in.
And so the framing some stuff from my book I call this era which I think is so not the Great Recession that we occurred in 2008 2009 but I called this era that we’re about to enter the Great reinvention.
Because I truly believe that people are going to come out of this different than when they went in one because.
Nothing like this has happened before in my 40 years if I could most people’s lives and which is everybody in the world is affected all at the same time.
Which is rare the second is we all are effective for 60 to 90 days,
and habits change in 60 days so either you start or stop doing things in 60 days then when you restarted it’s very different and very you know unusual.
And so I do believe coming out of this people are going to be looking for safety they going to be looking for society they going to be looking for security it’s going to be a different world and so I’m thinking a lot about that these days.
[27:01] Yeah I feel like another thing I saw you talk about when you were talking,
sort of coming in the book on social media that really resonated with me is hey everyone saying we’re working from home we aren’t really this is not work from home this is work under duress.
[27:18] Yes so the key is this is completely work under duress because you know we have three big challenges and that is everybody who’s listening to this so the first.
As long as you’re a human being I think you have these three challenges but it’s sort of differentiates a little bit on you know what your state in life is ETC.
The first one basically is we are extremely anxious about own health,
help us people our parents our kids our team members so you know you normally don’t work from home with this anxiety that people are dying in the thousands and you could,
get that if you go to the grocery store so that’s number one,
the second is you basically have this particular area of fear and the biggest fear that we have R2 and most of them are around economic,
which is will my job still exists because every day you see companies layoffs,
between 10 to 50 percent of furlough between 10 and 50 percent of the employees,
so that’s the second one in the third is uncertainty which is when will this end how will this end and nobody works from home under those circumstances where you basically have kids sitting in the house with you.
We shouldn’t be there worried about your health what about going to the grocery store water that your job will disappear.
Right there is not under any circumstances working from home is basically working under duress.
[28:47] Yeah no I totally resonated it is funny like I like you travel a lot and so when I’m home I often do work out of my home office and free pandemic.
I would be super concerned about my family interrupting a work conference or something like that and I if it ever happened I’d be really embarrassed and one of the things that’s been kind of funny about our present circumstances is I have kind of a cute I won’t tell him this but but acute four and a half year old son
and now I almost create an opportunity for him to come in and interrupt every meeting because it’s almost expected and appreciated and.
Makes me feel it helps me like form a more personal bond with the people I’m interacting with.
[29:32] So I actually posted something that was it’s a real story and it happens to be the CEO of one of our very large clients.
His mate his name is Laxmi under a salon and he’s the CEO of record been Seeker or now known as RB.
Which happens to make products like Lysol.
His products actually are doing very well there Lysol and they’re like Trojans and apparently you know condom sales are going up in Lysol sales are going up.
And he basically there’s an interview with HIPAA The Wall Street Journal and literally the way it ends is his mother he’s living in London with his 79 year old mother,
and his mother comes in and says you have not taken the garbage so he stops his board meeting and takes the garbage out.
[30:19] Yeah I love that the.
I did want to pick one bone I do have a small bone to pick with you though you you referenced earlier than no slides thing.
[30:31] And this is funny one of the reasons that I think of you frequently in my career is because but you do do a ton of,
client and public presentations in your you know very in demand public speaker and as you noted.
You never use slides I’ve watched you from the the wings a lot and it seems like,
you’ve jotted down you know the key bullet points that you want to discuss on a napkin or something and and you walk up there and had this really engaging conversation with the audience and it feels like.
There’s there’s less Detroit as between you and your audience and I feel like it really facilitates you,
um sort of having a bond with them and it feels more interactive and authentic which is all great,
I also do a lot of public speaking and I use a ridiculous amount of slide so a it always makes me feel bad about myself because I feel like.
I’m using a prop that you don’t need but but even worse than that,
I’m usually doing those slides at like 3 a.m. the night before the presentation and I’m thinking to myself
you know Richard went and had a nice dinner had a cocktail use the cocktail napkin to jot down his notes for the presentation tomorrow and got a good night’s sleep and I’m sitting here at 3 a.m.
You know trying to find the right image to put into a stupid PowerPoint deck so I.
[31:58] Difference the big difference is when I see your presentations I enjoy that and I say thank God I don’t have to do such amazing presentation.
Because the big difference is while you do have amazing slides you you use them as a backdrop but you speak without you know reading numbers from them or reading words from them,
you basically use them as sort of a prop but not as some kind of crutch so a lot of people use things as a crutch you don’t use it as a crutch use as a prop but the two reasons of the two or three reasons that I
don’t do the slides one is because it requires work.
Oh I just you know I’m down lazy but as importantly when you do slide somebody then says they want to see them and that requires like having a meeting to prepare the meeting which is a bit difficult.
But the most important reason and this you can’t do obviously because you share a lot of very valuable information which requires you to have those slides because when I look at your slides this isn’t just like a using slides because you,
using them because they actually add to the show but one of the reasons why I don’t use slides and why you actually don’t use them as much as you think you do.
[33:09] When you don’t use slides people play the slides in their head so when I’m speaking.
Actually there is a slideshow going on it’s sort of like a form of radio it’s like the theater of the imagination and what I began to realize is people think I’m speaking to all of them because they’re visualizing.
Their own slide where and that became what I found is very powerful which is not only if it was just that I’m going to save time and be lazy that doesn’t make a good presentation I’d get fired for doing that,
it’s because actually if you think hard enough about the audience and you customize it which is what I do.
People in the audience that actually played in their own minds I think you wrote everything just for them.
[33:57] Yeah that’s awesome.
[34:00] Jason speaks people close their eyes and envision the slides and sometimes they make kind of light snoring noises.
[34:08] Yeah but you know what happens is he has so many slides you gotta Clyde’s are so strange,
got to have a look at that because you’re seeing this big car wreck train wreck happening and you’re trying to figure out like how is this going to play out that’s what you’re going because you should see a slides they’re almost like.
It’s this almost like Van Gogh on drugs.
[34:29] This is fun we get to team up on give Jason her time I like this.
[34:34] In my defense and I feel like you gave me a nice compliment their Rishad which I really appreciate but the in my defense it is true like my sides tend to
images that support whatever story or point I’m trying to make as opposed to,
actually having the information on the slide and so the one thing I do dread is for your point like when a client or show organizers like hey can you send me your slides in advance or can you do and I’m like,
well I can but they would make no sense because they’re not the content like they’re not the story,
you know it’s like it’s kind of like asking to see the illustrations from a book without saying the words.
[35:14] Exactly exactly at that so that that’s out of the way it is and so what are the the you know the fun ways I try to sort of also redo.
Just like I thought of rethinking the presentation.
You should as you’ve read my book what’s unusual is I read mented the book without people without changing the format of the book so the,
it’s obviously available as a book at an audible at a Kindle and everything else but,
I sort of thought about that most nonfiction business books tend to only have one good chapter and then somebody just repeats and repeats and repeats,
and so I decided to write 12 different books instead of it being a book of essays is actually a theme and the theme is the story of the spreadsheet.
That’s I basically said I’ve written the first Spotify playlist of a book where you can basically read every chapter in any order.
And as a result people that Amazon are now asking the question how come they don’t have a shuffle mode on Kindle.
[36:14] The other question you kind of outlined companies that are to Excel and opposite in the Spectrum do you have a case study of a company that kind of does a good blend between the two.
[36:29] Yeah so I would basically say that in every category I select having in almost every category I could name like one particular leader.
So in in the world.
So the film for me the leader always was Pixar because Pixar basically told amazing emotional stories using state-of-the-art technology.
I basically think about it pizza delivery it’s Domino’s,
right the improves their Pizza they basically read the very thought of themselves as a Distribution Company or logistics company that delivers pizza.
But they really want to own the entire category of pizza so they’re willing to give you a coupon for Domino’s anytime you buy any pizza so now if you go to a grocery store and you buy a pizza you have think about dominoes,
which is absolutely brilliant in Airlines at Southwest compare Southwest to United and I believe that the most.
For many years it was one of the most underrated technology companies don’t of course that was not underrated was Adobe so if you look at the decisions that adobe made in Adobe right now is the second most valuable Enterprise technology company after Microsoft.
[37:40] And so categoria and many see these leaders and I know some of these folks who lead these companies
they have these amazing people who combine the spreadsheet on the story and they and and and and often it is leadership that makes the difference if you think about Microsoft.
For 10 years its stock price went nowhere and Steve Ballmer yelled and screamed Windows Windows Windows.
Write it it stack ranking math machines and everything.
In such an ideologue basically came on he gave everybody the spoke growth mindset he talked about basically a becoming a learning organization versus a know-it-all organization,
you focus basically on business primarily,
right and productivity he got out of a lot of the consumer business with the exception of Xbox and and in effect,
and he got rid of the windows Division and the stock price went up fourfold in 3 or 4 years.
And he’s a much more Humane boss with a company that is much more people oriented.
But on the other hand it’s results are better than anybody’s.
And so you know whenever anybody tells me they make decisions with numbers I tell them two things one is you are not human being because humans select with their hearts they use numbers to justify what they just did,
and if you work in marketing and tell me you make all the decisions with numbers are in the wrong World on the other hand if you do make all your decisions with numbers and let’s see working in the world of.
[39:10] Finans sooner or later you’re not going to have a job because AI does a much better job with numbers and computers do a much better job with numbers than human beings so anytime you make it
you saying it’s all about data or All About Numbers my stuff is don’t be silly and for most companies do with the exception of a few like an Amazon a Google or Facebook and a few others.
Data is very important but I sort of defined data is electricity.
Which is it’s so important that you can’t work in the future without electricity but on the same hand almost no company differentiates Itself by through its use of electricity I don’t see a company saying I use electricity better because I’m better.
Different better and so there’s this confusion and that was one of the reasons I wrote this book but it’s it’s kind of remarkable because it’s you know I found that.
[40:00] Because the focus is it still help people think see and feel differently about how to grow themselves their teams and their company,
that it is resonating with all kinds of people CEO CFO CMOS young people because part of it is it’s training on how to think,
and we have forgotten how to do that so big part of this book really is a,
you have amazing potential and I call everybody a leader but here are some things that people may have never taught you and you may want to think about and that’s probably why I think people should read the book,
which is it will make you more productive as a CFO of a company just bought 300 copies for every employee in his company and I said you’re a CFO what you buying this book called the purpose of business and all of that,
he said when I read it and two of The Twelve chapters maybe five percent more productive I decided therefore,
that each of my employees will become 10 thousand dollars more productive so what the hell your book will be cause 20 bucks by.
[40:58] Yeah and that absolutely is one of the things I love about the book as I feel like in my day-to-day life,
my colleagues and my clients get like really focused on The Shining baubles right like everything’s about the new marketing tactic or the new ad unit or the new e-commerce platform or whatever the widget is and it.
In the long run it feels like all of those things.
Are only 10% of the business problem and the other ninety percent of the business problem is the people behind those tools and how they work together and how they collaborate and.
Um and I feel like your book is a lot of super practical advice about improving the 90%.
[41:40] Yes and explains what and how to frame the 10% and because I know that 10% so well I can talk about framing that 10% and then focusing on the 90 because I truly believe there are only two ways to change a company.
And that is to basically either change the people or upgrade the people mind sense right everything else is a press release.
And we don’t play enough attention to that so this basically says a year so you pay attention which is if you get upgrade the ninety percent of the people,
how they work the talent the skill sets the company will do better it’s not different than you know world class sports teams usually world class sports teams have a disproportionate share of talent,
and then they have a coach that make sure that they work together and not at counter purposes and they win.
[42:29] Yeah the that is terrific on the flip side though I feel like one of the challenges with your book is because it has these twelve chapters and there,
they’re sort of very varied in topic it’s your book is really annoying to summarize.
[42:45] Yes that and that’s part of the the two parts of the book that is sort of annoying which is what it’s as hard to summarize the way I’ve basically summarized it is it help you think see and feel differently about it to grow yourself your company and your team which is number one,
and number two I would basically say is it basically says that for to succeed you have to come by.
Everything you know about the left brain part of you which is the spreadsheet out of you and combine it with the story part,
add depending on the situation that combination can be 75 30 25 or 25 75 or 50/50 it’s never hundred zero.
So Rishad apologize we are coming up on time but I do want to let our audience know about one other important Rishad fact.
And that is that,
in addition to being a great business leader and now author you are very accomplished photographer and it seems like you you use your opportunity to travel all over the world to capture these,
amazing landscape and Architectural photography wherever you go.
[44:01] Yes it’s one of the key things which is you know in fact I mention it there’s a chapter in my book on how to use Stein.
And you know one of the key things is I look at photography as a way to see the world differently but also to remember that it’s passing Us by.
Which is one of the reasons the opening line of my book is time is the only thing we have,
and these days we now truly recognize that time is the only thing we have whether we have too much of it or we are worried that we will die and have too little of it.
[44:33] Yeah I feel like in a pandemic there’s two kinds of people there’s working parents that have none of it and then there’s there’s empty-nesters are people without children that like suddenly have discovered some more of it.
[44:45] Absolutely absurd.
[44:47] Rishad speaking of time we have sort of ran out of it but I’m thrilled you are able to drive by and I can’t wait for this pandemic to be over so you can get back on the road and you can update your Instagram feed.
[45:00] Absolutely but thank you again thank you for your audience and thanks to both of you all bye.
[45:04] Thanks for Sean unfortunately I have not read your book but it is on my list and coming soon.
So the next category that I wanted to jump into is what I would call start-up entrepreneurial books and again you know this is for my entrepreneur buddies out there most impressive read them but if your intro
preneur I think there’s a lot you can pick up from these so I want to start with some of the classics so one of my favorites and I go back to this one probably once every two years just to kind of.
Remind myself of some of the concepts is good to Great by Jim Collins,
he’s kind of a recluse and he was just recently did a little PR tour so there’s some podcast he did one with see you do it with
Tim Ferriss and they do Joe Rogan no I don’t think he did but he did a couple podcast that were were just outstanding he has a little addendum to the book called turning the flywheel where he talks about evidently apparently,
he helped to Amazon deliver develop the flywheel that we all talked about all the time and he has a lot of really other interesting examples of flywheels in that little short book.
[46:14] This one actually spoke in the same conference with him recently and unfortunately he has passed away in the last year and this is the innovators dilemma by Clay Christensen
this one for the longest time I couldn’t understand the early days of e-commerce why big companies were acting the way they were like it was so clear to me that this was going to be the thing and they’re like yeah we’re just going to Outsource this whole thing and it’s going to be a small part of our business and I’m just like.
[46:38] Wanting to shake them and say my God can’t you see this is going to be the future and I didn’t understand of have a way to put that into you know understanding why these big companies were so hard to move and then the innovators dilemma came out and I was like
this guy totally nailed it he totally just makes a lot of sense now to me
another classic one and again for for someone like me that starts these new products and has to figure out all right why isn’t this getting the adoption I want it to how do I how do I.
[47:07] Get up that curve is called crossing the chasm and that’s a really good one for any
any kind of a start-up any new product that you have out there it’s got a lot of kind of great ideas for every every adoption curve has this dip in it how do you get across that tip that’s the chasm.
[47:25] I think that’s Jeffrey Morris all right yep
and then so those are kind of what are called Old chestnuts so totally stand the test of time you can pick them up today and they’re so extremely relevant some of the more modern ones there’s one called 0 to 1 by Peter teal
this was interesting because people have a kind of a binary reaction to it I just got a funny it says it’s called zero to one you know most startup people don’t like it
but then I found a lot of kind of more General business people love it so that’s interesting I’d be interested to hear how readers react to it what am I
one of my challenges has been there’s not a lot of books for startups when you get past like a hundred people there’s tons of books for how do you find product Market fit and like the early days of the startup but there’s
you’re having historically been a lot of what do you do when you get to kind of like 10 million and a hundred people how do you get 200 million or a billion and this is where probably my most,
my most favorite modern book by Ben Horowitz is called the hard thing about hard things and it’s with the first books I found we’re actually kind of
explains all the stuff of how you’re going to feel problems are going to hit when you get to like them employee number 200 and all the things you need to do to push through that so that’s one of my favorites.
[48:43] Speaking of that earlier stage you know I think I’ve practiced that this,
got put into writing as Lean Startup so how do you how do you get something out and get feedback faster that’s pretty much a staple because agile software development is worked its way into
all aspects of companies now but at the time it was kind of a weird thing to Think Through.
Um it spiffy we have to implement a lot of processes and procedures more so than I’ve ever had to do in any other company so there’s a book They’re called the checklist Manifesto that I found
and then Ben Horowitz just recently came out with a new book that’s kind of moron company culture which is really good what you do is who you are and then one of the last ones in actually want to add another one.
[49:29] Is Think Like Amazon we had John Rossman actually on the podcast and I go back to that,
there’s a lot of cool Amazon isms in there that I’m using on a daily basis like this concept of a two-way door of if we make a decision let’s be able to get out of it,
and I found that a really useful framework there’s like 10 or 20 of these in that book for me that are really helpful to help explain to someone
why we’re doing what we’re doing and why would you why would you try this if we just have a plan for I’m doing it well here’s why we don’t want to get stuck on the wrong side of that door for example
the other one is Extreme ownership I’m doing this from memory and this is by Jocko will will Nick
ex-navy seal my partner is 50 is an army guy and you know when I first read this at kind of it’s all about you know being a Navy SEAL and going out and killing people your kind of like well what’s that have to do with business,
and but you know increasingly especially in these times when it does feel like we’re under Fire,
I found that a lot of the concepts and that one are really really good and he has a great podcast to Listen to If you want to get super fired up and like
where if you’re having a down day and you want to watch some of his YouTube stuff that’s really really good content to kind of get you out of a little bit of a funk or depression.
How about you Jason.
[50:56] I think he’s got some Jocko has a couple extremely highly regarded appearances on the Tim Ferriss podcast as well.
[51:05] Yeah yeah absolutely and he’s on Joe Rogan all the time as well.
[51:09] And then for listeners that are following the John Rossman was on episode 181 talking about things like Amazon.
Yeah so that’s an awesome list I am reading another book that I would kind of put in this category.
The came out this January called future is faster than you think and it’s by this guy don’t.
Knew nothing about Peter diamandis and I don’t know if I’m pronouncing his name properly but this is a topic that you and I talked about a lot it’s this this concept of exponential growth.
And how everything particularly in technology is getting adopted at a much faster rate than ever before and so it’s kind of.
A framework for thinking about how.
How to operate in a world in which the future is coming at you faster than ever before and so you know it’s like as we’re doing this podcast Disney plus just got its 50 millionth subscriber right and.
Five years ago it took Netflix much longer to get 50 million subscribers and you know way before that it took HBO much longer to get 50 million subscribers so,
just kind of a interesting helpful book to sort of help you think about running a business in a in an accelerated world that’s growing at an exponential rate.
[52:37] He said one of the founders of Singularity University with Ray Kurzweil they’re biffle’s.
[52:43] Yeah hence the his hands his love of exponential growth.
[52:47] Yes absolutely it’s kind of interesting because I you’ve seen me talk about
this tonight I lead with that example A lot of times of exponential growth and how we’re not used to it it’s really interesting in this world of viral contagions that there is a bunch of people that just can’t get their head around exponential growth.
They’re like you know well .01% what does it matter you’re like well you know if you keep moving the decimal every other day that’s a pretty quickly.
[53:16] Yeah I think unfortunately a lot of people are learning about exponential growth in the context of the pandemic right now.
[53:22] Yes yeah the the hard way cool anything else on the general books Journal business set.
[53:30] No I have a longer list again I’ll put on the on the web page but that you know that I think that’s a great great list for now.
[53:39] Cool so then the third category we wanted to talk about is what I would call kind of e-commerce retail digital retail
payments and that kind of thing
this category I found the ones that hold the better test of time for me and our little more engaging or when I would call business biographies
so one of my favorite in the world of retail is Sam Walton made in America this one’s hard to find because it’s out of print so you have to buy it kind of used but it’s really good it’s got a lot of great stories about how
CM would just fire around America and you know be over some City and be like we’re going to put the Walmart there anyways in this little.
[54:19] Kind of I don’t know what kind of plane it was but and then you know sure enough they would build a Walmart there so that’s a really good one talks about you know
the whole concept of Walmart and how I scaled it up that’s pretty amazing in that same genre Ken langone who started one of the founders of Home Depot he has a book called I love capitalism that’s kind of his life story and it talks about.
How you used to work for a hardware store and there could be a better way and did the big box thing and it’s really really a good history of retail and you know,
just like Sam he’s had a very rich kind of post Home Depot business life also
and then as we get into the world of e-commerce the perfect store which is,
about eBay from Adam Cohen that was a bit old but still holds up pretty good I think the eBay story is really interesting from a Marketplace perspective
the good Google case studies called in the Plex the Facebook one that I recommend is called the Facebook effect,
it’s not a salacious as a lot of the other Facebook ones it really talks more about you know the iterative way they built Facebook.
[55:27] The best kind of the go to Amazon book is called the everything store,
my good friend Brad Stone you can actually find my name in that book if you want to go little spelunking there,
and then a bird to little bird told me Brad’s working on maybe either updates that book or a new book so I’ll be kind of watching for that so much happens with Amazon your,
but of course regular listeners know we spend half our time talking about all the new stuff coming on Amazon that it’s hard for him to keep that up and then
Doug Stevens who is speaks it a lot of the events we go to has a really good book in the world called in the world of retail called re-engineering retail that,
I think is interesting and kind of talks more about experiential kind of retail and a lot of the topics you talk about Jason.
[56:16] Yeah yeah for sure all good ones the it’s funny I read a ton of business biographies,
and I love reading them I do feel like some of them have these like.
Pearls that are Evergreen and some of them are like super interesting at the time but I’m not quite sure have as much legs.
[56:40] So you know it is a little interesting but you know other business biographies that I’ve read recently you know not too long ago we had weary and Gracia on from the billion-dollar brand Club,
um which is cool because it’s talking about a lot of direct-to-consumer biographies many of those stories are not completely done yet so it feels like,
work in progress,
um another book that sort of loosely a business biography also on Amazon is Amazon for CMOS which is by Kiri Masters,
I’m sorry like that but the book I’m reading right now in this category of.
[57:23] Kind of like specific retail advice is called remarkable retail how to win and keep customers in the age of digital disruption,
and that’s by another guy in our sort of speaker and social media ecosystem Steve Dennis and he’s a longtime executive JCPenney and then later Neiman Marcus,
and so I’ve read the book but it actually doesn’t launch until next week so it’s why it’s releasing on April 14th,
and because the pandemic he can’t go on a book tour so he’s having a virtual book launch,
on on April 14th at like 4:15 in the evening so if you happen to be listening in this episode before Tuesday I’ll put a link in the show if you want to join the virtual book launch,
and I will be participating and having a conversation and there’s going to be several other,
surprised e-commerce guest stars so it might be a fun way to hang out on Tuesday afternoon if you’re available.
[58:27] Very cool I’ve never seen the virtual book launch so it’s going to be exciting to see how that goes down I’m look forward to seeing how he signs books across Zoom.
[58:37] It’s going to be some way.
[58:39] Yeah I’m leaving that testy.
[58:43] And then for those folks that do not want or need if you’ve read all these books already or you’re not into books that’s not your thing this category is kind of multimedia so shows movies streaming anything in that kind of category
one of my
kind of all time classic business movies is Glengarry Glen Ross you can’t work with a sales team unless you’ve watched this in this is where all these kind of chestnuts of
ABC always be closing coffee sir closer closers there’s a lot of kind of sales people language that comes out of this movie and it really kind of.
Catcher some does a good job of
you know articulating to people that aren’t in sales what it’s the pressure of being a salesperson can feel like and of course it’s Amplified like
like nothing else in the stakes are much higher than in reality but it’s pretty interesting how they do that another fun one is Boiler Room same kind of a thing Wall Street you got to put that in there,
classic Michael Douglas Wall Street The Social Network.
That’s a really good one to kind of see a dramatization of how Facebook was created at the music and that is exceptional
this is one that I find a lot of people haven’t seen it’s called girl boss and it’s on Netflix it’s a Netflix original.
It tells the story of how a retailer Jason you got to help me out with her name Sophia Amorosa Zurich.
[1:00:07] That sounds right to me yes.
[1:00:08] Yeah okay so she started this this apparel e-commerce site called Nasty Gal and fun fact it actually started out as an eBay
so she started as an eBay seller this is really cool because it kind of shows this and I’m really super familiar with this life cycle because,
it might company started a channel advisor we have like thousands of customers like this where you know it started out as she she wanted to
make money to go buy something so she started
collecting vintage stuff finding it and selling it and then suddenly you know you look up and your apartments full of boxes in your you got a seven-figure eBay business and then she kind of graduated out of that into a retail facility and so
that did a really good job kind of showing that lifecycle that that’s really common for a lot of how a lot of e-commerce businesses are born
you have to watch office space that’s kind of a classic comedy around kind of what life in the office is like Jason is a consultant I feel like you.
You live that every day effectively and then another good one is start up.com.
[1:01:15] This is kind of a documentary about these guys that started a company and its classic because a lot of times you see this sad situation where these
these Founders will get together they’ve never really met each other and then they spend like the next two years just excruciating Lee arguing with each other and ending up with zero so so this this one kind of covers a situation like that and it’s a good
warning of if you’re going to start a company pick your Founders a little bit
carefully and then make sure you have those tough decisions early versus at the very tail end of the whole thing.
On TV shows I really enjoy Undercover Boss that’s kind of a cool way to see it’s so it’s a little staged and.
[1:01:58] More than three or four of them kind of get old but you know if there’s a certain business you want to kind of learn more about it’s a good way to do that shark tank is a lot of fun to watch with the family and kind of guests you know it’s a fun thing to see you know hey would you invest in that company and what do you think their evaluation should be
um another really good one is the profit this is on CNBC and this guy you know I was going to name wrongly.
[1:02:20] Marcus Lemonis.
[1:02:22] Leah notice he owns Kemper world you probably got better idea.
And all pretty much most the Sporting Goods things except for Dick’s right.
[1:02:34] He’s acquired a number of them recently in bankruptcies so again.
[1:02:39] Martin’s Gander Mountain yep.
[1:02:43] There may be more available in the near future.
[1:02:44] Yeah so a lot of his a lot on the profit you know there’s a good diversity of companies he goes in and turns around but there is a fair amount of retail there they’re not big box they’re usually kind of local retailers,
how about you Jason and he anything in the multimedia category.
[1:03:02] Yeah so you know.
I like to watch a binge watch shows while I worked out and we’ve all had a little more time to exercise lately so I’ve caught up on a bunch of stuff that was in my backlog,
um so I just recently finished the last season of Silicon Valley and,
to me that’s super important because I don’t know if anyone knows this but it’s Loosely based on get spiffy.
[1:03:28] Let’s hope not.
[1:03:30] So except Smith is going to end better but but the characters,
the characters are very very similar so that super funny and a great parody of Silicon Valley there’s a much less popular show that I really enjoyed the AMC made called Halt and Catch Fire,
which is kind of a dramatized documentary of like the.
Early eighties birth of the PC Atari kind of.
Yura and it’s pretty fun and mostly historically accurate which is cool.
Another one that folks tend to have not heard of but for retailers I think is a great one is called mr. selfridges.
And so this is the BBC show that was done about three years ago and it stars Jeremy Pivens,
as this iconic retailer Gordon suffrage who.
[1:04:31] Was a senior executive for Marshall Fields here in the US moved to London and open their first,
um department store called selfridges and a lot of the,
the retail best practices that we still use today and a lot of the slogans you here in the retail industry all came came from him so things like the customer’s always right for example are,
is one of his quotes and he led a very interesting colorful life so there’s a good soap opera quantit quality to the storytelling so that’s a I think that was a couple Seasons that BBC did.
I also recently caught up on succession which is excellent and I imagined,
plays out in the Wingo family when they’re talking about the spiffy Empire so,
highly recommend everyone watch that feel like you got to watch mr. robot so that you know not to store any of your secrets on anything digital.
And then I love Black Mirror which is kind of a.
BBC remake of Twilight Zone and it’s all these stories from the near future and I use quips from the show all the time at work because they’re all these,
sort of scary probably realistic projection of like what our life is going to be like in five years that that’s.
[1:06:01] When they when they paint the picture it’s kind of concerning.
[1:06:06] Very cool yeah I love Blattner do you like the last season had the automated pizza delivery van that was kind of cool.
[1:06:14] Yeah there it’s funny all these shows are starting to work these like near real-time things and I also I’m watching Westworld right now and they just had like in the last episode this week like,
like in the background while two characters are talking you see like for SpaceX rocket so I gland.
[1:06:33] Yeah yeah this call is on those funny
cool in the last category is what I would call non-conventional you know areas to go to learn interesting things one thing that I find is underutilized by a lot of folks is
there’s all these public companies in our category and if you’re interested in any company that’s public
part of being public as they have to disclose tons of stuff so one of my favorite documents to read is the S once when a company is about to go public if I was this document with SEC called Ness one and it’s this
it’s called a poop sandwich so it’s kind of got it’s really weird thing having done this you have to kind of say you know
our company is terrible you probably shouldn’t invest and then you say well here’s why we think it actually is okay and then you like you and you’re like
but there’s all these risk factors and we’re pretty sure it’s not going to work out so you have to kind of find that meet in the middle which is the really good stuff we’re management actually describes the business in their own words
I’m just called the management disclosure and
mm DNA and I don’t know I’ve got that but just look for management discussion and so that’s really really a cool way of reading things so you know kind of thinking about our audience
the Stitch fix one had this really interesting description about cohorts of customers and how they applied a i to those chewy had a really interesting one around how their subscription business work Casper to had this really.
[1:08:01] Really well-thought-out discussion of CAC versus LTV It’s oddly some of the best business writing you’ll find in for modern companies kind of buried inside of there so I know that’s a weird hobby but that’s I really like to read those
then if there is a business that you find fascinating like I’m obviously a bit obsessed with Amazon I listen to all their conference calls read there
quarterly reports and those kinds of things other ones in the industry I would recommend eBay Shopify has some really interesting kind of conversations on there’s one line that was kind of top of mind this week.
[1:08:38] On the furniture side is Wayfarer so they’ve kind of they saw sales spiked like 30 or 40 percent due to this quarantine so I’m going to be interested to hear what they have to say,
Etsy has seen an increase as people have been cocooning or nesting,
Ali Baba’s always interesting if you’re interested in the China side of things and then every public company has an investor relations site and on their they typically have their latest presentation they give to analysts and that’s another really interesting,
way of seeing how these companies talk about themselves you’ll get a lot of really good presentation ideas because these companies.
If you go look at Facebook’s or anything they’ve probably spent humility Philippe $300,000 on the graphics in this one deck so so you can kind of crib some good,
deck Graphics if you will from looking at some of these really high-end investor relations Decks that are out there so I like to poke around on that stuff as well.
[1:09:33] Yeah that’s awesome you actually turned me on to a related resource when these companies are doing IPOs after they file the s-1 they go on this road show too.
Sort of turned up investors and a video of a lot of the road shows is at least temporarily available in a lot of cases right.
[1:09:54] Yeah there’s a site that no one really knows about called retail road trip and they’re they’re up there for a very short period of time which is frustrating because it’d be fun to go back and look at like you know the Amazon Roadshow or something
but they are really really good so you know see one of my favorites Riesling was the Uber and Lyft one’s really good.
Yeah they’re they’re the Stitch fix one was excellent,
so that’s another really good kind of a area to go and you have to kind of unfortunately get to go kind of like log in if you especially if you know a companies going public you can kind of see when it’s coming
with this economy we’re in right now there’s not going to be eating probably for six months but,
keep it in the back of your mind if you hear Aaron B is going to go public Airbnb or whatever you can go and watch that as well.
[1:10:46] Yeah and then sort of a special case of the investor conference calls a number of these companies put out annual shareholder letters and of course.
The the Amazon one is particularly famous and like that’s one of the things I always look forward to every year is the new,
Amazon shareholder letter and the all-time classic is the 1997 version of the shareholder letter and it’s so classic that he reprinted in every new show at the end of every new shareholder letter.
And then like on the.
I don’t know if I’d say opposite end of the spectrum that another shareholder letter that’s like slightly less retail e is Warren Buffett’s Berkshire Hathaway,
shareholder letter always has a ton of interesting Insight in it and you know side note people forget but that warm Warren is a very big retailer that owns a bunch of retail in that portfolio so.
So it tends to be retail relevant.
[1:11:45] Awesome so that is a plethora of resources for anyone that’s looking to consume some new information and again like I’m going to try to put a superset of this on the website and I’ll put some links in there,
to sort of like the all-time classic list of books and putting on the books we have here and in the show notes will try to put a list of everything we talked about on the show,
but we’ve ended up using up a little bit more than our allotted time so we should probably wreck this up as always if you enjoyed the show we sure would appreciate a review on,
iTunes and if we miss some resources that we should include definitely hit us up on Twitter Facebook we’d love to add to the list and what are some new things that Scott on I should read.
[1:12:31] Thanks everyone hope you enjoyed this list of books and other media on how to improve your your situation while yourself quarantining and until next time.
[1:12:45] Happy commercing.
EP214 - Stifel Managing Director Scott Devitt on Covid-19
Episode 214 is an interview with Scott Devitt, Managing Director of Internet Equity Research at Stifel, in which we discuss the potential economic impacts of Covid-19.
In this interview, we discuss the travel, hospitality, and e-commerce industries, with a deep dive into some of the factors that will impact Amazon.
To receive Scotts research and analysis, send an email to him email@example.com and ask to be added to his distribution list.
Episode 214 of the Jason & Scot show was recorded live on Thursday, April 2nd, 2020.
[0:24] Welcome to the Jason and Scott show this is episode 214 being recorded on Thursday April 2nd 2020 I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-host Scot Wingo.
[0:38] Hey Jason and welcome back Jason Scot show listeners hopefully everyone is surviving their quarantining and shelter in place
and Jason and Times of Crisis like this I find I get really down in the weeds it’s kind of just pulled out plow through everyday grind it out
but sometimes it’s helpful to talk to folks that work at a higher level they’re seeing a broader spectrum of not only
companies but Industries and then the macro environment and the best place to look for that is Wall Street So to that end we are excited to have one of the top internet analysts on the show Scot debit
Scot is managing director of Internet equity research at stifel welcome to the show Scott.
[1:21] Hey guys thanks for having me.
[1:23] We are thrilled to have you Scott other than the fact that I am now feeling outnumbered to Scotts to only one Jason.
[1:30] Yes the between the three of us we have two of us we have three teas.
[1:34] Yes the S is are also popular so it’s got a tradition on the show we always like to start getting a little background about the guests so could you tell us a little bit about your background and then what your your area of focus or your role is its default.
[1:47] Sure sell-side analysts and cover the consumer internet sector.
Mostly u.s. space companies and the sub sectors include e-commerce you know so Amazon
that’s see Peloton the real Railway fare Stitch fix but we also cover Alibaba and JD in China and then their digital names include Netflix and alphabet we also Cover online travel and the ride-sharing companies as well.
[2:20] That’s awesome and have you always been a cell size analyst or how did you how did you come to the veal.
[2:27] Sure I worked in industry for a few years mostly at Dell after graduate school and then for the better part of the past 20 years I’ve been
I’ve been in this role started out as an associate analyst working for a senior analyst back in 2000 and then it kind of worked my way into the
into the role shortly thereafter we cover my team covers about 35 companies in total us internet.
[2:56] Pickle so your Universe for kind of folks on the phone so on the e-commerce side you have Amazon Ali Baba at see everywhere you put Peloton there’s that e-commerce you think of it I guess I think of it as a digital native brand.
Real real Wayfarer Stitch fix and then you also cover Netflix you mentioned all that Google.
JD JD on your list.
[3:21] GD GD booking Expedia Uber Lyft yes.
[3:25] Yep and we’re looking cool let’s start at the big picture and then we’ll kind of peel the onion as we go as it were.
So clearly this pandemic were as a recording this the jobless claims came out six million new jobless we’re going to clearly,
but the economy into a bit of a tailspin here what’s y’all’s big picture on kind of the how this plays out is this a v-shaped recovery is this 18 one thing a six-month and give us give us an overview of kind of the
the big picture.
[3:54] Yeah I can.
I can give you my personal view of that from just a macro overlay standpoint I mean I think I track the data every day as does everybody else and
it’s pretty rough out there right now
but you know but hopefully we do kind of get to the other side of the virus and you know the underpinnings of the economy going into this we’re quite strong
their stimulus behind us so you know I think my base case you know that then influences
my coverage and and modeling of internet companies would be something between like a V and a U-shaped recovery on the back of this and in as it relates to.
[4:42] Internet specifically we expect the advertising business to be down
ten to fifteen percent that’s roughly in line with what it was down in the o89 crisis certainly at the bottom
you know it could be worse but but that’s a good starting point until we start to hear these companies actually talk about current conditions e-commerce interestingly
right now is running above Trend because of the mix shift the Staples and groceries so overall recently Trends have accelerated according
third-party services like Adobe data today to 20% plus but
you have certain categories that are down as much as fifty percent in grocery that’s up as much as a hundred percent so very much depends on the products that one is selling within travel.
[5:32] And and and ride sharing which is tied to travel you know conditions are quite weak down 50% or more very much tied to the
the airline and hotel industry so that gives you a broad kind of picture of like the base case it’s now built into our models if I had to guess you know I would guess
are numbers you know probably going down further before they go up.
[5:58] Yeah yeah and so if we can think about how this will play out people report q1.
The quarter just ended so we’re going to have kind of 45 days of that and then you know they’re only going to have kind of a 15 to 20 day view of how things were right well the time they report that may be able to shed some more color so just feels like we’re gonna have a lot
you’re probably three to six months of bad news before we can kind of get to the good news of if I think through the way that all plays out.
[6:27] It’s probably in the best interest of companies to
just remove you know any any formal guidance for remained other year and you know potentially give qualitative assessments of current conditions but beyond that
just wait until more information is available and I think that’s probably the the best approach that corporate could take right now and some companies have begun to do that
Twitter data at the few other companies did it outside of our my coverage universe but you know a simple related company Shopify did it overnight so I assumed that
any company that does within my coverage give guidance is probably going to pull it back when they report.
[7:09] Yeah absolutely so let’s start at the the most heavily hits this travel industry you know I saw something that said like Travelers or down 92%
Jason’s are most frequent traveler and I have he hasn’t traveled in like four weeks so he must be just chomping at the bit.
[7:26] The I did something last week that I haven’t done in about 4 years I put my suitcase suitcase away.
I mean it sounds silly but it felt very weird.
[7:40] So so for that to come back Scott what do you think they have two you think we’re going to like change the configuration of planes so that we’re six feet apart going forward or like what what do you think it takes to kind of build confidence back in that industry.
[7:55] I think it will be a slow rebuild it’s hard to kind of determine.
[8:00] You know consumer Behavior coming coming back out of this and you know how corporations like say the airline industry you know will need to operate for a period of time
it’s probably too early to guess but but
but spaces in between seats is an option initially that’s not something you know that’s in place now but the flights are so empty that it doesn’t really matter
and you know I think I think in the end.
[8:34] The airplane configurations will likely be consistent with what they were historically but as we come out of this and consumers you know again
we gain confidence and things like
traveling you know that you could have instances like that and you know our expectations for the online business which is you know directly tied to Airline bookings and hotel stays is not down
you know as low as like the occupancy levels that you hear some of the hoteliers talk about what your 10
yeah roughly 10 15 percent but that’s just because we have built-in expectations of you know recovery starting
you know this summer which may prove to be
optimistic so are you know the bottom of our estimates get down to you know closer to fifty percent versus the 80% because month by month we actually begin to assume that things recover and that’s like I said
a few minutes ago you know in many cases I think as we update things you know our expectations will slowly grind lower you know as we get more information.
[9:34] Yeah I haven’t been I’ve been so focused on my own stuff I haven’t really looked at the ride sharing group have they been hit as hard as the travel industry or people still using ride-sharing in a pandemic scenario.
[9:48] No it’s about the same.
And it’s it’s very much tied to that but even even with the lockdowns that are occurring you know where you don’t have trips that are directly tied to travel
you know those are down meaningfully like like in some cases close to a hundred percent our estimate for to queue for ride sharing is down 50.
And and if the lockdowns hold through June you know then that will prove to be.
And aggressive estimate numbers will be lower than that.
So you have to look at these companies you know to the extent that your your listeners focus on things like this you have to look at these companies and look at balance sheet you know and things of that nature because some of these companies are going through a period right now
where if they don’t have solid balance sheets they could run into some considerable troubles.
[10:41] Yeah absolutely yeah it’s a lot of people didn’t have Pandemic in their crisis planning.
So you talked about within e-commerce obviously grocery is kind of over indexing and whatnot and then he said some categories are down as much as 50% what are what are some of the categories that aren’t doing well in e-commerce.
[11:02] Let’s see fashion down 51 percent according to one of the data sources that we look at.
Luxury retail down over a third e-commerce you know in aggregate
outside of Staples and grocery down almost 50% so anything that is.
Really consumer discretionary with a few exceptions
or down because you have you know offsetting that you have some of the stay-at-home benefit like
things like fitness equipment and you know other categories that are holding up better because PCS are doing quite well because people are rebuilding offices at home
and you know but the biggest driver right now of this growth this kind of 20th percent growth is just a mix shift
to grocery which is you know lower margin category but from a volume standpoint you can definitely see it in like Amazon’s hiring plans.
[12:07] Yeah you know it’s been funny like there’s there’s categories that that are up that are intuitively obvious like you mentioned that you know everyone’s buying the equipment for their work at home setups or their teach at home setups I’m always fascinated by the sort of.
Less obvious trends that start to emerge so across a bunch of my clients a product category that’s wildly up that makes sense but I would have never thought of is adult puzzles.
You know step stuff I got his people.
[12:37] That doesn’t make sense after you bring it up.
[12:39] Yeah once you see it you’re like oh yeah of course but those are the kinds of things and and you know what we’re starting to see what we didn’t see in the first two weeks but we’re starting to see now is all the at home.
Beauty care right so you know set everyone realize they’re not going to get to their salon and have their hair recolored or their nails done or their haircut and so suddenly everyone’s on YouTube learning how to trim their own hair with clippers and everyone’s buying.
Clippers and at-home hair kits and things like that.
[13:10] Yeah what’s most interesting you know that I found
in going through other other down Cycles whether it was you know mm or 108 o9 is that some you know is monitoring these changes in consumer habits
And trying to assess those that don’t revert bat because from an investor standpoint you know I think the internet generally speaking tends to be a
a significant market share Gainer
on the back end of down periods and and those consumer habits that change to something that is
better than what they were doing before under normal conditions consumers are very slow to change but in periods like this
they have to out of necessity and so that tends to drive you know significant kind of investment opportunities when you do get to the other side that benefit names like.
Amazon and an alphabet and and and and maybe even a Facebook but also something like a Peloton you know that a cover where there is an underlying Trend underway to Fitness in the home
that you know potentially is accelerated by this and it really doesn’t slow down on the back end of it.
[14:25] Yeah it that that is fascinating and difficult to figure out right because there’s some categories where you go it’s pretty obvious it’s not going to revert so if you bought a Peloton your.
You’re probably not joining the gym in three months or at least your you’re less likely to because you have that.
Capex now that you’ve invested in at home fitness but if you were having your groceries delivered.
[14:53] It’s a completely open question whether you’ll keep having your grocery delivered after the pandemic or whether you’ll go back to.
To shopping in the grocery store and I bring up the grocery one in particular because they’re it feels like there’s any even extra Paradox there like obviously with everyone Sheltering and home we’ve got.
Way more people trying at home grocery delivery or trips had grocery delivery than ever before which which the digital groceries are thrilled with.
But the experience that’s being delivered is the worst possible version right so.
You know every delivery is late every delivery is missing a bunch of items and has a bunch of you know weird inappropriate substitutions and then all these things and so there.
You know amongst the folks I’m talking to it’s a super open question like they’re getting way more Trials of their service than they ever had and could ever imagine but many of those customers aren’t having a great experience and are using it out of necessity so once.
Once this sort of pandemic a baits like it feels like a really unknown.
How much are those those behaviors stick or how many of those customers they lose because the experience was some up you have any like how do you even think about that but.
[16:04] Well you know everything is a hypothesis right now and.
Giving given where we are you know my with I totally agree with it with everything that you said in terms of it’s not necessarily a better experience you know groceries been slow to transition for reasons Beyond just consumer
the pace of consumer habit change because going to the grocery store is actually still quite convenient what may come of this is I think in the case of grocery you will you will very likely get a reversion back to
going to the store to get groceries because it’s still quite efficient and cost-effective but that you may have consumers more willing to,
supplement the experience with you know certain.
Categories whether it’s whether its buying the dishwashing detergent and things that hadn’t come to mind that that the consumers now realized that is readily available to get delivered to the home that could have an impact on overall trips
but you know it’s a it’s not one where I think you’re going to have a full-scale transition
over to direct distribution of grocery they’ll be some benefit it won’t be near what you’re seeing at the moment.
[17:19] Yeah I wanted to go back to something else you had said earlier like obviously you know they’re all these categories that are.
Wildly down and you know they’re mostly implementing austerity measures and trying to you know figure out how they can weather this and and you know we’re all trying to figure out.
How whether it’s a v-shaped recovery or a U-shaped recovering what that looks like.
I wonder if there’s a difference though like some of the categories you’re talking about like airlines are hotels I know I know there’s an occasional debate but like I think in general.
It’s known that there are nominally profitable models or at least the unit economics are favorable and they you know Airlines and hotels have demonstrated that they can deliver their services profitably and so.
When when they’re thinking about a recovery they’re trying to get back to where they were before but you know there’s a bunch of these businesses like Rideshare and Uber where.
Like nobody’s demonstrated that the unit Economics work so when they like lose all their revenue it just means they’re burning through their investor were War chest faster than ever before.
Like is it our those companies are less likely to have a recovery than companies that have a viable unit economic model or or.
You know do you feel like that Uber is going to be in the same shape afterwards that they would have that they were in before.
[18:43] It’s a great question on one hand Uber and Lyft or much less levered,
but they’re not they weren’t profitable businesses going in the way that the Airlines and hotels were but they’re certainly much less levered
then the airline industry so if you were to this is something that boobers said publicly if you were to run bookings down 60 to 80% for the rest of the year,
Uber still ends the year with four billion dollars of cash and and access to a two billion dollar revolver left in fact doesn’t have any debt so you know there
they you know that seems like a
pretty close to a worst-case scenario in terms of that we stay down here for the rest of the year so I’m comfortable thinking that neither of those companies has balance sheet risk but to your question whereas in the airline industry
certainly without the the.
The federal government providing funds that whole industry potentially you know would go away before the end of.
3Q if not to Q because of the leverage in the model and.
[19:53] And so I think you know we still have to prove the unit economics of ride sharing any other side but to the extent that travel does recover you know I think that both companies sit in.
In relatively strong positions and the question for everyone involved in that industry hoteliers.
Airlines in ride-sharing is what do volumes look like
Under The New Normal on the other side to Scotts earlier question of what have Airline configurations look like how do people travel what a conferences look like and how many are done virtually Etc all those things that we don’t yet know yet we’re going to have you know
potential long-term ramifications on on the trends across that industry I’m you know of the view that we will get back to
normal at some point in terms of people traveling the way that they once did but that could be much longer than other Industries in their past back to normality.
[20:51] Yeah so one other question I know Scott super eager to get to Amazon and I promise we will in a second but one other question to benefit all the CEOs listening to the show this week
a pre-pandemic a common conversation I would have with a retail CEO is.
This challenge around making strategic Investments because there’s lots of strategic Investments that like the CEO
knows that they need to implement for the long-term benefit of their company but many of them have adverse effects on short-term revenue and profitability and you know
frankly like most CEOs feel very locked into.
Performing against their comps and so while there’s a ton of negative stuff about this pandemic.
Like I have a hypothesis that like one small Silver Lining is like a lot of businesses are going to be off the hook for comping this year and they’re like they’re they’re me you know maybe a one time opportunity for.
Companies to sort of reset expectations with their investors and make some more forward-looking Investments since.
Like for most businesses there’s just there’s no hope that they’re going to favorably comp against last year given this like.
Am I thinking about that right or is that is that just Whimsical thinking on my part.
[22:12] I think it depends on the depends on the the impact you know.
Current conditions at any individual business in terms of like the first thing to address our current conditions to the extent that one can address current conditions and still have the flexibility to think about strategic,
options that are deeper into the future and have a capital position which they can deploy Capital then I think your
your scenario in a makes sense because no one’s really going to be looking at at numbers in the near term in terms of profitability outside
just flat-out solvency so I think every situation is quite unique to what that Corporation is dealing with.
[23:00] Coppola wouldn’t be adjacent Scott show if we didn’t dig into Amazon a little bit what’s your what’s your macro thoughts on the impact of the corner virus on Amazon.
[23:11] Well from an e-commerce standpoint you know I think that Amazon is is.
Doing quite well you know mix shift certainly to cpg grocery,
you know could have margin implications I’m sure there’s costs Logistics wise and hiring wives to deal with this you know that.
[23:40] Could have impacts on profitability they’re seeing a mix shift you know away from FBA right now because of the way that they prioritize
Essentials and that has a negative impact on 3pf be a yes so there’s there’s Justice
kind of the minutiae if you will that you know has a net negative impact on the margin profile of the business but I think the
power the strength of this company within e-commerce is more evident today than it’s ever been and Amazon’s of pure example of when we do come out of this a company that will be in a stronger position because
if the government doesn’t seem to be focused anyway on saving the retail industry
and so you had a companies that were on potentially week paths before this
which those paths have been accelerated on you know Macy’s in is an example that’s been in the news in the past week and that happened during the oh 809 crisis and a lot of that share gets reallocated among
the strong company is the same thing will happen again so e-commerce wise I think never been stronger
really and and this is the shines a light on
I think the power of Amazon’s model within their Cloud business you know you’ve seen some data points out of Microsoft that also showed that the way that the economy has transitioned
you know in some ways at least is beneficial to the cloud business Amazon’s like.
[25:03] Spin as it relates to investment ideas probably the most Rock Solid company in fact it’s the off the checklist but I think it may be the only company that I cover that was up.
Year-to-date through 1q the stock is actually up in 1q.
[25:20] So the cloud I could almost argue that they could have some challenges are because it’s a lot of startups using the cloud and we’re gonna probably have less the failure of startups is going to spike for sure and less new starts but
the same time you could argue these larger companies are going their workloads are all going to continue to move to the cloud I guess do you think Amazon’s delivery.
Capability I was thinking through this someone’s so that there is they did that one day walk out and then they fired that guy,
and they said he wouldn’t keep social distancing and I’ve been doing Amazon warehouse before and people are like shoulder-to-shoulder at some of these pick lines I wonder if it’s reduced their Cape their capacity just having to do implement
social distancing and procedures like that at the warehouses have you seen any data on that.
[26:11] I’ve not but I but I think that is.
That is likely yeah that may have an impact on overall efficiency yeah I mean.
[26:21] To your margin point.
[26:23] Yeah that you know have an impact on margin and of course you’re seeing you’re seeing I’m sure in your personal life changes in delivery times and things of that nature but that’s more related to this
favoring of Essentials than anything else but as it relates to efficiency I’d be surprised if it’s not down.
[26:40] Yeah it’s interesting when I talk to Merchants you know to your FB a point there there actually,
you know a lot of people have a hybrid model where they’ll have some stuff in FBA and some stuff out there for the first time ever the stuff that’s not an FBA is getting much higher pull through than the stuffs an FBA because it seems like Amazon is putting these really long delivery times on the
the non-essential FBA stuff so then I think we’re also seeing that spill over into the other e-commerce providers that people normally.
Wouldn’t start out like a Walmart or Target I know they’re not in your coverage University think you think they take a little share from Amazon here or,
the share is really the way to think about it is the Commerce guys take a ton from the offline guys that are closed and that’s how to think about it.
[27:27] And and you’re speaking to like Walmart’s Marketplace business or just Walmart in general.
[27:34] Just just I guess more their e-commerce business you know I’m seeing more people online anecdotally saying you know gosh I’m ordering from Walmart and Target now because the delivery times on Amazon of gotten so long.
[27:45] Yeah yeah certainly I think that Walmart.
Costco come to mind less familiar with the activity at Target right now but I would assume they’re getting a bump in their business as well so.
[28:02] All four of those companies I don’t cover three of them but it’s safe to assume they’re all seeing lifting their business as it relates to like share shift within e-commerce you know potentially
there could be some of that because of the way that Amazon’s D emphasizing FBA but but I think they’re probably doing well.
Holding their own and you know and doing quite well in terms of delivery guarantees on
the essential side which is where all the growth is right now I’ve just anecdotally you know we I think we’ve probably had 15 Costco boxes in the last you know two weeks show up and you know it started out on time
then before you knew it you know the delivery times were backed up a good five days we had a Wegmans order
you know that it took five days to wait to go pick it up at the Wegmans by the time that 5th day came up they canceled the order so I think you know many companies are
we’re having issues you know and I think Amazon’s probably relatively well positioned versus even those bigger traditional
General merchandisers as well but you know we’ll see I mean earning season it’s going to be the craziest earnings season
since you know I’ve been doing this in 20 years and probably I think some that have been doing this even longer than that I’m not sure how far you have to go back to to have something that’s comparable
you know to this but we have a lot more information within the next two to four weeks as companies speak for the first time about current conditions.
[29:31] You know I feel like Amazon’s investment in their own delivery network is
they obviously didn’t know this was coming but it was very very smart because now they don’t have to fight over that one FedEx truck that’s making it to my neighborhood every week they have six Prime vans.
Spin around and doing that so I think that’s been a huge Advantage for them to own the full vertical ization of that supply chain.
[29:57] I totally agree and having so many different
distribution centers as well I mean they haven’t been impacted in the way that some of them my smaller coverage has like like the real real as an example
they have to fulfillment centers in the US they both been shut down for different reasons you know so so the fact that Amazon is so distribute in the way that they are
there haven’t been any noticeable issues that have made it into the media but even to the extent that they do run into
issues at certain places they can reroute you know and still deliver to the consumer.
[30:31] Are you in the camp that Amazon ultimately competes with FedEx ups with her fulfillment or do you think they keep it as an internal capability primarily.
[30:42] I’ve I’ve always had the view that their competition with FedEx and UPS is more about pulling.
Product off of that grid and into their ecosystem so effectively FBA.
And in combination with an increasing percentage of the fleet being Amazon trucks is the way that they.
Ultimately compete with UPS and FedEx versus the more think creative out-of-the-box thought that they that they ultimately provide
similar services to those I think they’re already having an impact in terms of just simply the way that the.
That the size of Amazon’s network is growing that it’s pulling product outside of UPS and FedEx and that’s kind of been my.
My base case for the direction that they’re heading that’s all that they’ve shown to the outside world
you know to date and if that changes you get more visibility to something more distinct than you know change my view there but I’m not I’m not over the view that they’re building
UPS and FedEx internally.
[31:49] Are you following and worried at all about what happens to USPS and all this because it like is you probably know.
The post office is Amazon second.
Biggest delivery partner after themselves and for most of the rest of e-commerce it’s the biggest delivery partner and they’re in serious financial distress they you know weren’t included in the stimulus package so it’s
it seems like their future is uncertain.
[32:18] That’s a problem,
I did see that they weren’t included in the package and and you know there have been other rumors around as well in terms of their operations during this crisis so I mean that’s just going to be something.
It’s an important partner of Amazon so you know it’s definitely going to be something that could be a problem to the extent that their activities you know slow during this period or
or even you know beyond this period that the Postal Service struggles to operate I again in this area My Views been that.
The government will ultimately keep the Postal Service.
Running because it’s necessary you’ve seen some political.
Kind of calisthenics around this topic and that Amazon is not paying enough but
but without Amazon them in the you the Postal Service would be an even worse position so it’s kind of an interesting debate and one that will continue on but but I don’t think the Postal Service you know we’ll just we’ll just go away it will get funding
even if it comes at the last minute.
[33:30] Yep yeah I certainly hope so it’s hard to imagine a world without it what one thing you know you talked about.
E-commerce in the mix being you know shifting much more to Essentials and so there’s there’s sort of winners and losers in that.
One thing that I imagine is a bit of a bummer for even the winners is it feels like this new mix is fundamentally less profitable right so you know I know you don’t follow Target but like targets an example where
they’re ordinary mix with skewed heavily towards non grocery Grocery was a much smaller piece of their total mix than Walmart or Costco.
And so now that you know they’re mix is skewing heavily towards grocery that.
Grocery is systemically less profitable and then the way that all these guys are having to deliver grocery right now all the extra hoops and supply chain challenges.
It feels like it’s less profitable than ever.
[34:25] I agree the only one that doesn’t have quite the same impact so that would that would have an impact on the Amazon Walmart and Target left so Costco because of their markup model Costco you know
Garner’s a higher margin on their Kirkland brand you know which is probably not doing well at the moment
relatively speaking in terms of
product mix so that they have a little bit of a wait there but they’re markups across their business outside of Kirkland or quite consistent so they’d be the only one I’d say that
that wouldn’t see a meaningful margin impact outside of Kirkland mix the other three
certainly you know will have a lower margin impact benefit of mix but but the downside is percentage margin.
[35:13] Yeah and that you the those retail exclusive Brands is another interesting one on following pretty closely because.
There was already a strong Trend consumer preference with shifting to these exclusive Brands and they are better for the retailer and there’s a lot of good economics attached to them.
But my hypothesis is another secondary impact of this pandemic is.
Consumers are much more open to substitution and they’re trying many more new brands than ever before so if you were super loyal to Charmin toilet paper.
Right now you’re just thrilled to get any toilet paper right so the toilet paper you get is Presto brand from Amazon.
How many consumers will decide that Presto is good enough and not go back to Sharma.
[35:57] Time will tell and you know the throw another wrench into things when you get when we do get to the other side of this you know,
if one thought that China supply chain.
Was you know a risk to retailers prior to this I’d have to think that these things are only going to get more difficult
on the other side without going into into depth in that area a you know I do think that the possibilities of nationalism protectionism and things like that certainly could emerge out of this and have impacts on the retail industry.
[36:39] Yeah so like thinking specifically about some of these ecomp layers that you follow argue you mentioned Stitch fix real real.
You know what is going to happen with those I think of Stitch fix in particular is like.
The largely been the the direct to Consumer internet darling but then you know their last earnings were slightly soft and now they’re in this category apparel that’s that you know has a ton of potential head winds as a result of the pandemic.
[37:13] Yeah so let me quickly hit on the others for that stand out that are you know kind of that
small mid-cap e-commerce company Stitch fix is on that list and the Stitch fix customer one of the.
More meaningful use cases for the product is.
Dressing for work it’s not many people you know are doing at the moment other than those that have cameras in their house and are on news channels and so I think that you know Stitch fix his business while
it’s one that certainly has the potential.
[37:48] And and I think was was executing on becoming a leader in in soft lines in this new world of distribution there
they indicated you know some potential weakness in the coming quarter and I would imagine that that.
[38:04] Is is likely happening if not even worse the real real I mentioned
you know which is used luxury items they long-term I think their business model is sound short term
they are not shipping product out of their facilities now because of not being an essential business
in California New Jersey where where those states are on lockdown so you know they’re operating but they’re not they’re not currently shipping out of the facilities
wafer is in the furniture and Home Goods business wafer is not a profitable business and it’s one that it tapped been tapping the debt markets and so you know that lack of profitability is something that
concerns investors especially when one has Leverage.
[38:51] You’re comfortable thinking that that they will be that their brand will resonate you know similar on the way out of this as it did on the way in but I think that’s a company that
in terms of the stock itself it trades more like a leopard business like an airline you know than it does an e-commerce company at the moment because it’s the one that has the most
that of these names in the final one would be at Sea which is just a discretionary item Marketplace business which there
operating at a very high level but
I would assume demand for their products is down considerably right now so you know their numbers will likely be week as well and I put them on one side of the grid is Staples and Grocery and
and the other side is everything else you know at see each one of these companies falls in the other everything else which is down 2250.
[39:42] That’s how I could almost talked myself into a contrarian view because you know Jason talked about adult gaming and
playing puzzles and stuff you can almost think if people are stuck at home it may be a good time to pick up a craft and maybe they benefit from that some degree but I guess the macroeconomic would probably swamp that.
[40:00] Yeah well I yeah I I could talk myself into anything right now and I think that’s the it’s certainly.
Certainly possible and I think you know they will probably whether it better than you know than eBay across their broad set of categories for that reason you know but,
I just don’t know you know there’s not a data source that I can point to that that fully confirms that but I think that anecdotally you know I’ve heard similar things in that category.
[40:32] Let’s talk a little bit about eBay I actually.
[40:35] Before we go to eBay Scott one other thing I was just curious on Etsy like the so it does seem like in the short term they might get more sellers right as people get laid off and.
Turn to Etsy but I like another long-term potential benefit for Etsy is I’m growing increasingly concerned about what holiday is going to look like for everyone because of supply chain disruptions right so ordinarily.
The big retailers would be planning and executing their holiday supply chain right now which you know is much more difficult and.
Like basically a hundred percent of the toys that everyone buys for holiday come from a Chinese supply chain that’s pretty heavily disrupted like there’s a there’s a contrarian view of my mind that.
People might be getting a lot more Etsy gifts for Holiday than ever before because the traditional options might be diminished.
[41:28] That’s possible offsetting that they have you know a good bit of business that’s event-driven.
Weddings and things like that and so you know it’s hard to tell but I think you know I.
That’s it to me is a very Sound business it’s well-managed it’s not levered you know and as a Securities analyst you’re thinking of stocks like that’s the type of business that.
I would want to be building a position in knowing that at some point we’re going to get to the other side but I probably wouldn’t be building a full position with the amount of uncertainty with where we are in the process right now if that makes sense.
[42:04] Makes sense so on eBay I haven’t been following very closely in the last two years I know I know the CEO left and kind of a prompt manner what’s going on with eBay these days.
[42:20] Well I mean the closest StubHub deal that was a in hindsight a Herculean effort business effectively.
Shut down shortly thereafter in terms of business operations and so the fact that they were able to get that deal done was Quite a feat
I wouldn’t feel good to be on the other side of that transaction you know at the moment but um but as it relates to that’s just you know financials and gives them access to Capital to
continue to buy back stock over time as they’ve been doing you know the underlying kind of fundamentals of the business.
[42:57] I think can before covid-19 through and on the other side and continue to be week I mean I think it best.
EBay gmv is a GDP plus a couple points you know business and and at worst it’s GDP or point less and that isn’t
is not something that I think is hugely problematic for the stock because it’s kind of priced for that.
As the way they you know we all tend to think of the world in terms of growth assets it’s just it’s not a growth asset and more and I think that’s the way that you think of it in terms of the way it’s impacting them right now
given the categories that they’re in in the fact that they’re not in the areas that have all the growth is that their numbers will be weaker than that that Trend you know near-term and more consistent with,
with overall e-commerce Trends and then when we get back to run Ray you know this business will be growing two three four.
Best case five percent again and that’s eBay.
[44:06] Yeah yeah do you think they get acquired or they just kind of muddle along it kind of to 3% for the first syllable teacher.
[44:15] Well the list of buyers isn’t particularly long but.
You know so so Ali Baba doing something and.
Even before this with the current Administration was near impossible to the extent that they ever even had an interest you know the one that’s most stood out to me.
In terms of not saying it would be a fitness area but in terms of the perception that it would be a fit would be Walmart you know but
but you know outside of that like I said I mean list isn’t particularly long and you know I don’t have a strong view in that area in terms of whether they get consolidate or just kind of slowly but surely
privatize the company through generating cash and buying back stock.
[45:05] One other thing you mentioned at the top of the show that you know you’re going to you just paying a fair amount of softness on the advertising side in my day-to-day it spiffy we do a relatively.
For us a large amount but it’s very small compared to other folks but the efficacy has gotten way better on digital advertising Jason may have a point of view on this to because it just seems like there’s a lot less competition out there for
which you know it’s an auction so it drives the bidding so so we’re actually seeing very positive things on Google and Facebook for example
what say little bit more about what your hear what you’re thinking about Google and Facebook and how they’re going to fare through the next three to six months.
[45:49] Yeah well that’s great I mean I think that one thing to consider with the advertising you know marketplaces is travel as is you know
roughly fifteen percent of the industry and so
if that’s down 50 to 80 you know you get as much as 10 percentage points of drag just alone from travel and then you have.
You know the the mix shift in terms of towards Grocery and Staples that really I think right now.
Those that are Distributing those products have less of a need to actively market and then you have everything else which I think is you know where you’re talking about whereas if you have product that selling
the efficiency of the advertising right now is probably higher
then it’s been since going back to Oedo 9 when news of what smaller businesses if you had a product that was selling but everything else you know that’s down their ad budgets are down commensurate
with their revenue so the fashion industry fashion e-commerce you know down 50 they’re not spending on on advertising and so there’s a whole like mix of
the aggregate advertising industry numbers and that’s why in aggregate you get these numbers that are down 10 you know worst-case down as much as 20 but if you have a product that sells.
You know right now I would imagine that your rates are as effective as they’ve been in years.
It’s interesting it’s I think you’ve hit the nail on the head it’s complicated because there are like Windows of opportunity there but there’s some you know pretty big scary macro Trends as well.
Someone that whose salary is largely paid from advertising on I’m trying to follow it closely but I have no idea how it’s going to play out.
I want to do sort of.
Pivot to thinking about the big picture long-term just a little bit as we kind of get close to wrapping up here the first thing that strikes me in a bunch of these segments even if the segments down are the categories down it seems like we’re.
There’s a lot of acceleration of winners and losers so I know you mentioned a perils heavily down there’s a ton of challenges in a pair at all.
Nikes probably better position than a lot of their competitors to whether that down Ness and emerge with.
Greater share versus their competition for example right and Walmart and Costco my you know are likely to emerge from the retail category stronger than some of their traditional competitors like.
Big picture does that does that just eat mean consolidation and to fewer stronger Brands and retailers and as like.
You know does that create investment opportunities or is that like fundamentally bad at like you see it playing out like that.
[48:37] I absolutely do I mean I think that to try and put it succinctly Darwinism you know is accelerated during times like now and so.
You more so than ever want to own leaders and leaders will win on the other side I mean this is a
horrible period in human history but but humans are resilient and you know it’s highly likely we’re going to get to the other side of this hopefully sooner rather than later and you know this is why companies
the best companies do the best through all environments and you mentioned Nike there’s a good list of very high quality
Brands retailers and otherwise that when we do start coming up will be significant share gainers unfortunately,
either either in a very weak.
[49:31] Categories in terms of like department stores where the world is just moving away from that generally you can still be a great operator but it’s the power of the the industry that’s dragging you know the business down or you could just not have a
great business those won’t recover and you know and I think you saw to know 809 you’re going to see it again here
if you’re building a portfolio of Securities you know and your and you think about the safety of,
of your positions versus being lever to recovery I think a lot of those blue Championship names are the names that you want to be building positions in
right now Amazon you know on that list and certainly at the top of it but Google
you know as well you mentioned you know others that that I don’t cover but there’s a long list of other names as well.
I bet Mike you would wish that they were maybe selling through Amazon at the moment but that’s a different different topic maybe maybe they will.
Some resolution there although I doubt it that would be interesting because that would help for the time being.
[50:34] So you know what’s funny about that so.
I do want to double click on that one because it is it’s coming up a ton I have a feeling there’s a lot of people that weren’t selling on Amazon that wish they were and you just hit Nike but the.
It is also interesting there are a lot of people that were single sourced on Amazon so they looked at Amazon as their primary path to Market.
Um and a bunch of those sellers.
Are really taking it in the shorts right now particularly their non-essential category so if you are a business that was built exclusively on Amazon FBA.
You are and you think you’re going to have a future at all you are right now planning a future where you’re no longer a single Source on Amazon right so you’re either talking to Walmart about being on their Marketplace or at the very least your.
You’re thinking about applying for you no vendor fulfilled.
Prime or you know augmenting Amazon with some 3pl services like is there like clearly the macro Trends are going to favor Amazon but I wonder if they lose a little bit of Market
please share as as their Partners try to diversify themselves a little bit.
[51:45] It could happen under the service is so strong when tied in with prime under
99.99% of operating conditions you know excluding this moment in time that I think that you may have you know vendors that build emergency capabilities in or
being able to Source themselves or even layering in additional marketplaces but for the most part FBA will you know
what will likely go back to right where it was
when this ends I mean that’s just that’s my view because of the power of the product but but in the meantime I think what you’re saying is you know is absolutely accurate in terms of that there
going to be contingency plans put in place it’s just a matter of how active those will be once we get through this.
[52:38] Yeah and how it isn’t Heather if they’re economically meaningful at all that farpoint like
is prime certainly is very strong hey so let’s let’s wrap up on a slightly more positive question like appropriately like there’s a lot of Doom and Gloom right now totally get it but when I’ve been looking through history at some of the.
The the near analogies to this situation like a the first thing is there is no Perfect Analogy to this situation.
But when you look at something like SARS and and its impact in China One of the interesting things to me is you mentioned you follow Ali Baba and JD.
Arguable that JD.com was founded because of SARS and for sure.
Ali Baba was dramatically accelerated as a result of SARS and today you know those are two of the biggest e-commerce players of all time.
Like is our when we look back on covid-19 and we’re telling our grandkids about this this time when we had to home-school them are they are we going to be talking about some new companies we’re not even thinking about today that.
Become giant players because of this sort of disruption.
[53:49] Very possible it certainly we’re going to be talking about the strength of existing companies you know that are that are beneficiaries of this no doubt and and then I do.
I believe that it’s very possible that you have a whole new grouping of companies that emerge from this as well and you know if you look at we have
been through as a global Society various crises over many many
decades if you just simply pull up an S&P 500 chart you know that goes back to the year 1900 I mean I think you can comfortably without getting into the weeds of the our current crisis
assume that this too shall pass you know the questions that remain are more around depth.
And duration at some point
there will be treatment for this at some point there will be a vaccine for this you know it’s just a matter of how long do we have to bridge to get to the other side and I’m as optimistic as I’ve ever been in terms of that good companies will prosper you know on the back end of this we have a period of a month to you know
a number of months to see
where we bought them before we get there and I think we’re at the still towards the front end of that as has been indicated by you know by the government and the various stay-at-home initiatives are in place in the US.
[55:08] Yeah that that that is very well said and that’s a great place to leave its God because it’s happened again we’ve used up our allotted time but really appreciate the conversation and you’re inside thing I know it’s crazy right now so thank you very much for
taking the time to sit down and talk with us.
[55:26] Thanks so much Jason and Scott really appreciate it.
[55:28] If folks want to follow you online is there a centralized place where where you publish or anything like that.
[55:35] We don’t publish actively online but you can follow me on LinkedIn you can also email me at Devitt sdev itts,
stifel.com STI Fel and we can add you to our distribution list.
[55:51] Yeah I strongly recommend that so I read pretty much everything Scott puts out its really good read and you can tell he gets kind of punny with some of the subjects it’s always fun to try to decode what is puns are on those.
[56:04] Thanks a lot guys.
[56:07] Awesome and if folks enjoyed the show we love a five star review if you’re sitting at home with nothing to do great time to write the review if you’re trying to home-school a toddler
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