EP262 - Amazon Q1 Earnings
It's Q1 earning season. We recap Amazon, EBay, and Shopify Q1 earnings reports. We also lightly touch on Google and Facebook earnings and cover some other Amazon news.
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.
Episode 262 of the Jason & Scot show was recorded on Thursday April 30, 2021.
[0:24] Welcome to the Jason and Scott show this is episode 262 being recorded on Thursday April Twenty Ninth twenty twenty-one, I'm your host Jason "Retailgeek" Goldberg and as usual I'm here with your co-host Scot Wingo.
[0:41] Hey Jason and welcome back to Jason Scott show listeners well Jason it is late April and you know what that means.
Nope not pollen season not finally warming up in Chicago it is earning season.
[0:56] I thought it was the week before Star Wars Day.
[0:59] Oh yeah that's coming up lot a lot of exciting May 4th things going on
but that's not the focus of today shows Today's show this earnings season it lined up really nicely for podcasters so we appreciate all the big companies working with us on this so the sequence that was kind of interesting is we had Google first on the 28th and then
eBay that same day and then Amazon and then I'm sorry Shopify so it went.
Google Shopify eBay Amazon and Amazon was today so we have kind of four of the key companies that we like to talk about all releasing so,
gives us a good chance to kind of see where we triangulated on q1 the other one that announced in there is Facebook and we have a couple tidbits from that one,
in fact I'll kick it over to you to start there.
[1:51] Yeah so Scott one of the interesting things in Facebook's announcement is they referenced the the likely impact that the that Apple's changes to mobile,
app tracking the idea of a would have on their go forward advertising revenue and is a reminder.
We did a deep dive into changes in privacy from mobile cookies and from mobile tracking and from from third-party cookies and episode 257 which was a very popular episode.
But one of the things we talked about is Apple's making it harder to track.
[2:30] Mobile app behaviors and the company most impacted that by that is Facebook because.
Facebook sells a lot of ads to mobile app Publishers to help them get installs for their mobile apps and they'll now have,
a lot more difficult time doing attribution For Those ads and being able to State when those ads trigger an actual install.
So in the earnings Facebook had pretty good earnings and in their guidance they said they still expected the that ad,
Revenue to grow but they did acknowledge that the changes to IDF a would be a headwind.
That likely would slow down the rate of growth of advertising related to these mobile apps and this this change that Apple was doing actually took effect in the.
[3:25] The iOS 14.5 which released this Monday which I think was three days ago April 26.
And a related side note that
that's interesting to me about Apple is Apple is super good at getting all their users to update their operating system so it's been like three days in a huge huge majority of apples users are already on that new operating system so,
whatever effect it's going to have on Advertising Facebook is starting to see it we probably won't get any data about what it was for at least a month.
[4:01] But Facebook is undoubtedly already feeling it whereas where you know Google to make a similar change with with Android.
It would take much longer to take effect because they're their operating systems tend to get deployed much more slowly.
It's a as a app developer the Android operating system is a huge Bear Tooth to support everything people will call up and say I'm still on
I forget what C is I'm still on KitKat and caterpillar and your thing doesn't work like that's 30 years old dude get upgrade your upgrade your operating system.
[4:42] Exactly sir So speaking of Google did you follow their earnings at all.
[4:48] Yes and.
Just briefly that episode 257 I've had a lot of people say that it was the first time they understood cookies I DFA and the Cookie list feature so kudos to you for explaining it in a way that people can understand I like to take
eighty percent of credit because I kind of interviewed you on that one and I like to say I answer I asked all the right questions and that's that's kind of what led it to be set to get up soon.
[5:13] I feel like you are the Terry Gross of cookies.
[5:17] Fresh air
okay let's talk about Google results so we normally don't cover Google results here but it was pretty interesting because as I was scanning through some of the analyst reports it kept seeing a theme and the theme is
that Google's search volume surprised everybody it
it was up thirty percent year-over-year and what they call course or search which is people going directly to google.com not distributed through like
the Apple relationship in that kind of thing that surprised everyone it was they're expecting con 24 percent year-over-year and they got
thirty percent so kind of over 6% beat there and when they asked the CFL about it they specifically said that retail as a category was driving that strength,
and that they saw eighty percent year-over-year growth and local businesses including lots of searches I hope you're sitting down these are some of your favorites with local inventory availability and drumroll,
curbside pickup so so yeah so people are using the Google to figure out where to get curbside
pick up and they do I do like this feature that if you need something for like a project you can say you know where is a I don't know
a electric sander near me And if you do near me it will Keys Google to show in.
In stock inventory at retailers near you so that's evidently become quite popular.
[6:43] Yeah fun fact when you do a search on a mobile device Google just assumes you mean nearby and gives you those results.
[6:50] I always do near me so I can I guess I can stop doing that I'm old school I like to really explicitly State my intent to Google for those exactly what I'm doing.
[7:02] You are helping to train the algorithm they greatly appreciate that.
[7:06] Yeah and then I thought this note was really interesting for listeners I'll just kind of summarize it here you know one of the Wall Street guys said that this was you know refreshing because quote in our view retail search query share lost to Amazon has been a,
pillar of the Google bear bear case so a lot of what that
let me translate that so so I people are worried that Google is going to eventually lose share to Amazon which we talked about on the show all the time on the show all the time and then it continues
the emergence of true omni-channel retailing amid covid has demonstrated Google's relevance in an environment where multiple strong retailers are focused on digital
and then they asked management
and management said that they think that these behaviors are likely to stay around for a very long time and use the word permanent and they called out dopest and curbside again and then,
you know they
management highlighted how they've kind of integrated advertising and e-commerce Services across search maps YouTube as well as the core search experience so I thought that was interesting for Google to be talking so much about ta retail a kind of you and I have been talking about this forever that everyone says
OK Google has you know they did that thing where they put listings into Google shopping for free and everyone's like is it
too little too late so it does seem like Google is definitely refocusing on on the retail segment and you know I think.
[8:32] I think I'm calling it out on a earnings call has kind of been a first for a very long time that I've heard.
[8:38] Yeah yeah it is interesting and obviously I work for a big evil advertising agency so we see and talk about a lot of these trends,
two things to know is right in the pandemic that the two biggest change to advertisers behavior is they you know we were all.
Terrified that everyone would advertise less which you know would be bad for my my career longevity and people did temporarily get really conservative but pretty quickly they bounce back but what they did is,
[9:15] Shifted a ton of their budget from traditional advertising vehicles and predominantly TV to digital so that was like a hugely beneficial Trend to Google,
and then the other thing they did is they shifted from all these awareness ads what we would call top of funnel,
um to ads with a more miserable call to action which is code for Commerce right like that you know,
they wanted to run ads that they could measure sold something instead of ads that just got Impressions and so both of those Trends in my mind.
Where you know nice Tailwind for Google and I don't know if this is a commonly known fact or not but but retail has has been the largest share of ads on Google for for some time so,
that you know all of those things were favorable and I would just point out to other interesting tidbits I we've talked about this before but I think the.
Google losing search to Amazon is.
[10:16] Like there's a grain of truth to it but I think it's way overblown like a the explicit data that's all over the Internet is horrible right like it's from.
Thousand user surveys of where they claim they do searches,
and it's the truth is it's impossible to know because all of those claims are not search volume Google's search volume vastly exceeds Amazons,
they're what they're saying is that product searches are going to Amazon not Google but no one can Define what a product search is.
[10:48] Yeah it's the Paris Hilton problem.
[10:51] Yeah yeah there's no taxonomy or yeah exactly that's why I hadn't heard that example before but I love it so so yeah I you know I think.
That both both Google and Amazon are we're huge beneficiaries that probably saw their search get you know significantly accelerated so.
That was interesting and then I would just point out like because,
they specifically called out boat bus it is interesting there it appears that most retailers are equally convinced that the curbside pickup phenomenon is is going to be permanent and out wave the pandemic right because,
we've seen Target announced that they're doing a significant expansion of their curbside pickup programs and you know that hopefully the pandemic is starting to wind down right now and yet they're still.
Doubling their capacity of curbside pickup locations and then Walmart made an interesting announcement Walmart had all these robots these really expensive robots inside of the stores to do in-store pickups.
And they've said that they're actually decommissioning all of those Towers because customers don't want to come in the store to pick up their goods anymore they want to do curbside pickup.
[12:04] Interesting rabbit spent a lot of money on this.
[12:06] Yeah and you.
[12:07] Maybe we could get a used one for the Jason's gotcha.
[12:09] Yeah if I will try to pick one up on that on the second-hand Market if I can but.
[12:14] Put it in your condo in Chicago.
[12:16] My wife would love that.
[12:19] It's exactly her Decor Giant Orange robot Towers but the Stephen would love it for sure but the.
[12:28] Think about it she could say Jason have you seen a charger and you could be like hold on in the the tower would spit one out at it.
[12:34] Exactly yeah well remember these are Walmart one so it you would ask for a charger and you'd get a banana.
But obviously in all seriousness so I.
If Walmart thought that the curbside pickup was a pandemic only phenomenon they wouldn't be decommissioning those Towers so it's.
You know it remains to be seen what's really going to happen but it seems like the retailers have a lot of confidence in in this being a permanent new consumer Behavior.
[13:05] Yeah one last thing on Google you jog my memory when they talked about more activity at the bottom of the funnel they talk about e-commerce but then they also kind of did I kind of
I kind of caught it as throwing a little shade at Facebook they said yeah we've seen a huge surge in app download ad buys because they're they're not.
Because all this traffic is inside their Network they don't have the the IDF a or the cookie-less problem that Facebook has.
[13:32] Yeah yeah I think I like I'm not shocked that they pointed that out but I think that's all it has the added advantage of being true like they they probably are a beneficiary yeah.
[13:41] Yeah well called the next up was Shopify what did you see that tickled your fancy in there.
yeah so they're continuing to kill it like you know certainly if you're an investor they are doing very well by you so they had like a hundred and ten percent year-over-year growth I think it was 94
percent last quarter so that's accelerated growth,
the like obviously q1 is an interesting quarter for all these retailers because there was this you know economic stimulus that was in q1 this year that was not in q1 last year and so,
that that helps everyone's comps this year and it makes everyone super gloomy about their comps.
Either their quarter-over-quarter comps that are worried about next quarter and their year-over-year comps there.
They're also worried about next quarter because they don't have the pandemic Aid that the as much as they had last year.
Um Shopify of course in additional Revenue has a gym V number and the gym V grew even faster so a hundred and fifteen percent.
And I would just remind people that what like as an investor I love all these numbers they're super exciting but I see people all the time use them as some evidence that the.
That the long tail sellers are thriving and growing on Shopify and I would just point out that like.
[15:13] These numbers are the amalgamation of likely hundreds of thousands of sours many of which have.
Like less than 12 months of more you know of life and there's huge churn,
and so the these growth numbers are more indicative of Shopify signing up twice as many businesses as they had last year than they are that the businesses that are on Shopify are,
doing twice as well because quite frankly there's a lot of evidence that that.
The the majority of Revenue growth in retail is disproportionately going to these large players at the top of the echo system and not all these long tail players that you know tend to live on the Shopify.
[15:57] So that being said you know everyone like it's interesting to see how everyone spins their Q2 right,
so you're starting to lap the pandemic and I think I would characterize the Q2 comments from from Shopify as being kind of conservative right like they.
They painted a picture about facing some significant headwinds and I think they they told investors that they plan to significantly ramp up investment spending.
So you know that that.
May well be smart but it you know sometimes investors don't like to hear that they'll be pouring all the prophets.
Back into the company and they did my favorite topic of all like they you know they did talk about.
How successful their their Shop app has been the mobile app and I think they disclose that.
[16:52] The marketplace.
[16:53] Exactly the marketplace that put Amazon out of business I think is what I read on Twitter.
The by the shop arrazi I like to calm the Shopify zealots.
They disclosed that the mobile app has 24 I think 24 million active monthly users am I remembering that number right Scott or.
[17:14] Ma use as we say in the biz.
[17:16] Exactly so.
You know that's a meaningful amount of users now what they don't disclose is any hint of Revenue or gmv that goes through that app.
You know are what or you know how people are using that app so I you know like it's predominantly a shipping tracking app and so I the.
The positioning it as a shop app is is in my mind pretty thin at this.
[17:50] Yeah absolutely when other.
[17:52] I'd be shocked if 500,000 people have ever bought something from the shop app so the fact that they have 24 million active users doesn't doesn't mean a lot to me it doesn't mean they're taking any share from Amazon.
[18:04] I like their payment system because they've gotten it now to be more like Square where if you once you enter your e-mail it kind of like send you a code and then fills everything out I like that because I can never remember my password I mean this stuff so.
[18:16] Yeah authentication via email in general is a.
A rapidly-growing ux trend and it mostly is way more secure because it encourages you not to.
To have it easy to remember password that can easily be hacked and some payment providers even give you the option to not to literally not have a password.
So I agree I like that user experience I think shop pay is an excellent product and,
you know I didn't see any mention of it really in their earnings report but last quarter.
Was the first quarter that that Shopify made shop pay available to people outside of the Shopify ecosystem because they you can now accept shop pay on Facebook check out which is also used by Instagram so.
[19:04] Yeah where it shows up is Shopify is interesting it has its kind of like something like forty percent of their revenues are kind of traditional software as a service subscription revenues,
and then 60% is effectively at a grade on that gmv almost like a marketplace where they get
subsidies subsidies you have subsidies from the payment providers their own payment system they're loaning program Backstrom some of the shipping providers
and that's kind of where that take great comes from and that take great increased pretty materially from two point three eight two point six five and they largely,
called out the adoption of shop pay amongst that pool of GMB as a driver as well as some of the other
other like the what's it called The Loan program where if you need some like a little spot learned by some inventory I always.
[19:58] Finances are called or something like that.
[19:59] Yeah something like that they all have PayPal everyone has one now
that saw that grew very dramatically to kind of like a 300 million dollar kind of a quarter loaning base up pretty substantially from so that was also part of the take rate move so,
that's that's where you can kind of dig in and find where that's going on in their earnings.
[20:19] Yeah yeah and I would at the risk of turning this into a two-hour show I would just say like the digital wallet space in the u.s. is super interesting to watch the.
Pre-pandemic 23% of e-commerce used a digital wallet in the US as a result of the pandemic 23% went to 30 which is a,
pretty decent acceleration but to put that in perspective.
The worldwide average for e-commerce is 44 percent and China over 75% use a digital wallet and you look at,
a bunch of the shopping experiences that work in China where 75% of the people are paying with a digital wallet,
that haven't worked very well in the u.s. when we only had 23 percent using a digital wallet you go man if digital wallets catch on in us and continue to grow like this that's going to open the door to a lot of new Commerce experiences like social commerce.
[21:11] That's cool and then did you see that they're going to do some more investing in the Fulfillment.
[21:21] I did I did like there continues to be some controversy on on Twitter about how bullish,
some of the the industry experts are on that but.
It to me it makes total sense like I I actually think that's a smart play for Shopify and in general they like they pivoted,
they used to mainly be in the business of renting servers to people to host,
stores and increasingly as you've already pointed out like their business model is to
make money on services that they provide to small businesses right and and though it just X is one of the most lucrative potential businesses,
you know if I were a third-party carrier I would not be in love with that trend.
[22:08] Yeah well called The Nut next up we had eBay and,
this one was kind of the most interesting so so far both Google and Shopify were kind of what I would call kind of beaten raise so you know already in an elevated environment
the pandemic they exceeded already high expectations and then they kind of raise going into the next quarter.
[22:29] And then eBay came out and they were definitely a beat on q1 but then as they started talking about Q2 people kind of freaked out a little bit
so so on the Q one side the GM V which is the transaction volume going through the marketplace exceeded the street forecast by 4% and therefore Revenue beat by 2% and it was actually there
they're q1 gmv was higher than their q4g Envy which you know is pretty interesting feet because
most times you
you surge up in the queue for you come down and then by the time you get to Q3 it's kind of levels Q4 and then your next Q4 is a step up so if you look at eBay over time they've got this stair step and then they had this really interesting inflection point and
yeah I think that's largely driven by this whatever it's called the stimme dollars so I think they were beneficial of beneficiary of that
people buying I don't know if maybe a hard to hard to find collectible they've had the ion or something but then when they projected DMV that.
Pretty material decline in there for Q2 and that really kind of freaked people out that you know the they're not going to be able to sustain growth so.
Yeah I don't know if it's conservatism or here we are the other interesting thing is these guys have about a month of the current quarter to kind of.
[23:46] Factor into their guidance for that quarter and it just felt like eBay I think the read-through was eBay was seeing something there in April that
they don't get pretty conservative and it's interesting because and you know so far,
we have talked about the Amazon but of the other companies they reported we didn't really get much other than like that Facebook warning that you kind of hey you know we may see some softness from this IDF a thing so that was the scoop on eBay.
[24:12] I have a.
[24:13] Another good.
[24:14] As you can see I have a hypothesis there that I'd be curious if what your perspective is on so Q 2 of this year they'll be competing against Q2 of last year Q2 of last year was the.
The the thrust of the pandemic and that that initial tranche of people that suddenly were afraid to go to stores and we're buying everything online and if you you think back to that time,
you know Amazon had a service level glitch there right like they conservatively pulled back on shipping a lot of non-essential Goods to really focus on.
On shipping essential goods and that had the consequence of.
Shifting a lot of purchasers off of Amazon to Alternative e-commerce sites for the first time in a long time and so,
I think like Target Walmart and eBay were all beneficiaries of that Trend in my hypothesis is that Walmart and Target feel like.
They had an opportunity to permanently capture some of those customers but that eBay may feel like hey people came and bought stuff from us when,
when Amazon was on you know two-week delivery windows but when they go back to one day delivery Windows we're not going to get the we're not going to be able to keep those customers.
[25:27] I think I like your theory that makes a lot of sense yeah and also
spoiler alert for our Amazon section but they're going to be doing a June Prime day so that it's going to create a headwind for everyone because you know they're going to suck some of the oxygen out of the room in Q2 whereas last year it was in Q4.
Hard wait was it was October September to September right.
[25:55] Yeah okay so last year it was cute for.
[25:59] Well maybe we should pivot to Amazon.
[26:01] That's a great idea Jason let's talk about Amazon so Amazon came in with net sales up 44 percent to 108.50
billion with a B in the first quarter so that is very strong on the US side they were up 39.5 digital's physical stores were down 16% again I think that's a little bit of a.
Kind of a head fake because you know that's going to largely be grocery which is
moving to delivery and curbside but that puts it over outside of physical stores and into the digital side of things so a little bit of a apples and oranges thing there are attribution I guess I should say.
[26:38] Some of the metrics oh I should say International was up 60 percent year over year so that was pretty impressive so International is seeing a really nice acceleration you and I are talking
before the show in the green room and you know you pointed out that open up some new markets which I agree
but Internationals kind of been lagging the us for a while and now it's really picking up I wonder if they're starting to see some of the benefit of
you know like all my friends and UK say things are in pretty good shape there the vaccination rates are up and that kind of thing so I wonder if they're starting to feel some benefit from that on the international side that that was interesting.
On the third-party side couple of metrics I look at is the share of third party is holding steady at 55 percent and then they do talk about a couple other metrics
that you can kind of read through here 3rd party seller Services were up 64 percent that's largely
FBA and some of the things they charge for some small subscriptions for stores then they have another category which is subscription Services that's where Prime lives and that was up 36%
and as a reminder they did reiterate in the in the release the Bezos letter 200 million assertion on Prime subscribers so,
interesting to see that kind of reiterated in the press release and then you know hope you're sitting down but because.
[27:59] Yeah it's got before you go any further like it's impressive that they sold all that stuff but it's a shame they don't make any money on that right.
[28:06] Yeah yeah and I know you and I have talked a lot about how Amazon is never profitable well they did make a little profit the eked out a profit this quarter net income was twenty six point nine billion,
and what's a fun fact with that is you take
the profit from q1 2021 of twenty six point nine billion that's more than Amazon's profits from the three past years 20 17 18 and 19 if you add up all the net income from those three it was 24.7
paltry twenty four point seven billion and so just in this first quarter this is a nursing idea that kind of gives you an idea of the scale that Amazon is kind of growing this thing they did twenty six point nine billion so they did more in q1 than.
[28:50] Previous three years and in profits so you and I get this whole thing where Amazon wouldn't be profitable if it wasn't for AWS well yes AWS is a,
pretty good kind of portion of those profits but it's not a hundred percent and international is now profitable the marketplace is profitable retail is profitable,
so Amazon is turning into a cash flow generating just a machine and Wall Street loves this so their stock was up,
pretty materially I would say last I looked kind of 10 to 12 points
so that was interesting and that profit was kind of a beat as well so then as they gave Q2 guidance they they actually were kind of pretty bullish so they said that they expect pretty strong continued e-commerce growth and then of course they're going to have a prime day
which is about a 10 billion dollar benefit shifting there so this was a kind of a
you know not only a beat for q1 but a little bit of a raisin Q-tip so everyone was pleasantly surprised by that so little bit different than the eBay story which kind of ties into what you were saying
I know your favorite as Chief digital retail
curbside grocery officer there at an ad agency I know you like to track ads how did that do.
[30:09] Yeah so you know you mentioned AWS and AWS is a very good business that any of us would like to have but my hypothesis is.
It's it's potentially.
The third best business at Amazon so I actually think that that Amazon may have made more money in the last 12 months selling ads than they did on AWS and the reason for that is if.
If you can sell ads it Those ads are almost pure profit right so.
For the last quarter there are there other Revenue which is mostly the ads they sell to Brands and Merchants was up seventy three percent so that's a great rate of growth,
we won't even talk about run rate because the ad business is kind of seasonal but if we just,
look at the trailing 12 months.
Other Revenue was twenty four point four seven billion dollars so so they sold 24 billion dollars of ads in the last 12 months,
and they're only cost to do that is a little bit of infrastructure costs and some salespeople right so that's almost.
Pure profit so that you know that may have spun off 23 million dollars in.
[31:30] Yeah that's that's pretty good.
[31:32] It's a it's a good.
Well no that would have been in 12 months so but still like compared to their you know that's a likely more Revenue more earnings than they get out of AWS which we'll talk about in just a minute and I just.
Backtracking for one second like that they don't,
report separate financials for third-party sales versus first party sales like they they give us some cellular data but just as a reminder in third-party sales it would almost be impossible not to be profitable right like because.
They don't really have any carrying costs they sell a bunch of services to those Sellers and then they take a commission when that seller sells to a buyer in the fact that that's the majority of the retail sales like it's almost inconceivable that,
that the the 3p business at Amazon isn't more profitable than AWS also so I would just in my mind both of those businesses are probably at least as good as AWS which is also excellent.
[32:35] Yeah I agree.
[32:36] So that being said AWS had another good quarter you know again there they're the dominant player in cloud services so you know the fact that they're still growing like this is,
is pretty impressive their q1 year-over-year growth was 32%.
So it is obviously decelerating a little bit but that you know 32% is pretty healthy clip,
that unlike the the sales business so I get is I think fair to look at run rate for AWS because.
You know people don't tend to turn off their servers for part of the year so that.
They're basically at a fifty four billion dollar annual run rate on AWS which is a,
you know nice healthy Revenue rate.
[33:33] We don't really have a way to compare apples to apples and as you were kind of educating me offline there's definitely some fuzziness particularly in Microsoft's numbers because.
They have a lot of their own cloud services that they you know potentially are including in the Azure number but,
some kind of back of NAB can estimates I've seen for the size of azure that may or may not be inflated have Azure it around 30 billion dollars against and Amazon's fifty four billion,
and Google Cloud platform you know is probably in the nature of like 16 billion so
both Azure and Google say their businesses are growing it just under fifty percent so they're growing faster than AWS but off of a much smaller base.
Okay any other tidbits want to talk about here this was an interesting one where they
they said in the press release they said and I'll say this I'll quote this to make sure I don't mess it up in the u.s. same day delivery in as fast as 5 hours is free on orders over $35 for over 3 million items in select cities
so five hours so we've talked a lot about same day Prime is going to be the standard we talked in previous episodes that go puff is really I saw another article that,
they are doubling but they're getting a lot more competition so you know I think that Amazon is going to really start to turn up the heat on go puff by getting down to.
[35:14] Hours if not minutes of delivery for those kind of essential items that people want so snacks and ice cream and starts to hit some of the grocery items as well
and then the continues this is an addition to free same-day delivery on millions of items and thousands of cities and towns across 47 major US Metro areas
plus over 10 million items available for free one day delivery Coast to Coast so
you know so it's really interesting so there's these concentric circles where the little the smallest circle is three million items in select cities so that's probably like 5 or 10 is kind of how I read that then you come out and then you get same-day delivery on millions of items and thousands of cities,
and towns across 47 metros so 47 metros
three million and then the biggest ring is 10 million items for free one day delivery Coast to Coast so pretty,
pretty interesting that they're continuing to grind away at getting things to you faster with a bigger selection closer and closer and closer to you.
[36:14] Yeah I actually think I think is all super impressive I think you might even be conflating two things that are both like,
expansions of their very fast delivery I interpreted that announcement slightly different than you U iqu it sounds like we're thinking that that's,
referencing Amazon's company competing with go puff and I would argue also like door - for delivering like top off groceries right so stuff that you might have picked up at a bodega,
in the pre-pandemic world you're now getting delivered to your house and this this digitally native company go puff that bought BevMo asked year like they're there.
[36:56] They're growing quite well providing that that kind of service and we've we now have some evidence that Amazon is building out fulfillment centers to compete with them so.
This publication called hungry actually like like found video of the.
The contractors that are building these new fulfillment centers and they're targeting delivering like you know a small assortment of groceries in under two hours and there's one that's under construction here in Chicago,
so that I think that's all true I don't think that's what they're talking about here what I think they're talking about here is delivering the most popular items from the Fulfillment centers,
with a faster service level and,
part of the reason I think that is they talk they made this announcement today and I got a new experience on Amazon today so I live in Chicago.
We tend to be one of the first markets to get a lot of Amazon services but I put some stuff in my cart and it had a new message that I hadn't seen before which is,
you know order this in the next X hours and get it delivered by 8 a.m. tomorrow if you spend a minimum of 35 dollars.
[38:11] And so the fact that that those offers had this $35 threshold and Amazon specifically referenced the $35 threshold in there.
In their comments and their earnings call make me think that that's what they're talking about so I don't think it's the.
The grocery items are the go puff competitors that are talking about here I think it's.
Popular items from Amazon that a week ago they would have said ordered in the next 4 hours and get it tomorrow which.
Tomorrow at my house usually meant they delivered it like 8 p.m. at night and now they're promising it like at 8 a.m.
[38:49] Perry nursing yeah let us know how that goes.
[38:51] Yeah I in fact ordered a few things so I'll be curious to see if I get that am delivery tomorrow.
[38:57] Call any other Amazon highlights before we go to the summary.
[39:01] You did allude to they confirmed not in the earnings announcement but in their investor,
call they did confirm that they were moving Prime day to June and as you referenced last year as an anomaly it was in October because of the pandemic.
But ordinarily Prime day is in July so the way to think of this is they are pulling Prime day in earlier than they typically did.
Which is interesting they said that it's because they they 4 sieve some would just take challenges in July and the Fourth of July puts a wrench in things and they think June is just a better.
A better fit for Prime day so so likely we still don't know the exact date but expect to see Prime Day in June this year I have a.
A partial hypothesis that another reason that they would move Prime day to be a little earlier in the year is.
They did have primed a last last year in October and it was very successful and I will be shocked if Amazon doesn't invent some new Sales Event.
In October of this year so if that's true that would be another reason to space out the sales events more by making Prime day earlier in the year.
[40:20] Yeah and arson
cool so to summarize if we kind of start and build up we have so imagine your head a chart where we have eBay at 24 percent growth Amazon North America 39 Amazon international at 50
Walmart e-commerce they haven't reported yet but just as a baseline there it kind of 69 and I would be shocked if they don't do as good if not better than Q 1 and then Shopify at a hundred and fourteen percent
so that's how it kind of stacked up and I forget Jason when you did that initial read I know they don't do the converse one yet but they have that.
Other Commerce or whatever they call it how does where do they kind of fall into that stack you remember.
[41:08] Yeah so it's a it's a mess it's a lower number so so Ike the US Department of Commerce which I assume is what you're asking about like,
they're they're tracking around 25% which sounds way way lower than these numbers the that non-star sales number is higher so that's like in the 30s.
Adobe released some data that they said q1 was like 35 percent and.
What used to be internet retailer magazine now I think it's called digital 360 they came out and said that they saw e-commerce at like 45 percent growth so so there's numbers all over the place right now.
[41:56] And then they'll update that one though and in like the next 30 days right so we'll get a better picture.
[42:01] Yeah yeah so the the e-commerce out quarterly and so I think that's going to be mid-may I'll have the intern check on that while we're.
We're chatting but but I think that is right.
[42:20] Any other interesting Amazon tidbits you saw.
[42:24] I think that was everything that the jumped out at me there is a little bit of Amazon news outside of the earnings do we wanna talk about.
Cool before we do I will just confirm that the ecomcon quarterly data from the US Department of Commerce will be May 18th so some middle of next month.
[42:46] So other Amazon stuff that was interesting to me a couple of things a lot of activity in the UK so.
Amazon has opened their first Amazon go stores in London so they for the first time have just walk out technology.
In London unless I'm misreading something it's interesting because the it sounds like the stores there look exactly like the stories here but they're branded Amazon Fresh in the UK which is interesting because.
[43:22] In the u.s. those stores are called Amazon go stores and Amazon has an entirely different retail concept that is.
So far not just walk out technology that's a grocery store that's called Amazon Fresh here so it's interesting.
That they're they chose the Amazon Fresh name and the just walk out technology and related to that we also got news,
from Bloomberg I think that from that day he broke a story that it looks like there is a Amazon Fresh door under construction in like Connecticut.
And he got copies of the plans and it very clearly shows the.
Though I turn Styles and mobile scanning units and stuff of Amazon ghost or so and I think Amazon even confirmed it was true.
That it appears they're going to be opening their first full-size grocery store that.
[44:17] Has just walk out technology and in some small way we were part of that news because you and I sort of broke the news.
That some of the grocery stores that were not just walk out technology had all the cameras from just walk out technology and and you'll remember we theorize that they might be using those cameras to collect data for a future.
Just walk out grocery store and Amazon confirm that that was true as well so we were right.
[44:45] Wow yes.
[44:47] Exactly yeah so that was interesting to me all of this just walk out stuff,
the the more fun wacky news from London was the Amazon opened another new retail Concept in London and this is I think a much anticipated one that we all saw coming a mile away Amazon has opened a hair salon.
[45:07] Yeah I found this one as a Services person I found this one interesting and also scary at the same time and then as I dug in
it seemed like a gimmick like someone else is actually running the salon and it just seemed like a gimmick to sell more Echoes I guess because.
But article kept talking about how they be highlighting you know kind of in home automation kind of stuff do you think there's something or in some beauty products too.
[45:33] Yeah so I think two things are going on and who knows right so I joke I certainly didn't see this coming but so yeah so they,
they've opened their own hair salon they've hired a established well-known hairdresser in London,
to be responsible for the actual hair styling.
And they've invented a lot of new in store or in Salon I guess you would say Technologies for the store,
so they're using augmented reality to show you what your haircut is going to look like before you get your hair cut,
which is a new technology we haven't seen before they're using digital signs with gesture recognition to give you product information about the,
the Professional Salon Hair Care Products oh so imagine they have a shelf of shampoos.
You point at one of the shampoos and a screen above the shampoo knows which shampoo you pointed at and and gives you content about that particular shampoo and then you can order that shampoo by scanning a QR code.
So all three of those those Technologies would potentially have broad application and a bunch of retail categories and you know as someone that talks a lot about.
[46:52] Digital technology is moving to store one hypothesis I have is that Amazon decided that a beauty salon would be a good.
Sort of laboratory / proofpoint for testing some of these new technologies that they're rolling out right and so.
I think one of the reasons they may have opened the store is to give them a customer facing way to test some of these Technologies and they work well.
[47:16] You would expect to see him in Amazon forest our stores and bookstores and and you know at some point selling them to other retailers.
But the other thing that Amazon has leaned pretty heavily into is broader product categories and B2B,
and so one one decent size category is the B2B Beauty category right and so these are products that are not sold at Walmart but are sold by professional hair stylist to their customers.
And Amazon has been trying to recruit more sellers to sell those products,
and in the same way you need a liquor license to legally sell beer,
you most of these B2B products contractually you have to be a salon to buy and sell and so,
I have a hypothesis that they may literally have opened a salon so that they could go to more vendors and get those vendors to give them access to their their B2B beauty products.
[48:22] Yeah because a lot of what a weird lot of things require stores these days so that would check the box.
[48:29] Yeah and I mean like it's a little known fact but like there are there's a fulfillment center in every state that you can walk up to him by alcohol right because the.
The like you can't get a delivery liquor license only
and so so like there's a door that's not advertised in one of these fulfillment centers to meet the requirements for that liquor license right and there's no lot about these beauty product distribution but as a,
it's a contractual term and you know it's just it's conceivable to me that Amazon is doing this as both a learning opportunity and.
Couple other little interesting tidbits bunch of news today we try not to get too much into the political stuff but Amazon announced a significant wage increase for 500,000 of their employers so,
they said that that would they be investing over a billion dollars a year in giving 500,000 workers arrays of between 50 cents and three dollars an hour.
So that's that's interesting like Amazon has you know use the fact that they were one of the first three tears to embrace the $15 minimum hour.
[49:43] Thing as a as a kind of foil against some of the the the negative press they get I personally feel like the labor market just getting really tight and it's getting hard to hire.
And Amazon is Raising wages because they they're continuing to grow like a weed and need to hire a bunch of people and they're finding that they just have to pay more to get the people they.
[50:05] Yeah you might as well get political credit for it while you do.
[50:07] Yeah it's like you do it a month earlier and you get that that for a first mover PR and then when Target matches it just won't look as impressive.
Um and then there was a little bit of a buzz,
you know Amazon had done a bunch of seller unfriendly things like they actually started masking if you're a 3rd party seller on Amazon and you you don't fulfill your own good so you use fulfillment by Amazon.
Amazon is no longer telling you the name or address of the customer that bought your goods.
[50:40] Which a lot of people you know we're found found to be kind of offencive and so then a couple weeks ago they launched a new program that actually gave brands on Amazon.
Better access to Amazon customers they actually launched a campaign where you could pay Amazon to email.
Um marketing material to your customers your fans on the Amazon platform and so there was a lot of.
Talk about this being you know a potential thawing of the ice and in all these you know things Amazon does to kind of.
The customers and seller separate I think it got a little overhyped because to be honest right.
The conditions for that program are pretty restrictive so I don't think it's going to be a huge amount of people that can take advantage a you have to be a brand that's registered in the Amazon brand registry so you can't just be.
3rd party seller you know that's that you can't be like a wholesaler of Chinese Goods or something like that but then.
You can only email to people that have designated themselves fans of your brand page so again you have to be paying for and have a separate brand page and the only people you get access to are the people that clicked
the like button on your brand which you know is probably not a lot of people on Amazon.
[52:10] Yeah but it is kind of you know that that plus the next one that I'll go over were I view them as signals
as this kind of like nibbling away at Shopify think that we've been talking to him about
it's the one I wanted to talk about is they made an update to their fulfillment fees and
one of the things that's interesting is they've offered what they call multi-channel fulfillment so
FBA was born to essentially give you the choice as a Marketplace seller to either fulfilled them yourself or have them Prime eligible through FBA then they've introduced seller fulfilled Prime and all this other stuff
but the intent is that all those programs are for things to ship things that were sold,
on Amazon through the third party Marketplace then I think like five maybe seven years ago they introduced kind of multi-channel fulfillment where you could run your whole store.
[53:00] Your whole online store you could have a Shopify store for example and then route those orders to FBA what's nice about that is you didn't have to split your inventory so a lot of
a lot of people that don't just saw on Amazon they would have to send a big pool of inventory to FBA then they'd have a separate pool of inventory somewhere else and then
Murphy's Law is kicks in and you would send not enough to FBA or too much and then you know you'd have to constantly be load balancing your inventory between the two two warehouses so they introduced this kind of multi-channel fulfillment where you can send everything to FBA and then you could fill your
fill your eBay orders your store orders and your Amazon orders through one channel then a couple years ago so then does like 7 years ago let's say and then a couple years ago they started to
kind of like,
really limit people's availability to this program I think they started to see that FBA was becoming so full and they just really wanted it to be so for single Channel
the Amazon Channel fulfillment.
[53:56] And then now they announced that they are going to add an option to block orders from being shipped by Amazon logistics for a 5% surcharge
because sales channels like eBay and Walmart prohibit the use of Amazon Logistics you'll be able to block this shipping method at the account level within your FBA settings,
so this is interesting to me it signals that they're refocusing on this as an option you eBay and Walmart
explicitly disallow this what happens there is they don't like it when you buy from eBay and Walmart and it shows up in the Amazon box it confuses the consumer I've seen this happen a lot but also you know you know it's really confusing I remember a story
where this kind of urban legend the eBay CEO at the time whose name I won't say went to the mail room and he saw
yeah all these Amazon boxes and
as he dug into it everyone was ordering off eBay but everything was showing up in Amazon boxes so so I think they then very quickly kind of came up with a policy that that was bad and that they would not allow that anymore so
what's interesting here is so then if you're not going to fill to eBay and Walmart why do this well the answer is they want to capture some of those webstore fulfillment and.
[55:14] You know we had Faisal talk about this on Twitter where he kind of viewed shopify's week underbelly as fulfillment so this is another one of these little kind of things and it may be my radar is just kind of.
[55:27] Too high on this and I'm over reading into it but you know it's the emailing to Brands they would have never done that,
two years ago are emailing allowing you to email to your to the customers that you that you acquired on Amazon or that interacted with you on Amazon,
all right let me see let me reset it allowing you to remarked it to the Amazon Doan customers that you're borrowing for leasing or whatever that's kind of a new bridge they're going over and then this one is interesting so I thought those were two interesting tidbits in this kind of,
larger war between eBay and Shopify or Amazon and Shopify.
[56:00] Yeah yeah I just want to take half a step back because I feel like this is potentially hard to follow right but essentially,
you're saying so let's pick a brand and they're probably not even using this programs but just for Simplicity,
I'm anchor and I make batteries instead of like having some batteries in my own Warehouse that I can ship if you order my products from Walmart or from anchor.com,
and having some of my batteries in Amazon's fulfillment centers that you know Amazon will ship if you order it from Amazon.
I send all my batteries to Amazon and then if I sell one on my website I tell Amazon to ship one and if I sell one through Walmart I tell Amazon to ship one,
Walmart didn't like that because those batteries were showing up in a Amazon box and so Walmart and eBay and I imagine others have said hey,
you're not allowed to use Amazon to deliver our packages that you sell on our on our platform right that that's the gist of it.
[57:03] Um so one wrinkle the way I interpreted this that I'm not maybe is different so this option is,
is not to say hey we won't fulfill your Walmart orders if you check this box I think the option is will still fulfill your Amazon your Walmart orders,
but we'll use UPS instead of Amazon Logistics so I think Amazon would just X is actually the,
Amazon Flex in the Amazon W2 employees that deliver stuff.
[57:33] You're right yeah you got it and then
yeah and then they do offer a re boxing so maybe that solves the boxing problem and then the reason while Mart and
eBay don't like the Amazon Logistics that the truck is there's no tracking number that that's easily accessible so yet
also you know we saw in the UK they announced.
What they called door-to-door Amazon Logistics where they used an example where a retailer on High Street can ship a product to a consumer through the Amazon Logistics which is to me is effectively competing with FedEx and UPS and con Sebastian had some really good reporting on that that I thought was interesting
I didn't put that on our show notes but
that was another thing that just jog my memory there so all these things are getting closer and closer to 2 Amazon competing with with the carriers.
[58:29] Yeah and I think for sure your hypothesis that hey Amazon would only be rolling out these kind of policies that they were planning to lean into these.
These delivery outside of Amazon service has more right so that makes perfect sense one other thing I'm not sure if you caught in the the call.
After their announcement with the CFO another service that the CFO and nouns that I was surprised about because I've had this service for a year in Chicago but apparently it's not it wasn't.
Um he announced that they were providing bitter granularity into shipping tracking.
From Amazon Logistics so the example he used was,
like you you'll get proactive notification when your package is about to be delivered and you'll get something that says like hey your Amazon driver is 8 stops away,
and that you can you can Track Em on a map just like you would track doordash delivering a restaurant meal to you.
And the reason that surprised me as I've literally been able to do that for a year when Amazon's delivering something I get a notification and I can see the guy on a map.
So that those kinds of services you could imagine like could address some of the objections that that other sellers would have about trackability because that's way better tracking than you get from UPS or.
[59:54] Yeah you just don't have that you know you can take a FedEx or UPS tracking number and split it into anywhere and there's kind of like it's very easy for any consumer to track it's not Amazon school not quite there yet.
[1:00:05] Sure well Scott is going to surprise no one but we've taken this short earnings call podcast and turned it into a full hour of our listeners time.
[1:00:17] Boom we give the people what they paid for.
[1:00:19] Exactly good more than what they pay for for sure but one way they could pay us for it is they could jump on the iTunes,
the new improved podcast experience on iTunes and finally give us that five star review,
and we sure would appreciate that and as always if you had any questions or comments or we confuse the bejesus out of you feel free to hit us up on Twitter or Facebook and we have to discuss it further.
[1:00:48] Thanks everyone for joining us for this earnings recap.
[1:00:51] And until next time happy commercing.
EP261 - Benedict Evans
Benedict Evans (@BenedictEvans) has been a VC, an operator, consultant and an investment banker. His VC career includes a five year stint as partner at Andreessen Horowitz. He know lives in London, where he publishes an excellent weekly newsletter “What mattered in tech this week?“, a podcast “Another Podcast“, and some epic annual presentations, such as this years “The Great Unbundling.” You can find all things Benedict Evans at his website. He’s one of the most thoughtful people in the commerce industry, so we tried to cover a lot a ground in this broad ranging conversation.
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.
Episode 261 of the Jason & Scot show was recorded live on Wednesday April 21, 2021.
[0:24] Welcome to the Jason and Scott show this is episode a 261 being recorded on Wednesday April 21st 2021
that’s a lot of twenty ones I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-host Scot Wingo.
[0:41] Hey Jason and welcome back Jason Scott show listeners Jason this week on the show we have a really exciting guest he’s a renaissance man of sorts,
he’s been a VC an operator a consultant and an investment banker.
You and I love his annual Mega presentations that dig into various Tech Trends and he also has a awesome Weekly Newsletter that I highly recommend called What mattered and Tech this week.
Listeners please welcome Benedict Evans to the Jason and Scot show.
[1:12] Hey Benedict we are thrilled to have you,
it’s and it’s a it’s creating a special occasion for us I rarely get to talk to Scott during daylight hours but but because of your time zone we’re talking in the middle of the day it’s fun.
[1:29] Cool well it’s good to hear you listen to the podcast so especially the ones about statistic so it’s always good to chat about this stuff.
[1:36] You you are like one of eight listeners that enjoy my Deep – in statistics.
[1:42] Well it’s a former Equity analyst like I want to know what the number is I’m not happy with saying like so statista I want to know where is a number from and what is it what does it mean.
[1:52] Yeah there’s there’s I feel like I thread this really fine line the overwhelming majority of people don’t want to be overwhelmed with the numbers and then the eight people that are interested in the numbers I’m always nervous are going to realize that my numbers are wrong so it does it seems like it’s a very narrow audience of like
you know my mom that’s willing to
to take my content exactly as is but enough about me Scott gave some of the highlights but can you walk us through your career a little bit Benedict and how you got an interest in all this stuff.
[2:19] Sure sir so I did a degree in history I went into Investment Banking as a sell-side equity analyst so,
write research about mobile operators back when mobile networks were amazing and exciting Dynamic growth companies,
and then I went and worked in strategy and BD in media and telecoms companies for a while and then as a consultant advising,
media Telecom technology companies and then from 2014 to 2019 and a 2019,
I work for Andreessen Horowitz which is a venture capital firm in Silicon Valley with sort of 15 billion dollars under management that invests in,
people making new companies sometimes actually around e-commerce mostly around software to help other people do e-commerce but my other things say invested in instacart.
[3:14] And then at the beginning of last year I decided to move back to London and do my own thing and so,
instead of picking up some things I’d already been doing so I have a Weekly Newsletter with sort of Water by notes for the week and I have a website where I write about stuff and I do a big as you said like a big presentation,
and so I’ve been doing that for the last sort of 18 months or so which is kind of an interesting just in its own right of you know what is it like to.
Try and do content in a world where suddenly you can’t meet everybody and yet on the other hand suddenly everybody on Earth is willing to meet you by video.
[3:53] Yeah and I would argue also can seemingly consuming more content.
[3:57] It is yeah I mean it’s an interim we can maybe go into this later but I had this sort of interesting moment a couple weeks ago when I was asked to speak at a conference in September in Zurich.
And I thought actually that’s a choice now because in 2019 you either went or you didn’t do the business.
And in 2020 it had to be video.
And now it’s a question should that be video or should I go there and why would I go there do I want to go to Zurich with a be a benefit to me to meeting lots of people at the event should I hang around after I present it,
and we’re now I think just thought of trying to work out what all of that means in lots of different spheres whether it’s you know remote work or e-commerce or,
put a TV all kinds of different questions as we kind of we’ve had this of 18 months of forced experiment where everybody has to try working from home and are ordering everything on the web we inquire networks going to settle.
[4:53] I know for sure I think that experiment is still ongoing because I’m like you I’m starting to get these,
these optional in-person invites and it’s very unclear,
what my criteria needs to be for those so still still sort of sorting it out I am
I’m fascinated you you moved back to the UK not too long before the pandemic right was it.
[5:20] Yeah well I was sort of Fed Up of living in a city with no museums or art galleries or interesting shops and then of course I landed straight into the lock down saying like my timing wasn’t kind of wasn’t ideal you know so it’s a line from airplane you know I picked the wrong year
[5:36] Yeah and to give listeners an idea of your standards you move from San Francisco like they might have thought you just moved from like like Bozeman Montana or something but like by us standards that’s on the high end of culture so yeah.
[5:50] Yeah that’s what they tell themselves a lot.
[5:52] Yo I yeah I’m not disputing it just just stating the fact and I am I am mildly concerned for you because I do feel like moving to the UK has one significant disadvantage you went from a place where your,
accent like automatically conveys credibility and authority to a place where you’re just another dude with a newsletter.
[6:15] This is true yes coffee accent doesn’t really come across in the newsletter it is into the icy day she works by twice in that sort of our over a certain level and like any Foreigner I think.
Sort of automatically gets attributed a greater intelligence it’s like well if you manage to move and come here you must know stuff,
so you like Americans in Britain generally regarded as being sort of feeble-minded but you know once they’ve got a job then they regarded as well they must know something.
[6:40] Yeah my strategy is to move to Australia because I feel like that’s the one place where I could sound reasonable.
[6:46] I could work it could work.
[6:48] You don’t drink enough for Australian the but they do have Starbucks you okay,
a couple of follow-ups on your career when you were at Andreessen Horowitz what was your did you have a focus area or were you more of a generalist.
[7:03] Well so I think well so it’s your choice on says so when I went smartphones with a thing.
And I’ve been talking a lot about smartphones along interesting I was talking about this with somebody the other day I’ve been talking a lot about smartphones in public online along with her instead of you.
Um do you may know.
And the sort of the interesting thing was that sort of both of us were people who came from the industry and knew how to do the analysis and how to make the charts and were allowed to talk about it in public,
so there’s lots of people in investment Banks or Nakia or apple he knew all this but couldn’t talk about it in public and they’re also people who are interested but like didn’t know that,
Nokia published quarterly unit shipments on the investor relations website.
And so then but and so what I sort of built up with profile a publishing stuff online because I had a job I was a consultant I was freed and so I could say stuff in public since I was mad I was a small thing going.
Certain point small things stop being interesting because it happened.
[8:05] 90% of the developed world has a smartphone now four and a half billion people adults a five and a half in adults on Earth had a smartphone is not interesting anymore it’s like talking about Broadband adoption in like 2010 like we get it happened.
And I think there’s a sort of a general point there in Tech that the point that you understand something is generally the point that it’s time to start looking for something else.
It’s kind of the point that it’s become boring and you know it’s not what’s the important where the important questions are and say there was a time when that was no PCS in the 90s.
If a PC thing with it going to be interactive TV well that it’s not being an interesting conversation same with smartphones like it happened absol’s happened what next and so,
for one axis that becomes well let’s think about machine learning and crypto and a regulation,
on another it let’s think about what my old boss Marc Andreessen called software is eating World which you’ve basically what happens when four five billion people are online.
What happens with mass mass internet adoption,
um which is kind of like it’s like being in like 1950 or 1960 and saying well like the last 50 years was how does everybody get a car and what is a car what is a car company in the next 50 years is with Donald’s and Walmart is what happens when everyone has a car.
So you could kind of say well that’s sort of where we are in Tech now by the last 50 or 60 years is how does everyone get a computer and the next 50 years is well what happens because of that or whatever it is I suppose what I’m getting at is like the questions just keep changing.
[9:32] So when I was there I was looking at smartphones now I don’t really look at smartphones very much.
[9:39] And then you know it’s interesting if I understand you’re you’re doing some ice on LinkedIn you’re doing some work with some investors,
that looks kind of like part-time it seems like your full-time gig is really kind of being part of the crater economy is that is that a fair characterization.
[9:57] No I suppose so yeah so maybe I was I had an mft I’ve all I left row when I started a sent out a newsletter in like 2013.
It’s a bit like you know the joke that you know I didn’t realize I was doing machine learning I thought I was just making if statements in Excel I didn’t know it was a neural network and it’s not going to say I didn’t know I was making an end of T I thought I just sent his letter,
and so yeah I suppose I am,
yes I mean in the sense of poetry because I supposed to do only with some portion of what I do is actually.
Selling content in some form some portion of it is you know more conventional speaking and talking and working with people
in passing or by Zoom so you know I give presentations I spend sort of a day a week as a venture partner with a London firm called mosaic
which invests in you know series AC stage software companies in Europe and that’s fairly convert straightforward Venture Capital but I do a bunch of different things.
[11:00] Yeah I’m not sure if that was consciously a reference or not but there’s certainly a connection in there somewhere.
[11:06] Only like five of our listeners got that Joe and I was one of them all right let’s let’s jump into one of our favorite topics which is e-commerce,
you know so maybe I know we’ve had some interesting Twitter conversations of the impact of covid on e-commerce and,
one of Jason’s favorite graphs is that one that shows that we’ve like almost tripled our adoption here in the United States which he yeah I’m joking his he takes offense at that,
but what have you seen so you went you had this interesting perspective of you kind of know the US market and then now you’ve been there and UK / London what are you seeing as far as e-commerce impact during covid.
[11:49] Well so several different observations one of them is we actually have pretty good data for the US and the UK much less good data for the rest of your ordinary much harder to get and harder to compare.
Um second observation would be the UK and Europe in general had a much stronger lockdown in the US,
the US have service strong lock down in some places but not kind of nationally whereas the UK basically shut down for the last three months.
[12:19] Um and third observation is whatever you make of that the u.s. went from sort of 16% to sort of a bit over 20 percent penetration if you exclude gasoline and restaurants and things.
Um on the same basis that UK went from 20% to 30% and has been sort of bouncing around a bit had a second lockdown but in the UK is sort of stabilizing it about 30%,
um most of the rest of Europe was three to five years behind,
the UK and this is old joke that when the apocalypse comes you want to be in France because everything happens five years later there and that’s kind of sort of kind of what happens in Tech,
type the French kind of ruling class the French newspaper reading class has suddenly discovered Amazon and having all the kind of moral panics we were having about Amazon like five years ago,
like there’s a data from eurostat they don’t have penetration data but they do have usage data and in 2019 I think only about 38 39 percent of all Italians made any online purchase at all.
[13:21] So you’ve got this very wide spread across Europe of adoption and basically the UK and like the small Northern so you know this candies Belgium Netherlands and so on,
of the USA Southern your big you at the big European countries I like 5 years behind the USA but of course the lockdown has been this sort of catalyst to make everybody at least try this stuff and Pull It Forward,
um the other number is in the if you exclude grocery which is sort of you know a third of retail sales or something.
So if you exclude grocery sales and look at everything else in the UK it’s now 40 percent e-commerce so.
We’re now at this sort of point where it’s no longer a segment or even you know some if it will even for a long time it was something that some people did for some things and now it’s something everyone does for everything,
but you’ll now it is real Tipping Point where you’re having kind of a lot of major retailers disappear or move radically pullback.
And a lot of people asking her what is this going to look like what is the world of physical retail even going to be as we come out of this.
I feel like that’s probably I mean I didn’t have the US Direct us UK comparison,
clearly like us department stores in things a bit in long-term decline but I don’t think the u.s. is at the stage of like 40% of the mall is gone.
[14:47] Yeah it’s fascinating the like I’d be curious to unpackage just a little bit like so and and these aren’t perfect numbers but rough numbers for for conversation purposes if you kind of use the same definition of retailgeek,
the u.s. is going to have about 25% e-commerce penetration versus I’ve seen 35 to 40 in the UK so so I think it clearly is.
Is wildly ahead right in my mind there are three things going on there I can in both countries there’s.
There’s a lockdown impact and prove your point the lockdown played out differently and in the u.s. it,
spread out very differently just depending on where you lived but there’s hey we’re all getting less clothes and what clothes we do get were way more likely to get online stuff like that right so.
The there’s a / stored impact which I do think is unique to the us like we.
[15:41] 4X the amount of stores per capita in the u.s. that you had in UK so there was there was a long overdue correction and the covid-19 impetus for that that correction and then there is,
I think at the moment a fundamental difference to how,
people in the United Kingdom and people in the US get groceries digitally like the the UK was far in advance of the u.s. in terms of digital grocery adoption,
before the pandemic so in the u.s. there was this huge thing over half the population tried ordering bananas online for the first time ever,
um and while I’m sure there was some cohort of new new grocery Shoppers in UK as well it was.
It was less and part of me thinks like fundamentally,
the UK is an island with much greater density like you like the bananas like we call it it’s ironic that we call it shipping because the bananas don’t have to get on a boat to go like anything that there’s not a ship involved in the UK very often,
[16:45] This is a couple’s this is I mean it’s interesting stuff in here because well so two things to say one of them is so yes the UK will sort of five percent online grocery penetration.
And no actually growing that fast I mean you got to 5% in a straight line since about 2000 basically.
And it went ten percent more or less overnight and stayed there,
and it’s still a now it’s gone up a little bit more in rent into the second lockdown I should say incidentally for all of these numbers this is not being distorted by the fact the total retail sales went down so this is after total retail sales went back up to the same level it’s still at that high level,
so UK went from 5% to 10% I think the u.s. is sort of half that at most,
um the other question I was thinking all these how much variation is there in the USA to your point about density if we were doing this analysis for New England or for California,
would this look different with the numbers be higher I mean I don’t know I think the BLS is just started doing some numbers but.
There’s I wonder how much the u.s. let the lower u.s. penetration is skewed by the flyover states if I’m allowed to call it that.
[17:55] Yeah absolutely and I haven’t seen definitive data but my sense so a very,
interesting distinction the overwhelming majority of digital grocery in the u.s. is curbside pickup,
so we all think of the milk getting deliver to the house but but something like 80% of all the digital grocery orders in the US are a customer going to a store and picking up all their bags in the parking lot instead of,
having them delivered and that’s largely because of the unit economics just don’t work in most of the u.s. neighborhoods.
[18:28] Is the density point was the you you know I’m sort of sitting in my hat and it’s my study looking out of the window in the city of,
I’m in an Edwardian you know looks like it’s not like Brooklyn but it’s you know only Edwardian by bedroom houses and there’s you know practically cues of do grocery delivery van sometimes,
all I mean that’s part of the point is that the UK retail industry is just much more competitive than the US and retail industry which you thought of gets hidden by the fact that the US has lots of supermarkets but they will kind of regionally dominant,
Lucy UK there’s like five supermarkets I can shop from from here.
[19:06] Five different chains and so there is a Tesco truck and a car do truck a Safeway truck and the sainsbury truck.
Going down the street twice a day every day and they all these custom-built refrigerator trucks.
And so that they know that degree of density does change things I think the other thing that’s happening right now it’s sort of goes onto a kind of a broader point is there’s now a wave of sort of one and two hour
guy on the back of a bike grocery delivery startups one of them is his Turkish company called get ear or get GOI cottonwoods called now there’s like three of them,
and they’re all based on basically dark stores in light industrial areas around residential areas.
and it’s guys on bikes bringing you to bought a bottle of milk a pack of Pastor a bottle of olive oil and you know whatever they can fit in the bike and it’s sort of topping up
the bay so you do the big weekly shop which might move to delivery but then you’ve got this I need its a 50 pound,
$75 spend top up which is also happening,
and that’s also course about density and how often you need it and what you wanted to pay Logistics to that.
[20:22] Yeah now it’s and that is fascinating like I feel like you’ve highlighted what to me is the next digital wave of grocery like the the first way like the the biggest money to be made is on these big shops right so if you can,
win a bunch of those customers that get 60 to 120 items,
um in their cart like the unit economics are easier there and that’s in the u.s. certainly where all the big Grocers focused their attention,
but you’re absolutely right like there’s a,
a totally different mission that people use grocery stores and in the US the providers are heavily fragmented right so you’re going to go to Kroger Walmart or Albertsons to get your your big grocery shop but have you live in a,
a urban city.
[21:08] Probably going to a bodega to get a bagel or a coffee or or you know replenish the sugar you just ran out of right you like all those,
those top-ups you know tend to get served by these smaller local grocery stores and now we’re seeing a boom in the in.
E-commerce for those those top up so here in the US we’ve got go puff which is kind of a,
purpose-built delivery Network that really focuses on that top up and then you have folks like door – that grew up in meal delivery trying to kind of move over into that does Top-Up missions as well so it’s,
that’s going to be interesting in the UK is that are they the same providers that are doing the top ups and.
[21:52] The different know the different companies well so yes or no so some of the supermarkets have that Top-Up thing as well because what the supermarkets have done in the UK over the last 20 years is that created what they call a Metro format,
which is sort of like a bodega size store that it’s open 24 hours and it’s right and it’s got a limited and will limited selection,
but it’s you know it’s a double it’s two or three shopfronts wide,
and it’s it’s a Tesco Metro it’s the same speeds Metro and so they’re using those as endpoints for a guy on a bike at the same time,
I mean the other interesting thing there you know just talking about door – is the number from Uber last week.
That they would like a think a 30 billion dollar run rate on rides and now fifty two billion dollar runway on ubereats,
one of the things we’ll sort of sort of to kind of Link think sort of things in here one of these want I should have one of the points I wanted made in the presentation I did in January with that instead of thinking about e-commerce by product category and saying well
books are different from makeup which are different from shoes which are different from.
I don’t know like consumer electronics which are different from something else instead you should split it into Parcels versus delivery versus bikes.
[23:11] And so on that basis is everything that can go into a brown cardboard box which is basically the airway Amazon sees the world and everything that can’t,
which is either a refrigerated truck or you go to the grocery store or it gets brought to you on a on the back of a bike.
Um and in that category you basically have Grocery and restaurant,
looking at the numbers I mean I kind of struggled with for mentioned numbers earlier I got wildly conflicting numbers based on which research I looked at but it looked like something like a third to a half of us restaurant spending is actually takeout or delivery anyway and like was before the internet.
[23:50] Yeah my number is it was close to 50 before and and was like well over 70 of Court off Prem was well over 70 during the pandemic.
[23:58] Yeah and I think like the interesting General thing I was thinking about this is a like split e-commerce into can it be a cardboard box or a bike or truck,
oh collection but the other thing I was thinking is like if you just forget about e-commerce for a minute and you kind of ask the question well why is it that you buy a pint of milk,
from a completely different kind of store from a bed or couch why does he care I have a giant store in the edge of town and Walmart have a giant store in the edge of town and the bodega doesn’t,
the night we know the answer but like if you kinds of systematized that it’s like there’s like an algebra,
of cost per square foot how urgently you need it how willing the far you’re willing to go how often you need it how big the inventory is you know add 20 more criteria that get you like a kind of a multi-dimensional scatter plot of,
aquella versus a department store versus a high-end Boutique versus a bodega versus.
Pick 10 all the retail categories and sort of what the internet does is it’s kind of like it adds three ways.
[25:01] And so it enables a whole class of new kind of retailers so like it’s like freeways and cars enable big box retail for the sake of argument and enable the different kind of Supermarket where you can fill up your car as opposed to having it carried home.
And the internet like adds a whole bunch more criteria in the same way to that whole Logistics question.
Which gets you both to my point like the one our grocery delivery versus a weekly shop and it gets you that question do I go there or do they come here and what do I pay on each side.
Which is another way of saying like maybe instead of saying the internet is completely new we should say this is just like another wave of change in retail.
[25:38] Yeah yeah I agree with that Framing and it’s interesting,
so it wouldn’t be a Jason Scott show if we didn’t talk a little bit about Amazon and I noticed you didn’t mention them as one of the trucks coming to your neighborhood makes me so they just basically ceded the UK grocery delivery space.
[25:55] They do but they’re not in grocery delivery so they of course so there’s I mean it’s the sort of someone was saying what’s the you know the children’s game where you ring the doorbell and run away what do you call that that’s called parcel Force.
Did one of the career firms here.
And so yeah there is an explosion in the other so say they were the refrigerator trucks which are all the supermarket’s plus a car do.
And then there are parcel trucks which are a whole other bunch of companies so it’s dpd it’s making supposed to office and it’s dpd and it’s Amazon and it’s a couple of other things but that’s sort of basically the story,
um but it’s just a whole other hold on the model there is existing in powder.
[26:43] Dude so Amazon’s pretty dominant there in the UK and obviously in the US doing really well do you see anything slowing them down or how do they fit into that framework you just lay down.
I think well I’d sort of propose maybe another framework so so I think like the way I always have to talk about Amazon is you know this cliché that e-commerce has infinite shelf space and I said that’s not quite right for Amazon and Amazon has one shelf that’s infinitely long.
And so everything they sell has to fit onto the same shelf and be sold in exactly the same way through exactly the same website and exactly the same Majestics in the same kind of boxes.
And the like the story of the last 20 25 years is converting more and more product categories to discover people are willing to buy it like that.
[27:31] Where you know start with books but it turns out there’s an awful lot of other categories that you wouldn’t have thought people would buy like that it turns out they are willing to buy like that,
um and then the other side of e-commerce is yes people will buy it online but not like that.
So you need a completely different web experience different kind of recommendation or service,
for you need to have free returns or it needs to be hand-delivered or whatever it is but it needs to be something other than the Amazon commodity logistic model.
And so I mean you see this in the kind of the market share,
that you know they’re also to people who are under the impression that e-commerce is 75 percent of retail and the Amazon is a hundred and ten percent of that but of course it isn’t,
um you know Adams and his goal sort of seven or eight percent of us retail it’s got a bit less than half of depending on how you count it instead of it’s got sort of 4045 percent of u.s. e-commerce and it’s kind of the same in Britain,
Maybe a bit higher Court member rather unsurprisingly you look at the share in lockdown and the the online-only retailers share went down as a show of e-commerce but there’s a whole other question a lot well what are the other ways of buying this,
which I would think you know basically you never the what’s old is new and Amazon is the new Walmart and Amazon Walmart converted a whole bunch of stuff into Walmart.
[28:54] And Amazon is converting a whole bunch of stuff into Amazon but it doesn’t follow that everything becomes that.
[29:01] What are some of the other modes so you mentioned like Uber Eats and food delivery which is kind of a different mode what are some of the other modes that you’re seeing.
[29:10] Well so I think I mean just this is mechanistically there’s parcel and then there’s truck brings it to you there’s you go and get it and then there’s guy on a bike,
we just don’t like the kid on bike brings it to you there’s also sort of orthogonal to that the set of so that’s a very Silicon Valley word but same sort of next to that you’ve got like,
I should say societal next to sound clever you’ve also got like free returns,
for subscriptions or subscriptions where you get 10 things that you don’t know what we don’t know what you’re going to get and so there’s lots of different kind of merchandising and retailing models.
Um that are quite distinct from the Amazon merchandising in retailing model which is like you know whatever you know you can have any color you want as long as it’s black.
[30:02] I do so one that that we’ve been following closely is live streaming which is kind of caught fire in China,
but as you know some of these things they kind of catch fire in China and they stay in China they don’t so like
you know what I would call chat Commerce as a big thing in China hasn’t really kind of made it out there do you see live stream becoming one of those are you seeing any evidence of that like in your.
[30:24] So I think a lot of people trying it so it’s clearly on everyone’s experiment list for this year will it work I don’t know.
I mean I think this is like the general puzzle I have looking at China which again is sort of on my list to write about I read about it as a column in my newsletter but I should write about it again it’s like sometimes I feel.
[30:45] So this is what we’re saying this so like I started Mike when I started my career I’m mobile internet was everyone was very excited about mobile internet if it didn’t actually exist anywhere except in Japan.
The Japanese operators that launched this thing called I’m out and equivalents of I made which was a phone that had a packet-switched network and an internet connection and it was unmetered,
when I was submitted a comment anyway it was cheap and they had an app store and you could look at stuff on your phone and you have like a big not even color screen but it’s like a big screen with lots of text,
he was a mate and they were like millions of people using this and the chart was going up into the right and it was amazing and they were kind of to sort of lessons from this the first is that I made turned out to be a dead end it wasn’t actually the future.
The second was that you couldn’t actually find out what was going on except like a third hand because you couldn’t use the product yourself you couldn’t read the language.
[31:40] You couldn’t read the,
like discussion of it by informed people because it was all in Japanese you couldn’t go there because it was like $5,000 to go there and even if you did go there you still couldn’t use the product if you want a Japanese resident you can buy the phone so everything was sort of a third hand,
and you tear this stuff about this amazing stuff that was happening in Japan you would quite know okay is that actually what’s happening and be what predictive value does that have,
easy like I don’t know it’s like you go to a country another country on holiday and you see a retailer that you think that’s really cool I wish we had that at home a bender but you know it wouldn’t work.
Like you couldn’t take that retailer on just do it in LA and expect it to work.
[32:17] And which is still the thing I should have wonder if I look at it all the other this is repairable to this in Tokyo chit China we sighs how much of this is put how much of this is being accurately described in the first place.
[32:30] Because that was the whole problem with like the whole bot thing to in four years ago everyone said oh we chat is amazing and it’s all about Bots and Chinese people said like no it isn’t it’s not about possible.
And the other piece is like how predictive is this how much of this is about Japanese the Chinese market structure and LeapFrog in traditional retail and like five other criteria about how that market is set up and it wouldn’t necessarily work here.
And maybe the third step is which is one of the things I think is interesting about Clubhouse is is it that you take that core concept but you do it in a complete different way.
So Clubhouse looks a lot like stuff that was happening in Japan so in China a couple of years ago a bit in a little bit it’s also completely Americanized.
It doesn’t have 800 things on the screen and you know it’s not that visual overload that you get with two European eyes looks like that’s how that’s how European see Chinese apps are like oh my God there’s so much stuff on the screen but it has tipping and subscription and it’s not add based in the same way and you pay for content.
And so I think that’s like a generalized thing I wonder if I look at all of this stuff in China you have like eight or nine hundred million people you have a huge number or smartphones
you have a huge number of entrepreneurs scrambling over each other frenzied Innovation creation copying of every kind of course is going to be amazing ideas coming out of there.
But it’s a big jump to go from that to look at one particular company and say well that will work here.
[33:56] Yeah it’s interesting as you’re explaining it like I’m also thinking like I noticed there’s a very often a fishtail version of this to write that the.
The real numbers that were already impressive in China for you know some like different behaviors than we see here,
keep getting Amplified every time someone tells the story so I you know live streaming Commerce is 70% of all Commerce in China and you know WeChat is 50% of all Commerce in China and all these things that are like objectively not true.
[34:26] Yeah and you can tell.
[34:27] Yeah and I.
[34:29] Is there anyone can make up any old bollocks about what’s happening in China and people will believe it.
[34:33] Man yeah and toll recently and you know I was desperate to understand these real experiences and so I have a lot of Chinese co-workers and I there were super patient with me,
sort of like annotating screenshots from from various apps and things but,
to your point like it was impossible for me to experience,
are we pay for example right because you you literally need a Chinese bank that an American citizen could not get like that very recently is not true but like all of those digital wallets were,
not available the westerners and when you take digital wallets out of all of these ecosystems the experiences wildly different.
[35:15] Yeah is actually a which is to my point exactly like trying to understand I made 20 years ago.
[35:22] Yeah yeah.
[35:23] Literally be like looking at pictures and stuff and stuffing stuff through Google translate if that even existed then and try to work out how this works.
[35:32] Yep I’ve sat in a number of meetings at Best Buy when we’re talking about if we should have a web browser and using the wildly successful I’m owed example but yeah so I do want to,
half pivot I guess still on Amazon another topic that comes up a lot and I know you you have a strong perspective on it is this whole notion of
Amazon private label and and you’ve done some some awesome writing that Scott and I have both enjoyed talking about you know what a,
a miraculous new invention private label is since Amazon invented it a few few weeks ago and what is potential implications are an antitrust can you kind of.
Give us your primer there.
[36:17] Yeah well sorry I was kind of interesting so.
This is kind of Trope of attacking tech companies where you say you idiot you invented the thing that already existed so people looked at Lyft line and said you invented buses.
[36:29] And the funny thing is when people complain about private label by reaction is you can back congratulations you invented retailing.
Because this is book that I kind of talked about quite often by Zola,
from the 19th century called Bonner did and happiness of women which is basically a novel about the creation of Bon Marche and it’s equation of department stores in the nine 1860s 1870s.
And the central character instantly turns a Draper’s shop into a department store through force of will over like 10 years and there’s highlight pages and pages in this book about return on Capital and stop days.
[37:08] Um and working capital and he invents lost leaders,
and there’s like two pages where his staff is saying but we’re losing money on every yard of this and he says yes I know that’s the point and he invents free returns.
And of course and fix prices if you can’t have a discount until you’ve got a fixed price and free returns and catalogs,
and meanwhile the the shopkeepers on the other side of the street as saying like have you seen what that Maniac is doing he’s selling hats and gloves in the same shop he’s got no morals it’s indecent.
And you read this thing and it’s like this is people describing hours this is Amazon
you know this is this person who’s creating this different way of packaging up all this business and selling it in different ways and innovating furiously on every different aspect of it but one of the points is that the thing that he’s selling is a loss leader is private label fabric.
[38:01] And you kind of you you go and you look it and it’s maybe this is a point about you know UK versus American retail like I never would have occurred to me that you wouldn’t know the supermarkets are full of private later product.
And you go and look at the history of this and like the FTC wrote this like a hundred page report in the early 30s on chain store private label brands.
[38:22] And guess what it’s like a quarter of all these girl sales in the US are private label brands in the early 30s and so I think the sort of the interesting thing here is to say look.
This is the stuff that you were describing.
At the most basic level has been part of retail 450 years every retailer does his most weed hairless do it way more than Amazon it’s like one or two or three percent of Amazon
sales it’s 20 to 30 percent of sales and most retailers you’ve heard of except for the Gap where it’s a hundred percent but you know how I’ll get Macy’s Wal-Mart it’s 10 20 30 % of cells.
And so so the question here is like is it that you just didn’t know this happened and you’re shocked and astonished to have find out about it.
[39:07] Is it somehow different when Amazon does it.
And of course it’s different in some sense because like Amazon is in a supermarket but is it different in some kind of meaningful sense because like yes of course they have scale they do so there’s Walmart,
yes of course they look at the data of what selling in their store yes well done so does every other retailer they have computers do they know what they sell.
He’s a they’re looking at what you’re searching for but not buying and that’s a different kind of data to the data the Walmart has well maybe.
But how him how big a deal is that as opposed to the fact that they’re just competing with their suppliers like all retailers.
Case is actually just a moral Panic is it that you had no idea this existed you’re shocked to discover and you think it’s amazing in the evil because you think Amazon is amazing evil.
I’m always a genuinely something different about the way that Amazon does this that matters.
Um or of course do you think that all our retailers should be stopped from doing this.
And you can say that but you do have to understand that that’s like a third across K you’ve just band.
[40:14] So I think those are the sort of the interesting questions of course they intersect with a kind of a joke that Berman made earlier that there are people who think that Amazon is sort of like 45 50 75 percent of American retail so you do actually have to understand their Amazon is roughly the size is the same size as Walmart,
no it doesn’t have a monopoly.
But then it does have a monopoly in certain very specific areas you know there are certain businesses where I’m as an only is the only Channel not just in private label but you know it works.
Does that person have a does that person have Market dominant dominant does Amazon have market dominance in grocery obviously not his it have market dominance in books obviously.
[40:51] Yeah no it’s super interesting and it’s funny I was.
I found myself in a mild Twitter feud on this topic this week that I had to retreat from,
because I sort of made the same point you did that you know hey Amazon has like one percent penetration and you know 25 to 50 is not is not uncommon so Amazon’s the worst private-label her in the history of retail at the moment.
And then you know we were talking about the various categories of private label and and I pointed out that the interesting thing to me are the,
desirable unique products that retailers are starting to invent that our own Brands right and so I use that Target has a bunch of good examples of this like cat and Jack is their apparel brand,
but my hypothesis was.
Like arguably the most successful version of this recently is the as I hit mute the Alexa the you know which is essentially a
private label product that that Amazon invented and a bunch of people in Twitter like push back in there like,
that that’s not a private label product that’s something you know Amazon invented the the whole category while I can.
I don’t know I might go so Amazon invented the Bluetooth speaker that’s interesting but but you.
[42:06] Reporting invented the clock radio.
[42:08] Exactly and so but but I did really like you know is there a way in which they did an interesting mashup and that unlocked you know huge demand sure right like I’m it’s an impressive product but it’s,
at that whole Space is super interesting and the same people that are pushing back and going like oh this is you know uncompetitive unfair Behavior,
certainly enjoy their Kirkland 5 pound bags of nuts and they certainly enjoy their Alexa and you know you go back,
the history of retail retail started out as the the product inventor selling their own product right like wholesale is is a much newer invention.
[42:45] Yeah I mean I think the.
So to specific in a general points is specific point is I think the interesting thing about Amazon Marketplace is that if you are super thoughtful Innovative creative sort of regulator if that’s not in any sense an oxymoron.
You would propose that Amazon be obliged to provide wholesale access to its Logistics and it’s e-commerce.
Like if that’s your view think Amazon is a monopoly or anything Z Amazon is guilty of Market abuse what’s your remedy well they have to provide wholesale access to the logistics and website and guess what they do in fact that 60% of the business.
From and I think the the interesting sort of General point.
Is here and this is sort of a point I might sort of what Emily talking about regulation is like.
[43:34] The the kind of the eye-catching hand-waving sloganeering stuff generally falls apart when you start asking questions so like let’s break up Google,
okay into what and what problem does that solve YouTube is still YouTube it still doesn’t have any competition let’s break up Facebook okay that doesn’t stop teenage girls looking at self-harm content on Instagram those are different kinds of problem.
The stuff is going to hurt is regulating where the buy box can appear around Marketplace.
It’s you know regulating the price that Amazon charges for shipping,
from Marketplace and in the same way it’s going to be no the at the hey antitrust off that’s going to hurt is going to be digging deep inside the mechanics of the ad marketplaces,
and finding some Loosely worded email and finding Google ten billion dollars and making them sell double-click.
No it’s not that doesn’t make a great book title that takes 20 minutes to explain what the fuck just happened if I’m allowed to say that case 20 minutes did it’s a staff that takes 20 minutes to explain what happened and turns out to be 15% of Google’s profits,
that’s where I think most of the regulatory staff will actually bite.
[44:49] I know we’re running up against time and we want to be we’re thankful that you took time out of your schedule to talk to us
the I didn’t want to end without talking about just kind of at a macro sense your latest Mega presentation was around great unbundling,
so maybe tease listeners with kind of what is that and maybe one example of something coming out of the Great unbundling.
[45:13] You know it’s always kind of a challenge to you know talk about what’s happening in what’s changing in tech for either more than one minute or less than two hours.
Um because you can either say look everything’s going to be software or you can all you got off and you spend an hour and a half talking about what’s happening in Indonesia you know like and digital transformation and all kinds of other stuff that I didn’t even mention,
um I think the kind of the cool thing that I wanted to talk about was and this is great and I started with this quote from one of the owners of Kraft Heinz where he said I’m a terrified dinosaur I thought I was in a world of kind of efficiency and old Brands and profit maximization and now suddenly everything’s being disrupted.
[45:51] And I think you can kind of generalize this to like everything in retail and e-commerce is clearly breaking apart and no one knows what the new stability will look like.
Meanwhile because you have this completely different channel that totally changes everything in cpg everything in brand everything in consumer product because suddenly the way that you sell it completely changes and that creates all sorts of different kinds of competition a different kinds of product.
And then third very obviously the whole world of advertising is breaking apart like Google and Facebook between them and now probably half or more of total us advertising.
Maybe more I’ll remember the number now and say like this this we’ve gone from this world of basically creativity and telling stories to being data.
And meanwhile that place doesn’t have ads and so like the whole world of brand has changed the whole other retailers changing the whole world of
after I think it’s changing and of course TV as well is complete completely broken apartment
and you know where the show is going to be what channel the channel is going to be one of the aggregate is going to be and in all of these things the kind of the model it’s like you used to have this very clearly defined go-to-market where you have the people who made things and the people who are aggregated and sold it and now that’s all been broken apart,
all the people who used to sell to aggregators whether that’s TV companies or retailers or any kind of data market and now like okay well we’ve got completely different aggregators and also maybe we should be going Direct.
[47:19] And ever wants to customer relationship.
Most of those companies however most consumer brands are actually not consumer businesses they’ve never they don’t actually sell makeup they sell trucks full of makeup.
To warm up or 240 and they’ve never actually been a b2c business.
Um and now suddenly they all need to think about whether they should be a b2c business and if not what are all the new b2c businesses that will completely take over their Channel,
and what how much data they should have and what they should do with their data and what all of this means
and so this is great quote from great Jim Barksdale from like 25 years ago there’s only two ways to make money in business bundling and unbundling.
And what’s happening now is like everything across brand retail consumer products advertising TV is being unbundled.
And it’s going to get re bundled at some point in some ways but we don’t know what.
[48:08] Yeah I find myself I’ve got 20 subscriptions right to all these different things so now I need someone to do aggregate that for me where I unplugged my cable thing because it got too expensive but I’m spending just as much but now I’m having to manage 20 subscriptions.
[48:22] Yeah exactly I said it was with the point earlier it’s like the remaking of retail around the freeway or the remaking of retail around electricity and around elevators and department stores you know it’s another of these sort of generational resets of how all of this stuff works.
And like all the cars are thrown up in the air no nose with a little girl and not everybody is going to have a DC business in five years time and that applies in Hollywood as much as it does in.
[48:52] Yeah and then it’s kind of fun to think through so in the world of e-commerce all these brands are going direct which is interesting and but then
you know from a consumer standpoint where does it stop because you don’t want to go to 80 different
websites to get that one brand you know to the extreme example you know there’s a benefit to the grocery store of having one place that has all these brands aggregated,
We’re kind of in an unbundling phase and then I wonder is there a new model that comes along and is the bundling or does Amazon kind of become the bundle or do you have a point of view on where that goes.
[49:26] So I think clearly you know it’s a different way to think about this and one of them is clearly not everyone’s going to be able to go to Road and a lot of stuff will collapse back in I think the way that WWF,
WWE wrestling people rolled back into a bundle with interesting because you would think that would be a standalone brand that would be able to do that and they decided didn’t work Disney can.
Um Sony can’t like insanely build its own direct-to-consumer subscription video business probably not so what a Sony Pictures do.
Um says a lot of those sort of questions I think there’s a sort of a subtext within this and maybe another layer in this is I had this wrote this things that are four five years ago that I called lists of the new search.
And I she showed a slide to accompany the other day and I had a picture on the one hand of Macy’s from my 1910 you know the store the biggest store in the world,
on the other hand there’s a store in Tokyo that just sells one book.
[50:23] They change it once a week and they’ve got a table piled of copies and they’ll tell you about the book and the kind of the question is like how do you find a product,
see if you go to this store they only sell one book so that you don’t have a discovery problem but you’ve got to know that the shore store exists which basically means either advertising or they’re paying rent in the right part of Tokyo and so the that part of Tokyo is the aggregator.
Oh you can be in the multi-brand boutique and you’re not quite as hard to find but that Boutique has to find you and has to choose you and you still have to know about the boutique
for you can be in Macy’s and then like okay you’re going to be a bit difficult to find that but you’re not going to unlike you to walk past that product now or you can be an Amazon and you’re one of however many hundred million schools and you’ll never like walk past it you have to know what you want.
Um and so but if you’re in Amazon and you have to know then how do I know it exists while I read about it in Vogue or read about it in wallpaper or GQ or somewhere.
And so this is sort of sense that like you can either be.
This carefully curated thing but how do you find the curation or you can be in this vast thing that has everything but then how do you find it in the answer is well some other kind of curation but there’s like there’s not like an answer to that there’s just kind of a pendulum that swings back and forth.
[51:36] Yeah it’s fascinating to me it’s I kind of putting a historical retail lens on it again like in a,
in a earlier world when there were was a choice of three hammers to buy like you could bundle discovery of hammers with consideration of hammers and fulfillment of hammers right and that’s what independent hardware stores did and then the,
the pianos of the world or the the Home Depot’s of the world said hey now there’s a hundred Hammers and it actually became way harder to,
discover and pick a hammer because they did such a good job of bundling,
fulfillment and distribution of all these hammers when Amazon makes 80,000 different hammers available,
they can they simply cannot also be the point where you discover and decide on Hammers and so I actually think it’s.
Bundling fulfillment in some of these things or purchasing some of these things has created new unbundling zuv,
Discovery and so you know that’s an interesting space to me in Commerce right now is how how many.
Products used to be discovered on the Shelf of a grocery store and are now being discovered in a tick tock video or whatever else.
[52:49] Yeah I mean I think a lot of this is Pop Culture which is to the point about you know we’ll live streaming work I don’t know that’s like saying well that new,
my fashion magazine for teenage girls while I don’t know maybe,
awesome but he knows a lot about that and it’s pop culture and its retailing and Merchandising it’s not really a technology question and it’s also I mean that you know the maybe another way of thinking about this is that like in,
1800 there was a very finite amount of product,
there was also very limited number of customers you know number of people who are actually kind of consumers in any really meaningful sentence for fully like a couple of thousand people in each Country and
then the Industrial Revolution happens and suddenly you have infinite product and you also have like many more consumers and then you have but you have the gatekeeper of the logistics
on the retailing and the which is either the retailer or the media to tell you what bye,
this is the bait The Gatekeepers are the newspapers and magazines on the one hand and the retailer on the other side and maybe the retail is whole set up behind them.
Um so you have infinite product and customers but you have this gatekeeping function its activation function and now you know you don’t.
[53:59] You know now it’s Google or its Amazon and Amazon has however many hunting a hundred million schools or its Alibaba and they said there’s infinite product and infinite choice.
And that almost gets that gets you to the book store that only sells one book.
I mean I remember years ago reading about it I denim store in Tokyo that was called not found because they didn’t want to show up in Google they wanted it to be impossible to find them in Google.
[54:22] And you almost feel like there’s almost like an arts and crafts moment now we’re like in 1800 if you said I want something handmade that didn’t mean anything,
in 1900 if you say I want something handmade that that becomes a very meaningful statement you know I want to step out of mass production and I sometimes feel like there’s a lot of different strands in,
popular culture now that is sort of about stepping out of the fire hose he sort of what it serious as well isn’t it.
That is what Instagram is getting at there’s a lot of sort of ways that are trying to get you a way as not just a search box it’s something else.
[55:00] I remember the early days of etsy everyone thought they were crazy because the handmade category on eBay was like 20 million and they’re like can’t it’s not Venture back avoid the Tam isn’t big enough and now it’s like two billion dollars in GMB.
[55:12] Yeah well that’s like that guy who said that the time for Uber is taxi cabs like yeah I know.
[55:19] What do you think about scooters Tam is walking do you buy the you buy that argument.
[55:23] I don’t know um there’s.
[55:26] Are they a thing in London or is London.
[55:40] This is clearly a shift in electric changing what that can mean,
and changing the practicality of that and massively broadening that and there’s a shift instead of popular consensus around what road should look like which means that scooters and bikes can become much safer and much more practical.
How big is a scooter and a bike has some practicality in that like it’s you know you can fold it up so it doesn’t take the space that a bike the fall but whole bicycle does Maybe.
You know I mean it is a business how big a business is everybody on earth going to have one I don’t know you know I couldn’t have used one to commute 35 miles a day to Menlo Park from San Francisco,
um but I can certainly see that filling a segment.
In the same way that like it’s I don’t know maybe it’s like being in like 1975 on the same do you think hatchback small cars are going to work.
He wants his worlds for some people in some places.
[56:37] It’s never really fulfilling answer though yeah.
[56:40] Yeah it’s the answer is sort of yes maybe for some people it’s never going to be like binary.
[56:44] Depends exactly.
[56:47] Well this is I you know I studied history at University and I’m the master of my college Hugh trevor-roper of sort of famous for saying history teaches us nothing except that something will happen.
It’s always different.
hey I know we’re coming up on time maybe one one last question pivoting as far away from history as possible all this interesting Innovation is there anything in particular that you’re excited about for the future of Commerce like is there
is there one of these Trends or technologies that you’re more more bullish on than others.
[57:19] Um I think there’s like a hole
I hate this is such an overused term but it’s convenient there’s a sort of a Cambrian explosion in every kind of remote work every kind of video and collaboration and interaction we’re not in the same room and what do you do that it would be better than video.
And there was also a Cambrian explosion,
in every kind of sense of what would e-commerce be how would it work what does physical retail look like if it’s no longer the end point to a logistics chain so again a horrible word experiential huge amount of people thinking about retail is experience,
events is experience what does it mean if the alternative if it’s if it’s always easier to get it by Amazon or to buy online what we what is the reason you create to go to the store.
[58:07] If it’s easier to buy it on Amazon what’s the reason you create to put it on the website.
If people aren’t buying that online what would you put what would you change what online experience would you create to change that,
and I think the kind of the lockdown have been this sort of catalyst.
Of just we maybe just like the realization like everyone is online everyone will buy anything online there is no product that people will not buy online if you can’t come up with the right experience
and so we’ve got this sort of huge wave of innovation coming in the next year two years three years around working out what that means,
is this like all the things that come off to zoom which is a bit like all the stuff that happened with voice after Skype,
all the stuff that comes because out of that realization and it’s just going to be so many sort of interesting models in interesting ways of doing this.
[59:02] Yeah that is interesting it’s.
It’s going to be a fascinating area for all of us to live through that’s for sure I’m grateful we’re in a time of such such interesting and fascinating disruption,
Benedict that’s going to be a great place to leave it because it’s happen again we have used up a perfectly good hour of our listeners time,
as always if you have any questions or comments about the things we discussed on the show we’d love it if you’d leave us a comment on our Facebook page or hit us on our Twitter feed
and for sure if you enjoyed this show we sure would appreciate if you jump on the iTunes and give us that five star review.
[59:41] Benedict thanks for coming today if folks want to find you online you’re pretty much everywhere but what’s kind of the best Gateway that you folks.
[59:49] Well if you Google me my parents had good SEO so Benedict Evans will take you to my website which is Ben Evans been – evidence.com and there’s various sort of things you can do that.
[59:59] Yeah yeah yeah I share that with you Jason does.
[1:00:04] Yeah Scott Scott’s parents either had great SEO or were very bad spellers.
Yeah or perhaps perhaps both but I really enjoyed the chat thanks so much we’ll put a link to your bananas in the show notes and until next time happy commercing!
EP260 - March Retail Sales Data, Amazon Shareholder Letter
March retail sales data from the US Department of Commerce is out.
March retail sales were $556,935B, up 26.9% from March of 2020. Year to date retail sales are $1,589,538B up 16.4% from Jan-Mar of 2020. Non-store sales were $93,111B, up 16.7% from March of 2020.
Jeff Bezos published his final annual shareholder letter as CEO of Amazon. As always it’s a must read. Don’t forget to re-read the original 1997 one as well.
Episode 260 of the Jason & Scot show was recorded live on Thursday April 15, 2021.
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 260 being recorded on Thursday April 15th 2021
used to be tax day I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-host Scot Wingo.
[0:42] Hey Jason and welcome back Jason Scott show listeners Jason I was having a good day until you mentioned the tax man.
[0:50] Yeah but I don’t think it I don’t think it was going to be taxed day anyway today and then it got extended so you’ve got all kinds of time.
[0:57] Yeah there’s some complications there but all I’ll save that for another shift.
[1:02] All right I look forward to hearing that podcast.
[1:04] So there are some new Echo earbuds are you going to try this.
[1:12] I don’t know I was actually on the fence I was not a I was excited about the first ones and then I was not that impressed and so I’m debating.
I’m assuming apples going to announce some new ones next week or at least there’s some some potential that they will and I kind of live in those Apple earpods so I don’t know if I’m gonna bother giving the new Echoes that try it kind of depends on if you get them.
If you try and for me I don’t need to try it.
[1:37] Yeah I’m in the sink I tried the first generation it was like putting a pineapple in your ear so I’m not I’m not going to take that risk again I’m a I’m very happy with my earpod so I’m not going to risk it.
[1:51] Yeah I guess we have the same opinion we’ll wait for someone else to fall in love with them first.
[1:56] Yeah read some reviews see how they go
cool today is a big day for you Jason because earlier this morning the Department of Commerce came out with their big data drop and I know that’s always a big day for you so you’ve probably been tabulating collating
API in data sciencing AI in machine learning
and doing all that retailgeek stuff so tonight we’re going to keep it pretty short because we really want to focus in on that data
and then it was a pretty active Newsweek so we’re just a couple highlights we want to hit there so why don’t you kick us into the data conversation Jason.
[2:35] Yeah yeah and to be clear I don’t care about the data at all I’m just super excited for an excuse to use my python script and the play in tableau.
Exactly so super quick refresher US Department of Commerce publish retail data every month they have two data sets the retail data set which is,
kind of two months in the arrear so today they published their official retail data from February and then the advanced retail data which is only 1 month old so they published,
the March Advanced retail data in the difference is.
The advanced retail data is based on about 5,000 surveys that different retailers filled out in the full month is based on,
something like 10 to 15,000 surveys and there’s a lot more math and are correction in it so it’s it’s slightly more reliable.
[3:33] To be honest for the most part we use the advanced retail data because it’s fresher.
So so in that data is there their view on how much played out and March is kind of an interesting month this year because.
March last year was the first covid affected month in in the United States and I would call it a partial month like mostly covid sort of.
You know started playing out in March so April would be the first full month and then this year.
You know the the current March numbers are likely heavily impacted by all the economic stimulus that went out in January and February.
[4:20] Um so so a lot going on to look at and the the top line is March this year was way up over Marge last year so,
in this is retail only so I’m taking restaurants out of out of the US Department of Commerce data this is all categories of retail just not restaurants,
it’s we sold 500 56 billion dollars last month which is up almost 27 percent from March of last year and so you know that’s a that’s a huge.
partly explained by the fact that you know March was when retail started to have this huge dip last year and then we’ve got this extra bump from stimulus checks this year.
[5:07] So I saw a headline that said 9.8 I guess that includes restaurants is that why that was different than what you.
[5:13] That is month over month.
[5:15] Excuse me.
[5:17] Yeah every there’s yeah again I like encourage people not to pay attention to month-over-month for most for most retail purposes.
But that by tends to be the Top Line in the news so yeah we were up like 9 point something percent over last month,
um the even with restaurants the it was still a huge month of growth when you look at it you’re over year,
so if you want to kind of flatten out some of the special things that happen in March you we could then look at year-to-date this year versus last year so January through March this year versus January through March last year,
and that is also up healthy 16.4% so.
In general retail was you know growing less than 16 percent.
[6:07] Before this pandemic started so the fact that these these you know first three months of this year are up 16% over you know mostly in unaffected by the pandemic last year,
you know this this is setting us up for a pretty white if these kind of numbers continue which they likely won’t like this this is extraordinary growth.
And so then some specific things we like to pull out of those numbers.
One of the bombers about the advanced monthly data is there is not a true e-commerce number in there I wish there were but there is this thing called non store sales which is kind of a.
[6:47] A big lumpy superset of e-commerce and some catalog sales and some other things it’s the closest thing in this data to e-commerce,
and so that was up 16% over last year so also Healthy Growth that’s I would call that more typical growth,
and I try not to get too focused on that because it’s not a perfect match with e-commerce,
um so then in the categories this is the fun thing all these discrete categories that they break out we’re all,
over last year which has not been the case,
any any month for the last for the last twelve months of the pandemic right so apparel which has been absolutely blitzed by the pandemic.
Was up the most it’s up a hundred and one percent so that’s a combination of pent-up demand people starting to get shots and go out more and think about buying clothes and having you know some stimulus money burning a hole in their pockets but this.
Is a in encouraging sign because there were people in the apparel industry that we’re worried that like.
You know new habits that didn’t involve clothes stylish clothing had been formed during the pandemic.
[8:04] So everyone went on at least bought one fancy outfit apparently Sporting Goods were up 75 our percent Auto was up 71 percent and that’s interesting because Auto really wasn’t heavily impacted by the pandemic.
Behaved like we were worried it would but it ended up behaving about how we would have expected anyway so the fact that it’s up 71 percent is likely almost all stimulus money.
Furniture was up 47% restaurants which we’ll talk about in a minute first recovery they’ve had in a year we’re up 36% gas was up 35% which.
Arguably gasoline was the worst business to be in during the pandemic do-it-yourself was up 29% that’s was in Home Depot Electronics were up 28%,
and then you get into the stuff that was only mildly up which is general merchandise and health and those were the categories that most.
Benefited from the from covid last March right so so so even they were up but not wildly up and then only one category in the whole report was down,
um versus last March which was Grocery and that’s because of course we all rushed out and bought toilet paper at the grocery store in March of last year and.
So that’s kind of the breakdown the one of the most important themes in these covid categories is the competition between restaurants and grocery stores and so,
if you kind of think pre covid restaurants and grocery stores had almost 50/50 split of dollars for four calories so we bought half of our calories from grocery stores have from restaurants.
[9:51] At the peak of covid in April grocery stores were getting seventy percent of the dollars restaurants were only getting 30%,
and then for most of covid it’s kind of been a 60-40 split so so that’s a you know that that’s a big enough shift that that’s a huge Boon for grocery stores and a disaster for restaurants,
so for the first time we started to see that Gap close a little bit as restaurants went down our grocery stores went down for the first time in a year and restaurants went up for the first time in a year so for the month we have this kind of,
fifty-four percent of calories going to grocery stores and 46 percent of calories going to restaurants oh that’s,
starting to show a little restaurant recovery which isn’t remotely surprising because I think you know everyone understands there’s a lot of pent-up demand to.
To get back to restaurants and so both you know whether and vaccines and fatigue all sort of.
Making it a little easier to get the few more meals from restaurants so those were my big takeaways any.
Anything surprise you out of any of that Scott.
[11:10] For an online perspective the cops are gonna get harder for the next 9 plus months right like we should go negative almost you would think.
Relatively flat I don’t know.
[11:21] In a lot of categories that they for sure have this first world problem of comping against there there pandemic out escalated numbers.
And so I’ve been joking around but you’re starting to see it in kind of,
the the analyst reports and what not it’s you know a lot of CEOs are trying to make this year over two years ago comparison so I’m calling it yeah.
[11:48] I like to I may start to use that.
[11:49] Yeah yeah and sometimes it’s valid sometimes it’s not but but yeah like you know the interesting phenomena about this whole thing now is going to be,
you know the people that got a temporary benefit from covid what can they do to hang on to some of that benefit right or lock in some of those new behaviors can you know if you.
Made more meals at home
like obviously restaurants are going to come back but is there some way in which you you keep people cooking at home one more night a week than they did before or you know working from home one more day a week than they did before all of those kinds of,
[12:30] Yeah I guess the one that surprises me is clothing I wonder if Within.
It just feels like athleisure is just going to it’s just massive share and people that I’m seeing in closed doors they’re not.
They’re not in the Macy’s they’re at the limit so I wonder if I wonder if that’s going to be more of a permanent thing inside of that clothing I don’t think anyone’s going out and buying a suit yet or anything like that.
[12:52] Not a lot I’m with you I am relatively bearish on the apparel industry like I mean I think it was really.
Starting to struggle before the pandemic and then the the pandemic just obliterated it the it’s been so down that it’s not surprising that there’s pent-up demand and that you know.
They’re starting to have a rebound some level of rebounds inevitable but per your point how much of that rebound was.
You know fresh sweats for working at home as opposed to an outfit to wear to the bar right.
Why you know there is some evidence that you know there were more shoe sales and things like that,
so so you know there was so much repressed demand that that some kind of rebound is inevitable but I still think a you know it’s still down for the year and you have a long way to go.
[13:59] How about the non-store do you think that if you ever looked at how close that comes up being to the e-commerce number or they publish it is it like plus or minus a couple of points or is it.
[14:07] No it’s bigger it’s like it’s about 75 about 75% of non-store is e-commerce.
But the deviation is there’s enough standard deviation that it just not perfectly consistent which is why I don’t get too excited about the non-store number.
[14:24] Yeah because it feels like so the non-store number was 16.7 right.
Feels light to me with the stimulus dollars because everyone on Twitter at least and obviously it’s a bias audience but you know the
the things I have visibility into and then what I can see on Twitter it does seem like there was a stimulus surge there in March that was printed material now maybe it was small in it that words end right.
[14:52] Yeah and so I like there is the Brandon on store not being a perfect surrogate for e-commerce but then also just e-commerce data just stinks as we’ve talked about a bunch of times right and the.
Um maybe we’ll break it out for the next one but I keep this running list of reported e-commerce growth right so.
E-commerce is not a gap number right so nobody’s obligated to report their e-commerce growth but since it’s the best number in your financial performance almost every retailer they can’t help themselves when they do their quarterly earnings that are like,
comps were down two percent but e-commerce grew by triple digits and it’s often growing from a you know a small base and all these other things,
but so I’ve been tracking every public company that reveals it and I have a pretty good list of public companies that have revealed their e-commerce growth for the last,
three quarters and the common denominator of all of them is not one of them is at or below the industry average.
So like that that just doesn’t pencil out right.
There aren’t enough other retailers with enough volume to make that work.
[16:07] Yeah that’s never made sense the what are any other takeaways from the data.
[16:15] No I just so a like stimulus works it goes,
it goes right in the people’s banks and right into the retail store so that’s a super benefit like,
I don’t think you’re going to see any more stimulus right I think there’s there’s politically I think there’s a lot of fatigue around stimulus and went as the health stuff becomes less dire which happily it’s going.
The there’s not going to be the political will for more stimulus and so you know I think that the.
This is going to be another part of the comps problem going forward.
[16:54] Cool nothing else on the data.
[16:57] Nope nope that seems like plenty.
[16:59] All right well let’s pivot to news it wouldn’t be a Jason’s got show without some.
[17:11] News your margin is their opportunity.
[17:19] Jason I hope you’re sitting down and you have a hanky there you know I know you keep a locking key in your in your pocket there.
Jeff Bezos put out the last his last shareholder letter today and it was actually Bittersweet for me I’m a,
you’re a retailgeek I’m an Amazon geek I guess and I hope you know a lot of people wait for the,
Buffett letter that come out and all that I wait for the Bezos letter so I really love his annual shareholder letter comes out when they do the annual report so that actually came out today,
and it’s really good so in there but it’s sad because it’s bittersweet because it’s his last one.
And you know as an entrepreneur and founder this one really was is kind of hit me in the feels I could talk about it for the whole hour but I won’t subject you to that,
so I split kind of my highlights into buckets one would be kind of takeaways for other people starting companies and then the other one would be,
just generally any one industry he released a couple of little news tidbits and in the letter and someone’s actually pretty,
a new disclosure that people have literally been waiting over 15 years for.
[18:30] So I’m the founder entrepreneur side you know he has created one point six trillion dollars of value for shareholders so that’s that’s pretty amazing,
Not many people can say that I do question the validity of saying you’re a day one when you’ve created one of the world’s largest companies feels like maybe it’s day one and a half I don’t know I know that Amazon onions get offended by saying they do so I won’t go there.
[18:56] I think it’s especially hard to say it’s day one when you’re founder retires after 26 years.
[19:06] Yeah that’s Alaska territory right there.
[19:09] Yeah I know encourage listeners to read this one it’s really good and one of the most fun things to do since we’re on this topic is go back and read the original you know what people call the 97 letter his first one it’s just amazing,
how he talked about.
So relevant today that it’s pretty amazing you know imagine trying to write something in 1997 and so much has been invented since then.
Let’s say that the smartphone social media and you know all these things.
It’s pretty amazing that he nailed then the trends that they would focus on for the next year’s.
[19:50] That being said I want to pull a couple of highlights he has a lot of the letter was really interesting because it did have this for the first time kind of like.
Coaching lessons for entrepreneurs and I picked out to the like there were many more in there so I’ll defer people can read that if they’re interesting.
But but the two lessons I thought were most interesting number one was create more than you consume and I’ll just read this little excerpt,
if you want to be successful in business and life actually you have to create more than you consume your goal should be to create value for everyone you interact with any business that doesn’t create value for those it touches even if appear successful on the surface isn’t long for this world it’s on the way out.
And you know I thought that was just a really nice way to summarize a philosophy of doing things he’s in the crosshairs a lot because he’s one of the world’s richest men not the ending on how you’re calculating.
Elon Musk and Bill Gates knowledge as and.
You know but he has given back a ton he speaks a lot at on true events and all his kind of thing so and he’s invested in a ton of startups as well which is which is interesting so.
[20:58] Including like Google by the way.
[21:01] Yeah a little a couple Stanford guys had the certain invested in.
But then what’s interesting he’s kind of goes and tries to make a does the math on the the annual impact and uses the last year 2020 as the.
The time frame and it goes through and I won’t bore you with this but it’s really interesting kind of talks about.
Yeah you know shareholders made effectively 21 billion employees 91 third-party sellers profited to the tune of 25 billion by calculation,
and then one thing he does that’s near and dear to my heart is he does this customer calculation and it’s really interesting uses kind of the the proxy for how much time they saved in aggregate shopping on Amazon.
[21:48] I spend almost all day talking about you know our.
Ja bitte my company does is saving people time on car care so it’s kind of interesting to see him walk that Math and how he approached it and he sums all that up and he comes to kind of 300 billion dollars was kind of the.
D some tangible some intangible value that that Amazon created in aggregate which is pretty interesting.
Then we live in such a skeptical time.
At the first pass I read that I was kind of like reading it and as like this kind of lesson foreigners and the second time I was like how much is he defending himself from Monopoly and that kind of stuff and there’s definitely Parts the letter that are a hundred percent offense against that but this one,
it felt like it came more from the heart I kind of landed on.
[22:34] The second lesson he talked about and I feel comfortable with a podcast host who calls himself retailgeek that you’re going to be squarely and on this one,
he talks about differentiation as survival and the universe wants you to be typical so you know this was a really interesting lesson of,
being different is okay and it’s good and it actually is is a way to survive and do better than the average by definition,
and then a little quote here we all know that distinctiveness originality is valuable we are all taught to quote unquote be yourself.
I’m really asking you to do is Embrace and be realistic about how much energy it takes to maintain that distinctiveness the world wants you to be typical in a thousand ways it pulls you at you to be typical don’t let that happen.
So I thought that was kind of interesting of you know the things he picks a talked about and you tell he puts a lot of thought into these topics I just thought those were two interesting ones.
[23:33] And then on the new side so that was some option or founder stuff I found kind of interesting and helpful.
And then the other bucket was some new stood that’s and I talked about the 25 billion dollars from third-party sellers that was kind of a new disclosure if you will,
but for the first time he effectively says that there’s over 200 million Prime members globally so that was interesting because there’s been some wide-ranging I think I’ve seen the range I would put on this.
A lot of Wall Street guys were kind of like in the 180-190 range so they’re kind of close to 200 but then there’s always that one that’s like wildly high and I think it’s it’s kind of up into the high 200s like 280 290.
[24:17] But in classic basil system he says over 200 million so.
We definitely know the 180-190 is wrong but 280 probably is Wrong Feels like the way it was as close as almost as if they had just crossed over but he doesn’t explicitly say that so you can’t count on.
That was a big disclosure that had a lot of people on the interwebs talking today they also disclosed when he was going through that math of the impact,
he had to have a number two x he kind of does the / seller impact and they had to have a number to multiply and he said greater than one point nine million
I kind of thought I remember this being disclosed as one and happens I wasn’t so surprised by that one and then another little tidbit is that they have over a hundred million smart devices that are connected to Alexa,
so that was a new disclosure as well so so those were my takeaways Jason what what did you enjoy from the letter.
[25:12] Yeah I would Echo all everything you you pointed out he like one of the things that hit home for me he talked about like,
you know everyone will give you advice to be yourself and the fairytale version of that is that just you know when you act like yourself everything will be great and easy and he’s like the reality is,
I like being different than the norm takes a huge amount of effort to end you know challenge to maintain and that that you know that,
you know part of the deals you have to keep putting that effort in it’s not easy and that’s that’s why you know people tend to regress to normalness.
[25:47] Which I like it’s obvious when he says it but I thought you know it was it was an interesting point and he whether it’s him or the massive team that writes this letter for him he’s super articulate I tend to believe it’s mostly him.
You know there’s some great metaphors and points in their the I took away the the same three big bullets you did 200 Prime member 200 million Prime members 1.9 million sellers,
and the hundred million devices and I would say a to me it is interesting it means that the the,
the estimators are really good right like a lot of people had them at 190 to 200 million Prime members so that was great,
Marketplace pulse adamant 1.5 million sellers so you know 1.9 was great and I kind of think the hundred million is a little bit of a throwaway number because,
you know we’re all curious how many Alexa’s are out there which he did not disclose and he said a hundred million smart devices are attached to Alexa but the.
The ratio is highly variable I have 82 smart devices in my house connected to Alexa.
[26:51] So like I know I know that I’m an outlier but I’m just saying like you start throwing a bunch of light bulbs and switches and stuff on there and it’s you know.
[27:02] Kind of a meaningless number but I thought all those things were good takeaways the the math on the,
Time Savings was awesome to me a fact he disclosed that was not public was that almost 30% of all Amazon transactions happen in under three minutes,
so total shopping time for twenty-eight percent of transactions is under 3 minutes and you know by comparison and average brick-and-mortar trip is 60 minutes so.
Huge huge Time Savings I you know he kind of did a more sophisticated model and came up with like the average customer Amazon Customer saves,
75 hours a year of shopping by shopping online and it’s a great argument for Amazon but it’s also just.
I got involved in a dispute online on LinkedIn recently about like what the definition of.
Customer services and customer satisfaction and everyone’s like well you know people in a retail store can always give better customer service than a robot online,
and I kind of took the argument well no that’s not true if customers decide that good customer service is fast easy shopping.
[28:15] Then Amazon gives better customer service then then Amazon then Nordstrom’s and like the customer SATs show stores kind of show that,
and it makes perfect sense when you think about three minutes versus 60 minutes for a shopping trip so I just thought all that stuff is super interesting,
and then the other thing is you know he’s not going away he’s still chairman,
you know curious what his Focus was going to be on and kind of the two things he talked about we’re number one that he thinks of himself first and foremost is an inventor he thinks that’s where he adds the most value at Amazon so that like on a go-forward basis he wants to invent stuff.
And the stuff he claims he’s going to focus on which is probably true but also has a kind of,
you know good good PR element to it is is he made a specific emphasis on adding a new goal for Amazon Amazon’s goal has always been to be the most the world’s most customer-centricity company,
and he’s added this new goal to be the world’s best in and safest employer and so his.
His promise in the shareholders letter is to you know help invent new,
products and processes to make Amazon the best employer in the in the world and the in the safest and so super.
[29:33] Yeah I’m eating I’m skeptical but it made its just right after the heels of that whole being and Jardin trucks thing and it just felt too.
[29:41] No party like clearly it.
[29:41] Last minute addition to talk about that.
[29:43] It’s in response to that and he vote overtly took on the you know they they massively won the super controversial union vote,
and and he kind of took that on he’s like in case you’re curious I’m not happy about the white Amazon one like they you know a bunch of people word really hard to Amazon to make sure that a union didn’t get formed and and the voters you know the employees,
why overwhelmingly voted against forming a union and you know Jeff which is the right spin regardless of how you feel Jeff you know in the shareholder meeting he’s like hey.
Nobody celebrating nobody’s happy that a union didn’t form like we clearly need to be do a better job with our employee like you know our employees and so here’s my go forward Focus so I think it’s a it’s a smart Spin and,
I do think you know just not going to write something in the shareholder letter that he doesn’t plan on delivering on so whether it’s it’s coming from.
A kick a place of convenience or altruism kind of doesn’t matter I’ll bet you I’ll bet you they spend some real Cycles,
figuring things out to improve the the allegedly already hide custom employee satisfaction and and for sure to overtly improve safety.
[31:00] Yet the one last thing on that math that was interesting is he does all that math of how much an average trip to a store cost everything,
and effectively and then he nuts out Prime cost and basically the calculus is by being a Prime member you save $630 just of your time,
and he builds everyone’s time at ten dollars an hour so that was I thought that was really you know.
There’s all these stories about when Prime was being invented that he is driving,
measure of it was it should be fiscally irresponsible not to be in Prime,
and this makes now and a lot of that was just the the savings of products and those kind of the convenience just overall convenience and this is kind of interesting that he’s put some hard dollar against out.
You’re effectively throwing away six hundred dollars if you don’t join Prime now there’s obviously a counter,
argument to that and everything but I thought it was really interesting how he framed that.
[31:58] Yeah no I agree so a ton of good stuff in the shareholder letter I saw people on the internet like alleging it was his best one ever and I still think the first one is the best but.
[32:08] It’s good looking so there’s a good good beginning and ending okay well you can put your hanky away hopefully if you’re okay over there.
One news that caught my item in this is kind of related to this we’ve been talking this year a lot about watching Shopify versus Amazon,
and then we did that very popular show about the changing privacy things coming out,
and one of the possible conclusions of that is Shopify could be under some some pressure from that.
And it was through interesting an article came out that about half the senior Executives at Shopify are leaving it’s hard to tell what’s going on here Toby had a really weird statement let me read it didn’t make sense to me did you read it.
[32:54] I’m not sure which I didn’t catch one that sounded.
[33:05] So he did the normal they’ve been spectacular and deserve the cabal then he this is the part that kind of had me a little befuddled each of them has their individual reasons but was unanimous with all three,
was it this was the best for them and the best for Shopify and then he says we have a deep bench and they will be they will step in to quickly fill these roles so I don’t know.
The weird thing,
I don’t know that it was unanimous that it was best for Shopify and it’s kind of it’s almost like there was some kind of a power player something or I don’t know I got like a weird vibe off of it.
[33:42] Yeah you almost would,
the conspiracy theorist in me like so this is three sea level people leaving a public company at the same time and by the way a fourth one left three months ago right so
it’s four of the eight,
and a couple of these the the chief product officer that left last November Craig Miller and then the the chief Talent officer that left this week like those were,
like amongst the 21st employees and I kind of think Anna,
a giant fast running public company you tell me but
in normal succession planning like even if a bunch of people want to go you know cash in their chips and live on a beach you would stagger out the departures more right if in a.
In a kind of if you were working things out synergistically so for all these people to leave at once,
it feels like there had to be some impetus that that were not fully cognizant of.
[34:50] Yeah one of the thing I’ve externally observed is,
they have a guy Harley is it Finkelstein and Finkel something like that we’ll call him Harley up,
and he was kind of you know a partnership guy and then he seems to becoming the face of the company and maybe I kind of wonder if there was you know some secession thing in there and he’s been some kind of he’s kind of been
he kind of won that battle there feels like something went on there the other thing I’ve noticed is there their social accounts they’ve gotten really super snarky so shop if I used to kind of I think,
be in this kind of what I would call this Canadian like you know we just want to help arm the rebels and grow customers and like most their social stuff was about
just kind of pounding that drama of you know look we took this,
this entrepreneur and we help them do this and they have a lot of good content around that but increasingly they’re Throwing Shade at Amazon which you know,
that’s punching up but then I’ve noticed they’ve actually been kind of I would say punch down there was a retailer who site was down and it was and they were on Commerce and you know the Shopify socials kind of
added them added that retailer and said hey sorry to hear you’re having so much trouble with your current provider we’re here to help and that that one kind of felt like.
Punching down and little little on the edge for what they’re doing so something something interesting is going on inside of there.
[36:17] Yeah it is a Jeff would be very happy because it’s a not normal culture.
[36:25] The yeah I will say for better worse like,
these three three folks announce that they’re leaving add in the fourth one last quarter and the stock still went up so,
so for whatever that’s worth like the market isn’t panicking the the one I hear the most about is the chief technology like if people are freaking out that someone’s leaving it’s this guy,
Jean Michael Lemieux who is the chief technology officer and he’d been in like six years and was credited for you know,
a lot of progress in the platform so people are somewhat concerned about his departure,
so we’ll see how that plays out like I think shopify’s an amazing company they do a bunch of stuff for right but I have to say a common problem for someone in shopify’s position and I think Shopify suffers from this in spades.
Because of their success and their rapid growth they have a ton of Technology debt.
[37:23] And you know there are a lot of chinks in their armor from a product standpoint like it’s not the the,
the fastest best performing most mobile friendly platform on the planet at this point and so I like I don’t know maybe the.
The change in leadership will make it easier like I know Toby is a developer and he has a personal affinity for their original stack that they’re still on which is,
Ruby on Rails but like maybe maybe a new technology officer will help them work down some of that technology debt.
[37:57] Or made an old guy said leave her behind leaving in that was like.
[38:00] Yeah yeah maybe that was it.
peace bro and one calendar thing just to throw out there is Shopify announces their q1 results on April 28 and then the next day is Amazon so we will be having a show we’ll do it after the end of the longest one I’ve definitely,
that people enjoy our Recaps there we will wrap in some of the Shopify stuff and have our ears peeled for anything around this and obviously how Shopify did versus Amazon I think it’s gonna be interesting because I think
they may throw shade at each other in their calls Amazon won’t but Shopify May so I’ll be listening for that as well did you see any news that caught your eye this.
[38:39] Yeah there’s one more I want to bring up because I feel like it’s thematic with the other news Katrina the founder of Stitch fix has announced that she is stepping down as CEO,
moving into executive chairman role and that is interesting to me there have been a bunch of Articles you know kind of bemoaning that she’s one of the,
the the best female entrepreneurs out there and you know one of the few female CEOs of a successful public company,
and I have to be honest like all of those articles are slightly rubbing me the wrong way because whether it’s lost some people are not,
she’s one of the most successful entrepreneurs of Our Generation. Like it like there’s no gender qualifiers,
um she started a company that you know invented a new business model that’s been heavily knocked off,
she took them public but what’s unique and continue to operate them,
what’s unique about her versus almost any other CEO in this rat race is she retained the overwhelming majority of ownership of the company all the way through the IPO.
Which almost never happens.
[39:55] Yeah her um her episode on how I built this is really good I think she ended up retain law because they had a hard time raising Capital there was so many people that doubted the model whatever work.
[40:05] And ironic in the long.
[40:06] Part of it was wasn’t by design it was by necessity yeah yeah yeah I agree she’s awesome and did she I didn’t see that did she announce what she’s going to do I think she has young kids so it’s probably.
[40:17] She did she did not specifically announce it she she did tease at.
Kind of what the next chapter is at Stitch fix which people are kind of excited about because Stitch fix was already a pretty heavily data-centric company and both,
but I think this is partly true but I think they also leaned into this from a PR standpoint that they collect all this,
this unique attribute data about all the items that get sold then all the items that don’t get sold and you know that they have like very data-driven personalization and the implication.
Interweaving was that like the next phase and evolution from Stitch fix is to really weaponize that data at the next level and kind of there were a few things in there that a lot of us interpreted as,
they’re going to be pivoting and making a lot more of their own stuff they already do make some there a wholesaler but they do make some of their own stuff,
um and that the stuff they make is going to be heavily data-driven merchandising design and so that’s going to be interesting to watch,
there’s this woman Elizabeth Spalding who’s currently the president I think she’s been there like 6 years and so she’s going to be the new CEO,
and like most of these Founders she’s not she’s not going away she’s she’s stepping up to a chairman role which I assume will give her more bandwidth.
Other aspirations in her life and spend some of that good Equity money she earned.
[41:47] So Scott I think we miraculously did it we are we are well under the hour so we can we can give our listeners a little time back this week
and finish with a shorter show but if we got something wrong or spurred some,
some following conversation we’d love it if you’d hit us up on Twitter or Facebook.
And as always if this was helpful now you got 20 extra minutes that’s plenty of time to jump on iTunes and click that five star review for us.
[42:16] Thanks everyone we appreciate it and we got a lot coming up next week so hopefully some of you are going back to work and commuting or still have time because we’re going to be cranking out some content here as things heat up.
[42:30] Absolutely and some exact guess I’m excited for her as well so until next time happy Commercing.
EP259- Listener Questions
Amazon is building Micro Fulfillment Centers to deliver fast-moving grocery & convenience SKUs in under 45mins. Locations include Seattle, DC, Baltimore, Dallas, Nashville, Detroit, Chicago, San Diego, Phoenix launching this year.
Episode 259 of the Jason & Scot show was recorded live on Thursday April 8, 2021.
[0:24] Welcome to the Jason and Scott show this is episode 259 being recorded on Thursday April 8 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 and Scot show listeners Jason how’s your spring going up there and sunny Chicago.
[0:47] It is going well but you you’ve already thrown me for a loop I don’t deal with change and you took the year out of our intro thing so I total I’m totally messed up now.
[1:01] It’s 20 21 so you’re back.
[1:04] Thanks thanks I appreciate you appreciate you saving me ya know spring is going good we had two lovely days of like,
like High 70 low 80 degree weather here and I got super excited and then as is often going to happen in Chicago it was all a mirage because today it’s like 16 raining.
[1:24] Want want want sorry to hear that here in North Carolina it’s funny because we’ve had,
Bob’s Ilion New people move to our state some of them from the Midwest a lot from California New York and when they move here we’re always like hey in February,
used to be get ready for pollen season it’s going to be like
unlike anything you’ve ever seen in their lap and like we have pain and San Francisco are you crazy and then are real pollen season hits which were in the thick of right now and they lose their minds because
you literally get a you know coating on your car where your car is essentially just looks like it’s been painted yellow so we are in heavy heavy pollen season right now,
I have seasonal allergies so I am you know pretty pretty loosey-goosey right now I think I’ve had like 16 Benadryl ‘s and 5’s vertex of so if I’m a little spacey it’s due to that.
[2:14] I love that yeah I was going to ask if you like develop a stronger immunity system because that would that would wreak havoc on me although it has to be good for the car wash industry.
[2:27] It is so that’s the computer that’s the Silver Lining so yes we we are very very busy right now so it’s good a good thing.
[2:35] Yeah where I grew up in Southern California we had a very similar issue the saltwater from the beach would make all the cars filthy.
[2:45] Good we will have to look at San Diego as a possible location.
[2:49] Yeah the beachfront homes in San Diego.
[2:53] So tonight we have a lot of good listener questions but before we get to that it wouldn’t be a Jason Scott show if we didn’t talk about a little breaking Amazon news.
[3:11] News your margin is their opportunity.
[3:20] Jason I was excited as our resident grocery Guru in the chief digital grocery retail.
Grocery grocery store officer I wanted to get your expert opinion I saw this on Twitter I guess there’s a magazine called hungry and it’s missing a bunch of vowels H NG Ry,
hindery and they had a scoop so they have confirmed that Amazon is building 11.
A hundred and forty thousand square foot micro fulfillment centers.
It’s kind of funny to talk about a hundred forty thousand square feet and taught micro but I guess you know when the alternative is a million it is small,
and they are designed to move a hundred thousand fast-moving Grocery and convenience cues in less than 45 minutes,
and the initial set of cities are Seattle Washington D.C Baltimore Dallas Nashville Detroit Chicago San Diego Phoenix and going to be launching them this year.
This is super interesting to me because we had we’ve had several amazonians on the show past amazonians,
and Amazon does these pretty big Cycles on an annual basis where they’re going to make big Investments and to me this was a really big signal that they’ve decided that this is an important category.
So I tweeted about this and then I had several.
[4:39] What I would call Amazon insiders not bullies but people that are maybe in orbit away from Amazon and know what’s kind of going on and the thing that surprised me is that there,
they were saying that go puff we’ve talked a little bit about on the show but I want to use this entree into that to get your thoughts on that too.
They are growing at a tremendous Pace I’ve heard several people say they have over a billion dollars in sales they are a retailer so it’s not a gmv Marketplace kind of thing so GM ve is real Revenue.
And then they didn’t acquisition of an alcohol company that was also about a billion dollars so now they’ve got kind of a two billion dollar company they’re going after some categories and areas Amazon is very keen to get to so the grocery and alcohol,
I looked him up in some of the databases that go plows raised over two billion dollars you know squarely in the,
if passed the Unicorn status which is over a billion dollar valuation I think they’re into the DECA unicorn kind of status
so really interesting moves here you’re kind of I guess a battle between these two folks breaking out into the open what do you think about all that.
[5:49] Yeah yeah there’s a lot of interesting stuff going on there the maybe I’ll start with BevMo and work backwards to Amazon Amazon or go puff and work backwards to Amazon.
The you know we talk a lot about covid accelerating trends that already existed this whole notion of.
Delivering alcoholic beverages was already really starting to pick up some steam we’ve had drizzly on the show before which was one is one of the dominant players in in alcohol delivery and most of them are via these.
These are complicated Marketplace models because you have to do the delivery from someone that has a liquor license.
[6:30] And so then the pandemic vastly accelerated liquor delivery because under normal circumstances the vast majority of alcohol is consumed.
What the industry calls on premises which means at a bar and so because you know Bars were closed or constrained so much,
we certainly were consuming way more alcohol at home which means we had to buy it or get it delivered,
we got a bunch of meals delivered from restaurants that weren’t allowed to bundle alcohol with them in many cases so all of these Trends made it really accelerated the alcohol delivery industry and.
I don’t you know we don’t there’s not great numbers but my sense is that no one benefited more than go puff and partly because they,
are closer to a first-party model so they did by a very significant alcohol chain on the west coast BevMo.
Um so they own a bunch of their own liquor licenses they own a lot of product that they deliver to people,
and they actually started out not delivering the liquor but delivering the snacks so go puff started out do everything you know Munchies presumably to people that were high.
[7:47] Um hence the go puff delivering snacks on college campuses and so.
Part of their model is they actually inventory their own snacks they have these micro fulfillment centers and so buying BevMo give them a bunch of liquor licenses and it also gave them a bunch of locations that they could stage.
[8:09] There there fast-moving food alcohol items and go puff is always focused on cold so they’re one of the best.
Nationwide cold chain one hour delivery services so if you need to store something cold and then deliver it.
They’re one of the few options out there so for all those reasons.
Go puff is booming then you know we throw in the trend we’ve talked about a lot on this show the retail media networks and all these sellers you know monetizing their business by selling ads,
so you know go puff has been able to successfully get a nice chunk of AD revenue from that,
and I have to believe Amazon sees that and says hey we need you know they obviously have a lot of their own plans and capabilities around to our delivery of those kind of items,
and I’ll bet you go puff is sort of accelerating Amazon’s aspirations.
[9:06] Another another Insider told me that go puff has an ad Network that’s kind of getting a fair amount of traction and that’s another thing that Amazon’s attention you know we’ve talked about on the show that they’re their ad Network.
It’s getting a lot of steam it’s kind of getting to be almost the scale of AWS and contributing quite a bit of profit
it’s in the kind of pesky other category so it has some other things mixed in there but from what we can tell it’s pretty pretty large and growing making Amazon the third largest ad Network behind Google and Facebook.
What do you think about does that make sense to you or you familiar with this go puff ad Network.
[9:46] Yeah a little bit It’s Tricky I do think they’re generating some significant Revenue.
The the wrinkle is.
Advertising for alcohol is dicey so you know so I think what go puff is generating the most is is right these ad revenue from the these like cpg snacks and things like that that are getting delivered,
with the alcohol like the you know the bummer is the alcohol people spend so much money on pram and with that clothes they would have shifted a bunch of money into these other channels but it’s.
It’s risky to do and and you know most of the big players aren’t willing to take those.
Those sort of risks with with the various compliance and to do so.
So that’s a little complicated and then I you know I would say they’re probably generating a bunch of Revenue but it’s not a very mature platform with a lot of tools yet and so I haven’t seen any.
Any sizing on it.
[10:46] So that is the news and now let’s go into.
[11:01] This question question question question question.
[11:08] All right our first listener question comes from Ted and he says and I’m going to shoot this one over to you Jason well headless Commerce take off in 2021 why or why not.
talked about a lot we’ve covered it few times on this show just for people that may not be familiar it’s a it’s a method of.
Implementing an e-commerce site so instead of a piece of software that’s kind of a monolithic software that has all the check out functions and product catalog functions and all those sorts of things with the user interface.
Um it’s a it’s a system where,
where the software company provides a bunch of apis and you kind of build your own e-commerce experience leveraging those apis and it generally you build your own user interface so hence it’s headless,
um and it’s the definitely the most trendy architecture right now it’s talked about the most.
[12:16] The and it kind of is catching on but the reality is we’re just not really going to know because one of the problems with headless Comet or it’s a benefit of headless Commerce but it’s a problem when you’re tracking it is.
You can do it very piecemeal right so you could you could have mostly monolithic software and you could say oh you know what,
my checkout isn’t very good and I can’t take all the the alternative payment methods I’d like so I’m just gonna,
improve my checkout flow and so you could add a couple headless apis just for the checkout flow and it could be.
Four percent of your total e-commerce site but now you’re partly headless so you know so I would say.
[13:02] Most people that build something new are going to adopt a technology like that but it often is very incremental versus a big bang where you kind of rip out everything you had and put something else in so it’s it’s a little bit like the.
The so slowly increasing water temperature in the Frog like we’re all getting boiled by headless Commerce but like I don’t know when you’ll officially declare it like taking off versus not taking off.
[13:29] Yeah and so some of the big players so there’s Commerce tool or tools and then,
Faisal has a company called Fabric and we had some confusion over multiple Fabrics but he is one of the fabrics and then anyone else there’s because I’ve seen
I’ve seen some of the Shopify folks and sidebar it seems like they’ve hired everyone I know in e-commerce at Shopify those guys are hiring it’s like some kind of an incredible clip right now.
I see them all talking about how they effectively,
are at least framing Shopify as being a headless player which doesn’t make sense to me bless there’s like some study Pi is enough moveth so who are the players and is Shopify a player.
[14:10] Yeah so there’s kind of a couple categories of platforms that that offer headless Commerce and it’s such a buzzword I like a lot of other things I would argue people that like.
Are are not very truly headless Commerce.
Have an offering they would call head owes Commerce but so there’s a bunch of traditional platforms that were monoliths that saw this trend coming and kind of pivoted right so,
to me that would be someone like an Alaska path,
that that kind of had a turnkey platform and they really like focused on the Headless version of that platform and today I think.
[14:45] Any new customer is probably mostly headless the all of the the brand new platforms tend to be headless so certainly fabric.
There there’s a bunch of small players it’s pretty fragmented industry you mentioned Commerce tools which to my knowledge
was really the first platform out there that was headed west so there now they’ve been I want to say they’ve been doing headrests for like 10 years they were originally a spin-off of hybris before sap bottom.
And so those guys have been doing ahead of us for a long time and.
Traction but then there’s the the traditional SAS players and the two biggest examples would be Salesforce Commerce Cloud which formerly was demandware and Shopify in both of those are.
Monolith software that’s offered via SAS but both companies have recognized the Headless Trend and have launched.
Separate products which are an API SAS model so you can rent.
Salesforce Commerce apis and build your own head with solution that leverages the Salesforce infrastructure and similarly you can.
Via Shopify plus you can rent apis from Shopify and build a headless solution and Shopify plus so they they both are very legitimate.
[16:11] Head West Solutions but I would say you know as a percentage of their total user base it’s a small minority of their user base that have that headless configuration.
And then in the case of Salesforce one other note I would make is,
one of the problems with headless is okay so now you don’t have a user experience or a GUI and you have to build that yourself and there’s cost associated with that and you may or may not be good at that you may not follow all the,
the industry convention so there’s pros and cons to not getting a,
a store in a box and particularly as we talked about on this show a lot mobile is so complicated and evolving so fast that there was a company out there called MOBA 5 that had built a really good.
Mobile user interface that could leverage all of these these Head West Commerce tax and they were acquired last year by Salesforce because that’s.
There’s so much energy there so now somewhat ironically,
you can buy MOBA fi user interface and Salesforce Commerce cloud apis and put them together and I you know you’re technically headless on the one hand but on the other hand you got a complete TurnKey solution from Salesforce.
[17:30] Yeah it’s like when you were a kid remember those things that had like three little sections and you can change the purple head the body and the feet so sounds like that’s kind of where we’re going to.
[17:39] Yeah I mean that the simple metaphor for these platforms are like Legos right so you know you get a kid a little Legos and you can you can snap them together like the picture on the outside of the box or you can you know snap them together in an entirely different way if you.
so let’s go to the next question also from Twitter this is from retail razor and the question is
Amazon has been getting hit with an endless series of media articles about the private label development at the expense of other merchants on the platform,
but retailers have been doing this since well forever example department stores private label apparel why is Amazon different.
[18:25] Yeah and this is a while I’m an Amazon Guru I’m not a huge on politics but but this is a political kind of thing that’s going on here so
you know you’ve got so you got Jeff Bezos world’s richest man I think at this point yeah I think Elon is kind of
catching up to him at some point I think they crossed for a little bit one what does.
[18:50] They did but it shouldn’t even count because you know Jeff Bezos has like ex-wife that also has 40 billion dollars.
[18:57] True yeah but she’s not giving it away as quickly as you can so she may actually.
[19:02] She’s much more admirable than him that’s true.
[19:05] She may be the millionaire poor house and then,
you know another thing is he bought the Washington Post which is you know also seems to have caused a lot more political kind of Venom to come his way.
And you know Amazon itself is a big company and you know there’s they’re just easy to shoot at and so you’re hearing a lot of talk antitrust talk a lot of folks want to break them up,
the two most vocal that I see are Bernie Sanders and Elizabeth Warren yeah they very much want to break those guys up Bernie Sanders is always talking about how they pay more and you know.
If you look at the disparity between what Jeff Bezos makes and the $15 an hour employee that’s a big number.
[20:01] Let’s Elizabeth warrant then there’s Amazon doesn’t pay taxes because they take every penny they make in plow it back into growing and hiring more people and and buying where houses and building,
we just talked about they’re going to build you know what it was at Eleven Hundred and forty thousand square feet facility centers that’s not cheap I don’t know.
Each of those maybe 50 million bucks so that’s 6 billion dollars right there,
you know so so they don’t they take every penny of profit and they just see such a big opportunity they keep plowing it in and therefore they don’t make profit and you get taxed on profit so they don’t really pay taxes and then of course everything he does a lot of you know.
Corporate all legal but corporate setups so that they can avoid taxes like.
They’ll have their European group and some kind of a tax-free area and you know they will set up the structure of the companies to minimize taxes globally and then also the United States.
[21:02] So I think that’s why they’re under a Target and then you know there’s it’s also really easy to find third-party sellers that are brands that have sold on there and a private label came out of their stuff and it’s,
it’s kind of catnip for reporters to find a,
it’s very easy to find people that are very upset about Amazon I see it on Twitter all the time yeah there’s third-party sellers that are very unhappy about the way they’re treated and creates a lot of possible content.
So that’s that’s my take I think it is.
If this ever got into a court and you were looking at the facts I think retail razors right that there’s nothing new going on here and it’s kind of silly to argue this,
it’s even silly the argue the antitrust argument because you know I think it’s pretty fair to Define Amazon in the same context as Walmart right and.
[21:57] Walmart is as big or bigger so it’s not like Amazon is got some.
Position compared to like a Walmart targets really big there are other very big large retailers and there’s it’s also hard to point to note the consumer being harmed.
Poor consumers they’re getting cheaper stuff faster its there’s not a lot of,
it’s not like a monopoly where your price gouging or there’s no choice anything Amazon’s Lord prices and increased choice.
Now that being said if you look at Europe Dave kind of defined monopolies differently in there it doesn’t have to be a consumer damage so there’s a lot of talk about that kind of coming,
and then the Biden Administration hired someone that has that similar kind of a take on on antitrust that it’s really.
The size and not the the consumer.
[22:50] So those are my loose reading of some of the political winds you know what.
My take is companies move a thousand times faster than governments and they’ll be able to,
navigate whatever the government throws out them succeed if we all remember well you and I remember the Microsoft all the who are around antitrust,
Microsoft’s doing okay after that they’re they did find they had to just kind of do some,
little things around their browser they spend a bunch of money around it but at the end of the day it was effectively a slap on the wrist of anything so so I don’t think it’s just a lot of noise and I don’t really foresee there being anything that slows down Amazon from this.
How about you Jason.
[23:31] Yeah I mean there’s a lot there I won’t rehash it all but.
[23:39] I think you’re right like I think the biggest companies in capitalist economies are always,
targets for a lot of concern and they’re generally there are always some valid concerns and there’s always a lot of.
Scrutiny that isn’t necessarily valid right and certainly you know Walmart’s head is fair its fair share and before that Sears did and,
before that Montgomery Ward’s and Woolworths and A&P like you can go back as far as you want,
these big huge retailers like there have always been concerns about their size.
The bottom line is the you know us antitrust laws are not super strong and the way they’re in written and enforced today.
I just don’t think.
Amazon has very much risk so per your point they’re probably way more exposed in Europe where there’s a much broader perspective on,
but the the thing that a lot of these lawmakers are going after is just,
right / retail razors Point like is it kind of a misunderstanding like there’s this thing oh my gosh Amazon’s using.
[24:49] Sales data from their third-party sellers to design their first party products and when you say it like that it doesn’t sound very fair,
but the point is retailers have been doing that for the entire history of retail I mean you know Sears had a lot of Their Own Private Label products in the Sears catalog you know listeners may be familiar with Brands like Kenmore and crap.
[25:12] Craftsman and you know all these these various brands that Sears built right you know doing these exact same thing so,
that’s not new they’re some antitrust people would say oh but you know what’s different about Amazon is there also a platform in an ad Network and they get extra data from that,
that a traditional retailer wouldn’t get so they would say I don’t object to Amazon using the retail data to make their own products but I object to them using their,
their platform data and their their the ad spend data that they’re getting,
but even that to me is a thin argument because every other retailer have advertising programs and co-op programs and slotting fees and things like that so I just.
I think there’s some legitimate things to look at all these companies about but I think that particular one is a hard argument and and again the US antitrust laws are pretty heavily in Amazon’s favor
so I think we’re always going to hear about this stuff but I don’t think.
Amazon’s fundamentally different than than previous private-label efforts the one thing that is better about Amazon you know and therefore you know potentially more concerning is.
[26:32] Collects a lot more data about how you shop and what you don’t buy right so a traditional retailer doesn’t know very well.
What other products you considered on the way to buying the brand that you bought but Amazon you know because by virtue of them being online,
they collect much more data about your browsing behavior before you buy and so that’s not saying it’s it’s an antitrust violation to use that data but that is a new data set that you know Sears and Walmart,
didn’t necessarily have it at their disposal so yeah I think we’ll keep hearing about it the,
you kind of alluded to it but one funny thing that happened this week our Prime not funny dramas on,
the rumor is that Jeff was upset that Amazon Executives weren’t defending Amazon aggressively enough for all of this this noise,
and so it appears that a bunch of Amazon execs totally stepped up their social presence and started arguing.
[27:30] Up to and including arguing with like sitting Congress people on Twitter,
um a congressperson you know is complaining about labor standards in Amazon and made reference to Amazon employees having a pee and Bottles because they can’t take a break,
and a senior vice president Amazon like chimed in like that’s absurd I can’t believe you believe those rumors,
if that was really true do you think people would really want to work for us.
Um and then a week later Amazon had to print a retraction and say like it turns out a bunch of our employees do have to be in bottles.
[28:03] But so do UPS’s so that probably like when you have to issue that press release that’s not a good look.
[28:10] Yeah that’s a tough one and it is confusing because there’s the DSP program aren’t really Amazon employees but they’re just that I guess during a branded truck they get that kind of assumed.
[28:22] Yeah so again.
[28:23] This one is this next one is for you Jason and it comes from listener Wanda cadogan.
[28:47] Wanda hope you enjoyed that we know that’s your favorite song now to your question we are seeing a big increase in visual media use cases for e-commerce it’s the new digital proxy for in-store experience
I’m curious about your thoughts around Shopville video Trends in adoption especially in the Americas.
There’s a there was another question that will kind of group together here in this one came from Darren Archer when will we have a major paradigm shift from the online store
category pages and pdp’s seem dated in the era of tick tock Instagram shopping and all these other things that are like pop-up shops when will retailers big change step change in the experience.
[29:27] Yeah both good questions and I do I do agree they’re bundled and
side note I think I’m assuming daren’t an Archer is a former Adobe Alaska path and now at the Gap so so he,
has definitely been around a lot of the issues that were we’re talking about today.
So so yeah the.
Video Commerce and is often called live-streaming Commerce although a ton of it is not live streaming is huge right now it’s it’s even Huger in China where by some estimates,
eleven or twelve percent of all e-commerce is live streaming,
um more more consumers start their shopping trip on Ali Baba’s a live streaming site than they do on Team all right now,
so so this live streaming Commerce has totally exploded in China and there.
Appears to be appetite for it in the US as well and so you’re definitely seeing.
The platforms that that can support it so most notably Instagram and Tik Tok.
Um are we leaning heavily into it and we’ve seen Walmart due to two pilots where they had Commerce events on Tik-Tok now,
[30:54] The jury’s out on like social commerce in the in the west is way smaller than it is in China so it may be 12 percent of e-commerce and in China and it’s like 4% of e-commerce here so,
so it has a ways to go in the jury is out on whether Chinese consumers are different than Western consumers and it’s never going to catch on or whether they’re just ahead of Western consumers and they kind of WEP frog.
Um so we’ll have to see but I can tell you a ton of retailers and brands are super interested right now and the part of the reason is implied in Wanda’s question.
Um a sort of Inconvenient Truth about all of this e-commerce that we’ve invented is.
We’ve made it very easy to find products that you know you want and buy them and we’ve taken all the friction out of the buying process and so you know there’s a saying.
E-commerce solved buying but broke shopping,
right so you know it’s super easy to buy stuff you can go on Amazon there’s 800 million products you type it in the search engine a product pops up you click one button and it shows up two hours later you’re good.
Um weather is not is.
[32:09] Discovering products you never knew you wanted right like there’s never like creating demand for products a lot of the things that traditionally stores were good at and a lot of you know Discovery experiences that happen in stores.
E-commerce isn’t particularly good at and so the hypothesis is that this social commerce.
Has the potential to replace all those Discovery experiences and the way I think of it as kind of decoupling Commerce like the buying and browsing used to both happen in a store and that was kind of the monolithic solution.
[32:46] The digital disruption of Commerce means.
Buying and browsing now can be decoupled and browsing can happen in all these micro moments on Tick-Tock and Pinterest and and taobao,
and the buying can happen in another moment on Amazon or Walmart or or wherever else so,
I definitely think there,
it is we’re going to see it can continue to increase I don’t know whether we’ll catch up to China in the near future or not but they’re you know appears to be a lot of Headroom and therefore sure is a lot of interest.
Of in retailers and brands that want to experiment in the space and platforms that want to you know capitalize on those experiments so I have major,
social commerce initiatives with almost every client right now that are kind of you know mostly in the test and learn mode.
[33:43] Um couple things you didn’t mention Amazon’s poke around here they have Amazon live which is this video program that’s kind of running and it’s pretty terrible right now but you know I’ve seen some stuff start to get some traction there.
They have a couple of influencers that that hop on there and don’t forget that Amazon owns twitch so there’s,
there’s Twitches really started with video game streaming and there’s there’s a lot more that platform is widening there’s some interesting things we’ve had some Congress people get on there we’ve had,
[34:18] There’s a lot of interesting music content and then there’s a lot of innovative new social media companies like Clubhouse and some point maybe they’ll be some selling that happens to some of those channels.
The other one is I highly recommend everyone make sure you listen to our deep dive episode recently.
We talked about all the changing privacy rules I think that’s going to be another Catalyst for this because Facebook is in this kind of squeeze between Apple and Google in a way.
Facebook doesn’t have a platform like they do so,
Facebook could lose some ad revenue and they’re doing a lot to replace that through a variety of different experiments and I think we’ll see a Facebook doing a lot more in this this area,
and they on Instagrams and Instagram alive is getting a lot of Engagement as well so,
a lot of interesting platforms were this kind of live streaming and more social commerce could come from.
[35:16] Yeah hundred percent Amazon’s done a ton of experiments and and twitch is a very powerful platform so like I certainly.
I think Amazon is you know at the front of this trend along with several other Front Runners.
[35:32] This one this one this next question is it’s a it’s a tough one so I’m going to throw it at you here
comes from Brendan Witcher and I can’t hear his name without hearing the
toss a coin to hear what your song and anyway mr. whicher says when will the Jason and Scot show t-shirts finally be made available in can I have mine signed before you send it you guys rock thanks for helping to keep balance in the,
parentheses retail Force thanks Brendon Jason any your our chief swag officer Chief swag digital retail grocery officer what
what’s the take.
[36:08] Yeah great question Brandon appreciate it.
So we do have some swag and I’m sure I’m going to regret saying this but if you ping me on Twitter I will be happy to send any listeners some Jason and Scott.
Riri a pliable stickers for your laptops and and the your bedroom windows and all that good stuff.
We have not offered t-shirts I’m open to it I have to be honest got and you weigh in on this as well.
Rrr logo Works reasonably as podcast cover art,
but it’s kind of intricate for a t-shirt I just I’m not sure what looks cool like I feel like we need a more elegant logo.
For a T-shirt and then side note I would also point out like you and I have both lost some significant weight since the characters were done so I like part of me before we invested in a lot of apparel I’d want like skinny or characters.
[37:12] Yeah yeah we’ll have to maybe we’ll have a con reader contest readers can submit their their artwork let’s see you again from and then most of.
[37:22] Yeah and side note when he says bring balance to the force I assume we all knew that you’re the dark side of that.
[37:29] Okay ouch I’ll point out that your son is clearly on the dark side.
[37:36] Well but my son also likes you more than me so that’s further proof.
[37:40] I can’t no accounting for Taste okay back to real questions
so this one is from Kevin Cronin what are your thoughts on e-commerce conversion tracking and how it has positively and negatively impacted companies in the industry.
[37:59] Wow so I don’t know what your angle for asking this question is but it’s a great question in my mind I am anti e-commerce conversion so it’s a.
[38:10] Super important and useful metric
but for my entire career I’ve been walking into situations where people were using it as a kpi and for me it’s an incredibly stupid kpi because I can’t tell you how many times I’ve had clients a Json I want to hire you to improve my conversion,
and my answer is always the same that’s awesome I accept because,
I’m gonna do a white make your eCommerce site password only so that only good customers that I know have buying intent are going to come in and your conversion rates going to go through the roof,
you’re your revenue and traffic will go way down right because conversion is related to all these other things,
um and while it’s possible to do multi-session conversion the overwhelming majority of people when they talk about e-commerce conversion are talking about single session conversion,
and very often it’s not profitable the cell one thing one time.
And so again so for all of those reasons I think you need better kpis like for sure conversion is a metric that that should be included in your.
Your overall ecosystem but that’s not the thing that should be steering your business and and I don’t know if this is,
what you were implying in your question Kevin but like there’s a shockingly high amount of e-commerce operators that that give too much Credence to conversion.
[39:37] Interesting or you guys give products away if you really want to increase conversion.
[39:42] Yeah yeah I can sell dollar bills for for 98 cents and have a very high conversion rate I would throw.
I had something else I was going to add to the conversion conversation but I’ve totally lost my train of thought so I should have come to rehearsal.
[40:00] Are so all the tracking changes aren’t going to really change conversion while still no when people are on our side.
[40:09] On site conversion again if you’re doing more nuanced multi-touch attribution type conversions there some of the depreciation of the third party cookies and the in the mobile tracking is.
Going to make that more difficult so we’ll see how that that all.
Toys out oh I do remember my other point on conversion a fun fact about conversion average conversion rates on e-commerce sites today,
are almost identical to what they were in 2000 like the its chin mobile has changed a lot but.
[40:46] The the overall desktop conversion rate hasn’t changed very much like a cross,
there’s huge deviation but across a ton of sites it’s about 2% of Visitors by something as we’ve already talked about.
Stupid metric and a lot of those people didn’t come to the side to buy something maybe they wanted to check your store hours or your your your store address or all sorts of other things,
but what I always chuckle about that is there’s this whole industry of conversion rate optimization companies and what they do is they come in with this one tactic which is multivariate testing,
and they say like we’re going to improve your user experience and dramatically improve your conversion rate and there’s a bunch of companies that have been doing that for 20 years,
and yet the conversion rate in our experiences today is exactly the same as it was 20 years ago and so like we like to joke that like all conversion optimization regresses to the mean.
How’s that for a math joke.
[41:45] It is good if conversion isn’t a good kpi then what are Jason recommended gibbous.
[41:53] Yeah so go listen to.
Our customer lifetime value show with Dan McCarthy and and to me metrics around LTV or seal the are much more valuable,
then then just conversion rate even if you’re going to adopt a conversion rate I like to do some some more.
More derived conversion rates that I sometimes call the real conversion rate where I infer your mission from some of your on-site behavior and I only look at the conversion rate of people that actually had some buying intent right so,
so in that example you would,
you would take all the people that used your store locator or you know left on the rating and review page or something else or the warranty page
you wouldn’t count all of them in your conversion rate because they probably had some mission that they accomplished on your website that was other than buying something but for sure.
Having a multi-touch attribution system and ultimately getting to a COV or LTV as the way to go as far as I’m concerned.
So let’s move on to the next question bin win what do you guys think is keeping Amazon from entering the promising African Market.
[43:20] Yeah Amazon’s Geographic expansion has definitely slowed if you look at kind of the last markets they’ve opened up,
think they’re opening a Poland right now,
India has been a big one and they’ve just really that one seems to I’ll use this analogy of kind of the snake eating the pig right so so India seems they went storming in there and it seems to have been a handful for them
they really haven’t done a huge meaningful expansion since India my recollection I don’t think Poland would count as huge,
then there’s Brazil and Australia are kind of in that category of most recently geographies they’ve opened and I think what’s going on there is.
You know they have to evaluate every opportunity just like any other company even though they’re huge they have not endless resources so they’re always having to figure out where to apply them.
And you know I could say the same thing for South America South America.
Commerce is really complicated because you’ve got a big cluster of countries you’ve got different languages currencies shipping things,
now mercadolibre in South America has gone in there and figured all that out Africa is you take,
you take South America and I think Africa is like four times the complexity there inside of Africa you’ve got on the order of 50 countries.
[44:45] Lots of complexity and you know if your Amazon do you.
Go after that or can you go get that in 10 years let it mature and worry more about go puff taking you know a big grocery category United States,
so I think that’s really what it is it’s a prioritization exercise and for whatever reason Africa just has made it to that priority I guess you could say they’ve also expanded the Middle East through that acquisition they did,
of a big Marketplace there yeah haven’t really heard much about that I haven’t heard them adding 1 p 2 that or anything or
I only think they rebranded I think they wanted it as almost like Zappos as its own kind of little Standalone thing sounds kind of weird because in the past when they would go into a new geography by acquisition they would Rebrand it too
Amazon Japan it was on China this raw Acquisitions to my knowledge they haven’t rebranded suit could all and
kind of the brand their Stokes I think that’s what is required is a sure thing Jason Do you have a.
[45:51] Yeah well I’m not sure if you’re aware of this but strategy is actually one of the words in my title.
[45:58] And it’s a little known fact but in order to get a strategy certificate you have to have a great affinity for a 2 by 2 Matrix,
and I don’t know if you remember who did this I feel bad that I don’t but I used to attend the channel advisor conferences and they would always do this great.
Session on the latest trends and opportunities in global expansion and they always started with this 2 by 2 Matrix and,
one axis is complexity and the other axis is opportunity right and so you think complexity how hard is it to go into that,
Channel what you know what’s the regulatory environment what’s the currency environment what’s the language environment and Africa is actually High complexity because,
there really is no African continent from a Commerce standpoint,
there’s a bunch of countries there’s like 50 for different countries mostly with unique languages and unique regulations and unique currencies so the complexity is very high,
and the opportunity at the moment is pretty low penetration of e-commerce in Africa on a per capita basis is much lower in the spend is much lower than a lot of these more established market so I,
I’m sure there’s a long-term aspiration for Amazon to dominate the whole planet before they get to Mars but,
in the short run I just feel like that Africa hasn’t done as well on that on that two by two Matrix that I got from Channel advisor.
[47:26] Yeah and I’ve actually talked to a fair number of South Africans and they order a lot from Amazon and Amazon has some kind of a global cross-border trade thing where you can actually shop from Amazon and get it shipped to you in South African and not crazy amount of time
so there is an interesting not native Amazon shopping going on in certain areas of Africa that I’ve heard about.
[47:52] Yeah for sure and not saying there’s not an opportunity now I’m just saying if you’re if you have limited treasure that it may not you know you may get more value out of your India investment then you are Africa and the short run.
[48:04] Yeah and if you’re already like covering half of the opportunity through this cross-border trade solution than that even is better.
All right here’s one for you Jason this comes from Kelly gauche I think is how you’re going to feel so looking forward to that pisode I’m seeing all the CX related vendors Salesforce sap Bloom reach,
acquia Etc building or buying cdp’s in the past 12 months I get the value of cdp’s but why we’re all of these Acquisitions done so rapidly is this related to the third-party cookie changes coming.
[48:42] Good question so sidenote Kelly is the chief technology officer at Commerce tools who were talking about earlier and he’s also the author of.
I think at least two books that are published by Riley on headless Commerce so we probably should have forwarded the Headless Commerce question to Kelly.
With regards to his CDP question for listeners that may not be familiar CDP stands for customer data platform.
Um and so this is a tool that was primarily developed for advertising although it’s now used for some other things.
Where you build a database of unique customer IDs and what you know about those customers and you use it for marketing purposes and mostly for targeting ads win to win to show what adds to what customers.
Um and they are super trendy right now the.
[49:38] Has the acquisition spree been been accelerated by the Privacy changes that we talked about a couple weeks ago.
My short answer is probably but it’s interesting because those privacy changes both help and hurt cdp’s,
they make that first party data in a CDP more valuable,
um but they actually make it harder to collect that data and they make it harder to activate that data on not first-party data and so I in the aggregate.
I’m not sure.
[50:14] I sort of doubt that all these Acquisitions are because the cdp’s very clearly go up in value as a result of these privacy changes in some ways.
[50:26] More customers opting out and more attention to privacy means that cdp’s get smaller,
um and the the alternative versions of these things that don’t have uniquely identifiable data for an individual customer which are often called dmps.
Maybe get bigger so that’s my long answer to say I don’t think it’s purely related to the,
changes in privacy what I think is related to is,
the the whole category in notion of personalization is super hyped and popular right now we actually did a deep dive on personalization a year ago that frankly I still think stands up pretty well,
and in it I kind of highlight that at the moment a lot of this personalization is probably overhyped.
[51:17] You know in the last year there was a lot of investment dollars that were you know looking harder for a home,
you know there’s a lot of Buzz and hype around personalization and a lot of confusion about privacy and so I suspect that all of those factors.
Um contributed to the the shopping spree and cdp’s but in the long run and because of the privacy issues I think the way this all plays out is.
Um instead of it being super valuable for everyone to have a CDP that there’s going to be a small handful of cdp’s that are you know operated by people that have a ton of first-party data that are going to be most valuable.
[51:57] Yeah I’ll just throw in there as a guy that watches kind of the SAS space and startups you have this kind of interesting musical chairs / Supply Domino thing that goes on,
so you know one of the the big cloud players and I think the bigger ones would be like Salesforce sap Adobe then obviously.
You know you have a little bit IBM they’re not really as aggressive especially on the e-commerce side now maybe Oracle
but even they been quiet so those are the three really right now but you know what let’s say for some reason Salesforce buy something then the Corp Dev groups of other guys are out there looking and saying hmm.
If there’s 10 of these then then you don’t have to do anything but if there’s one more than your Adobe or sap you have to be kind of quick because.
These Cloud companies are really in an arms race against each other and.
They never want to have one of them with some advantage over the others so it’s such a big space the multiples that those companies enjoy are so big,
there’s a lot of Risk by not not having something so that could be one of the reasons you saw this kind of fast uptake by something was really more of,
competitive concerns and keeping up with the Joneses and then a lack of Supply I don’t are there tons of CDP companies or are they kind of rare.
There there’s a ton of CDP companies that it’s a long tale type thing where only only you know there’s a finite supply of ones that have significant customers in them so that you that me teacher
you think so I’m going to call that the domino theory of acquisition.
The ones that first first acquisition Domino Falls at triggers a bunch of other Acquisitions is nobody wants to be the loser in the musical chairs right.
[53:51] So let’s move on to the next question this is from Tech whiz
we’ve seen a significant stimuli bounce on Amazon do both of you feel the reopening exuberance will keep the sales acceleration going and if so for how long interested to see if you two are in the Jamie dimon camp.
[54:13] Yeah and I love these economics questions because I always beat you on these Jason so,
it’s gonna be interesting so if you kind of so you got two things going on here number one in our world your of your comps are very important right so same-store sales and comps and stuff,
and that’s going to get it super easy right now because this March is obviously way better than last March and April it’s going to be way better
for a lot of people.
From a store perspective but then on the e-commerce side it’s going to be inverted so e-commerce is going to face really tough comps retail is going to look really good and then just so that’s going to be one aspect.
And then we talked last week about that channel advisor blog and a couple other folks that were talking about this kind of.
Material bump in sales from the stimulus checks kind of going out and you know so the.
[55:17] I think what’s going to happen is there tide is going to rise so.
Hard from the money being pumped into the system by not only stimulus checks but just.
You know we just had another two trillion dollars go out there’s talk of a four trillion dollar infrastructure,
some people are saying that should be five or six trillion we’ve never had so much money pumped into the system,
so I kind of in my mind the metaphor there is the tide is going to rise very quickly and e-commerce will benefit from that so if we had just the year-over-year affect Commerce would look like flat to down I think.
But because the tides going to be rising I think we’re going to have a really nice continued growth in e-commerce.
[56:04] I also when you one of my favorite.
But I’m a huge fan of Elon Musk and people eyes asking me on how how are you able to do these things that you do he always goes to core principles and His World core principles are physics you know Rocket Fuel Burns of this right in that custody.
In our world the core principles are consumer behaviors and I’m I’m convinced that.
You know go puff and instant card and all these things that that people have sampled through the pain Dynamic their addictive and I use that phrase zero friction addiction.
The pretty sticky because once you have that really super low friction great experience it amplifies the friction of the the higher friction experience.
So I think those things are going to stick it kind of a rate of 80% way more secure than a lot of people I think.
[56:57] I don’t know if that puts me the Jamie I’m in Camp but I.
I think those are the things so a negative is summarized a negative vizier of your comps are going to be hard on Commerce a positive is the.
Not only the stimulus checks but the macro stimulus going on and then the third one is,
I do think the zero friction addiction is going to also surprise people so I think that Nets out that we’re going to be surprised that we see the sales acceleration keep going and.
You know the thing that can this is probably a topic for another time but then the thing that concerns me is
we’ve never put this much money out there we’ve never printed so much money and at some point inflation is going to be a problem and we’re starting to see it in certain parts of the economy and food cost and Home Building
things are getting pretty hot already so that could be the thing that slows it down I think that’ll probably be a
early next year problem that will have to worry about what do you think Jason.
[58:01] Yeah it is I mean in general I think in aggregate if you look at all of these favorable and unfavorable Trends it’s,
the favorable are going to outweigh it so I think like industry averages for both retail and e-commerce will continue to go up.
But the real story is going to be the winners and losers right so there there are definitely categories of consumer spending,
that are likely to go backwards a little bit you know next year right like there’s huge pent-up demand for travel,
and so some of those dollars that people have been you know investing in their home this year,
are not going to get reinvested in their home next year they’re going to get invest in a new trip or more time in the bars and more restaurant food instead of grocery food,
so I do think.
There are going to be some people that are going to struggle to comp because they they were disproportionate beneficiaries this year and,
and there’s going to be a counter Trend next year.
[59:05] I also do think there is a little bit of a bifurcation there’s big chunks of the economy that are booming and you don’t have all this extra cash pouring in and the savings rate is going up and,
all of these good things,
, there’s a huge chunk of the economy that were low-wage workers many of which worked in the restaurant industry and half the restaurants aren’t going to reopen and it’s going to take five years for those jobs to come back.
And there’s going to be no more economic stimulus for the rest of this year next year because once the health problem goes away,
there’s going to be no appetite for passing it and so those people are going to have a really hard time in the industries that are,
tied to those people are going to be challenging so I think we’re going to see a both ways but on the aggregate there’s going to be more good economic news than not,
and I’m calling it right now you’re going to see it check me in a year I wish I could go back to the prediction show
the new catchphrase is yacht yeah which is year over two years ago and and I’m predicting that
when you do the word cloud of all the things CEOs say in their in their shareholder meetings for the next year that yeah is going to show up a little bit.
okay that’s weird prediction but if you say so so we are we have two questions left and we’re up against time so we’re going the lightning round Jason lightning round for you this comes from Trevor Sumner
there will be a multibillion-dollar media shift to in-store who controls the brand spin.
Will be media folks will Shopper marketing and trade dollars increase how will brand organizations need to transform to take advantage of the digitized store.
That’s an easy one to answer and Twitter a tweet length.
[1:00:50] Yeah it actually is easy to answer and lightning around like that whole industry in the siloed budgets get disrupted
in the long run and I don’t know how many years it’s going to take all those budgets get Consolidated in the silos breakdown right so there there’s going to be a marketing person a CMO that that
owns all of that spend and there’s not going to be a separate trade budget and all these separate retail budgets and they’re going to you know
consider the next best dollar for you know Super Bowl ads against ads on the Shelf at Walmart.
[1:01:24] I don’t have an opinion on that so we’ll go on to the next question and it comes from this was from Facebook Scott Silverman
what do you think will be the most surprising post pandemic consumer behaviors that e-commerce retailers should prepare for.
[1:01:41] Scot you want to go first Scot to Scott.
[1:01:45] Um sure I yeah I you know I think the things that we’ve already tried are sticky.
I’ll be controversial there’s a lot of Buzz that people are all going to work from home I think that’s over balloon I think,
90% plus the folks will go back to an office they’ll get pulled in they think they’re going to work remote and then
you know what’ll happen is another domino effect so sales teams are not efficient working from home so you’ll have a sales floor and then those folks would be like well why isn’t the marketing team here supporting
yes and in the marketing team will kind of come in and then
they’ll be like well why aren’t the accounting folks here you know we have all these questions and now I have to hop on a zoom decimal question and they’ll be like well let’s bring the engineering team in and suddenly the whole company will be back in an office so I think that’s one that’s not going to
that’s a lot of people are assuming it’s going to change that’s not it doesn’t really impact e-commerce per se but that’s one that I’ll be slightly controversial,
how about you Jason.
[1:02:49] Goodwin I’m so we don’t have time to get into it I don’t totally agree with you on that one so that’ll be fun will visit it again later I totally get where you’re coming from though,
the the short-term one that everyone talks about that I’m many on is peacocking right like that that you know we’ve all been wearing sweats sweatpants and,
and sitting in our homes for a year and so there’s going to be this counter-reaction where everyone’s going to want to wear you know you know stand out and go be very.
Um gregarious and outgoing like that’s kind of what happened in the Roaring 20s after the Spanish Flu in 1918.
Um so so there is some of that.
Um that we might see in the short term to me the big the big thing that’s happened that people aren’t talking about enough is consolidation right that the,
the pandemic dramatically and disproportionately benefited big chains over small Independence in every category but especially in retailgeek.
Um and so I’ll Paris publish a new version but.
Almost every public company that has reported their e-commerce growth Drew dramatically more than the industry average.
[1:04:00] And the reason that’s possible is because a ton of Mom and Pops shrunk and I think there’s all kinds of implications for that but you know,
Walmart Albertsons and Kroger were 40 percent of of a cpgs business before the pandemic and now they’re going to be 60% and that that’s going to be a,
shift in the balance of power and a shifting leverage and and they’re all these other implications around.
This enormous consolidation the chain restaurants are doing fine but all the independent restaurants are gone bars everything.
I think there’s all kinds of implications from that that we’re just starting to think about are you in on that one’s got.
[1:04:42] I disagree on some of that stuff but yeah well we’ll have to this is a good topic will have to revisit.
[1:04:49] Yeah I like it it’s a great question Scott always appreciate your participation and that is going to be a good place to leave it because we have used up our allotted time plus gods for bonus minutes,
so as always if we if you disagree with our answer or didn’t get to our reading get your question feel free to hit us up on Facebook or Twitter,
um and you know as always if you enjoyed the show please give us that five star review on iTunes.
[1:05:19] Thanks everyone and.
[1:05:20] Until next time happy commercing!