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

Join hosts Jason “Retailgeek” Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Founder and Executive Chairman of Channel Advisor, as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.
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Now displaying: May, 2021
May 28, 2021

EP265 - News and Listener Questions

Amazon News

Other News

Retail Q1 Earnings

  • Ulta – US Comps up 65.9% (up 7% from 2YA)
  • Costco – US Comps up 18.2%, e-commerce up 41.2%
  • Dollar General – US Comps down 4.6%; (up 17.1% from 2YA)
  • Best Buy – US Comps up 37.9%, e-commerce up 7.6% (online revenue was 33.2% versus 42.2% last year)
  • Burlington – Comps up 20% (shutdown e-commerce Q1 2020)
  • Gap – Comps up 28% (up 13% vs 2YA). Digital up 82% vs 2 YA.  Digital now 40% of total sales.

Episode 265 of the Jason & Scot show was recorded on Thursday May 27, 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.

Transcript

Jason:
[0:24] Welcome to the Jason and Scot show
this is episode 265 being recorded on Thursday May 27th 2021 I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-host Scot Wingo.

Scot:
[0:41] Hey Jason and welcome back Jason Scott show listeners,
Jason before we jump into some juicy news and we got a couple listener questions I wanted to send a big congrats to Chris Bell if that name is familiar to listeners he is the CEO of perch one of those quote unquote
F be a Amazon Seller roll up companies and he was here on a pisode 252.

Jason:
[1:07] Yeah I heard him he did a small raise this week did you you get the details of that at all.

Scot:
[1:15] I did and you know in the The Venture Capital World which I am.
I guess involved in to some degree you have your seed round and you’re a around and your B and your C so they just did there are around and what’s kind of special about it is usually you’ll do something like you know maybe
couple hundred thousand to a cup small millions in a seed round and Silicon Valley they the seeds are pretty large the you’ll do an AR around maybe five to ten million and a be around 20 to 30 or 40 Etc
they are around they did 775 million so so it’s
they proclaimed their the fastest company to achieve profitable unicorn status unicorn says means you have a billion-dollar valuation and then they said they have been profitable since Inception which is interesting because,
if you.

[2:14] Keep it so that then what that means is they’re probably just going out and using all this Capital to acquire profitable companies and therefore as an entity from an ebitda perspective there
there there’s an accounting trick where they’re profitable but the the the Goodwill of those Acquisitions is kind of below the line
then it’s the largest series a Ever Raised by a consumer goods company by a factor of over four so I think the previous record was something like a hundred hundred and twenty-five so
yeah that is a crazy rays and you know I think we’ve previously talked about
I think it’s 3 billion in the US and five globally raised for these types of companies and and this obviously text
about another billion on there and then I think a song article that this cause other people to reload their War chest as well so it’s it’s a very active segment and it’s exciting to see / qu as a friend of the show really really start to scale up.

Jason:
[3:13] Yeah yeah I had two immediate thoughts number one clearly it’s an advantage to get on the Jason and Scot show before doing your raised because it seems like there’s about a four x multiple you get just for being on the show.
And no.

Scot:
[3:28] Yeah that was in the footnotes of the press release.

Jason:
[3:30] Yeah and number two it’s going to be ugly when they show up on Shark Tank and try to do an up round because mr. wonderful is going to cream them on this valuation.

Scot:
[3:40] Mr. wonderful is going to just like tap out in the first five seconds he’s the bottom feeder he’s not going to like like this one.

Jason:
[3:49] Yeah they’re only going to get a royalty deal from him.

Scot:
[3:52] Small loan that they pay back in 5 minutes.
With thirty percent interest compounded every every 3 seconds,
okay so this week we have some listener questions as I mentioned before we get to that there was some pretty big.

Jason:
[4:17] News your margin is there opportunity.

Scot:
[4:24] Yeah I like to say it wouldn’t be a Jason Scott show if we didn’t talk a little bit about Amazon and they made a really big play this week they announced that they are going they’ve entered a
negotiation or a see an agreement to by MGM for 8.45 billion
I have a theory here that Jeff wants to own the James Bond franchise so he can put himself in there I think he
fancies himself in his current situation of a single Bachelor that’s gotten pretty buff as maybe the next James Bond but maybe that’s off a little bit what did you think about this when Jason.

Jason:
[5:06] Yeah well a couple of That’s So a whether Jeff realize it is it or not he could only is the bond villain in this scenario.

Scot:
[5:14] It’s got a Lex Luthor vibes.

Jason:
[5:17] Yeah the crazy bald super buff guy that owns his own rocket ship and then buys the company James Bond works for like I think that’s the theme for like a James Bond movies.

Scot:
[5:29] Yeah and finally had a cat that he maybe he does who knows maybe has a cat that he sits there and pets while he’s planning his next moose.

Jason:
[5:37] Yeah I don’t know you know people have been asking me about this in the.
To me the acquisition makes perfect sense it’s not even very surprising and pretty consistent with a lot of other tactics we’ve seen.
Amazon follow I like the open question is whether that’s a good valuation for him GM or not but.

[5:59] Yo big picture Amazon is this platform and and we’re all familiar with the flywheel but in essence.
The more reasons Amazon has for people that join Prime the more money they make on this whole ecosystem of services around Prime and it’s.
It’s one of their biggest competitive advantages versus other.
Content Publishers that are contents indicators that might have been interested in him GM is.
Amazon can sell James Bond merchandise on Amazon they can make Amazon TV shows for Amazon Prime those Amazon,
those people that join Amazon Prime in order to see the new James Bond movie will spend more money on the third-party Marketplace and will be open to more ads from,
the Amazon ad Network and all all of these Services sort of.
Lean into each other and so it means a Matata Amazon’s better able to monetize an eyeball than almost anyone else so then buying em Jim for.
P point for doesn’t even seem that surprising I think they’ve they’re spending over a billion to make the Lord of the Rings.
Series alone so like it.

Scot:
[7:17] Just a license it I think I think there’s just a license.

Jason:
[7:20] Oh my god well yeah so.

Scot:
[7:22] Yeah there’s hundreds of millions of dollars in the licensing of the Tolkien estate.

Jason:
[7:26] Yeah so and I mean the NFL was a billion dollars a year for 15 years or something so so this seems I get totally fits there are
people that are saying that in gym that this is too high evaluation and that Amazon may have like had to reach.
But I guess time will tell on that.

Scot:
[7:50] A couple fun facts so this is their second biggest acquisition,
the only one bigger than this one was Whole Foods 13.7 billion in this one’s about 8.45 and it’s important to note that in today’s environment what you do is you you kind of
you get everything all your eyes dotted and your t’s crossed you
you filed to do that position and then you have to go through this process where you work with the government to see if they’re going to let it happen or not there’s what’s its I know it’s called H hart-scott-rodino hurts Scott
Regina something like that H RH s g human do better idea,
but there’s this one approval that you get there but then also increasingly you know Amazon’s under the antitrust microscope and there is a lot of senators tweeting their dislike of this deal,
and I’ll turn to you for that before we do it is interesting in the media segment you’ve got Netflix as kind of the king disruptor and they’re causing a lot of
a lot of different things to happen one of the big ones was
AT&T who thought it would be clever to buy a bunch of content to put through their pipes in the form of Time Warner they are shedding
Time Warner and what’s called Warner media and that’s going to be married with Discovery to create a try to have a mass of.

[9:14] New and Library content to kind of go up against
peacock Disney plus the 80 different new streaming services were all thinking about you know should we subscribe to those or not so it’s definitely kind of a little bit of a musical chairs thing and it makes a ton of sense for Amazon to really
build a war chest and I think they’re buying it mostly for the catalog and then when you get that IP you could come out with you know all kinds of.
James Bond merch there’s a lot of really good IP inside of that catalog so I think that’s what’s driving driving a lot of it.

Jason:
[9:50] Yeah no for sure there is a fun or more silly theory about the acquisition,
MGM owns a bunch of movies that are in this catalog but they have even more rights to TV series and one of the TV series in that portfolio is a show you may be familiar with called The Apprentice.
And so there are people that are like did Jeff Bezos just by MGM so that he could like release all the the unaired you know behind the scene footage from The Apprentice to embarrass anyone that might have been on that show.

Scot:
[10:29] Yeah could be.

Jason:
[10:30] I doubt it but yeah.

Scot:
[10:31] We’ll see I doubt it that’s a big that’s a big price to pay to bearson ex-president.

Jason:
[10:36] I mean yeah it is funny to think about but yeah.
Yeah so yeah it’s going to be interesting.
Famous Last Words I’ll probably be dead wrong I doubt so anytime you do a merger or an acquisition of this size like you do have to get regulatory approval,
I kind of don’t think this is gonna be that tough because Amazon doesn’t have a lot of.

[11:09] Like meaningful Network content versus HBO or Disney or Netflix at the moment like which is how this would have to be looked at so we’ll have to see but I think the,
the claws you referring to is the hart-scott-rodino which is a law yeah so so.
Like remember most antitrust law in the United States is like a hundred years old so it’s super relevant to today’s business circumstances and I say that entirely sarcastically,
um but this.

[11:42] In 1960 76 we passed this like minor update to The Clayton Act which is one of the big antitrust laws and it was this hart-scott-rodino improved antitrust improvements Act,
in one of the things that it did is it used to be that if,
even acquisition was going to trigger some antitrust concerns the government had to notice it and had to sue you and they made it.
From sort of a opt-in to an opt-out kind of situation where if you do an acquisition over a certain size.
You have to proactively get the government’s approval before the merger can go through and so now all these big Acquisitions have to be proactively.
Approved and and this one will have to go through that process as well a minor fun fact there.
All companies have to comply with antitrust law whether the deal is big enough to trigger the the HSR or not it just did your,
over that size you have to do it proactively,
and so there’s been one antitrust action against a company that was too small for this act and it was in the e-commerce space it was bizarre Voice versus the Department of Justice when.
Bizarre voice pot power abuse.

Scot:
[13:00] Yeah they didn’t file for it and then the government flipped out and said you didn’t do it and then they said we didn’t have to and then the government said you did undo undo that.

Jason:
[13:08] Was so I don’t even yeah I don’t even think they said you you you had to proactively file but they said it’s still an antitrust violation and we’re going to prove it in the government won in court and broke them up.

Scot:
[13:22] Yep boom and you are an expert witness.

Jason:
[13:25] I was an expert witness in the case and then and I lost because I represent a bizarre voice and then fun fact,
so power reviews got split backup and power views later hired my wife to run their marketing so losing that case got my wife a job.

Scot:
[13:42] Boom there you go what goes around Good Karma you put dark Good Karma into the road.

Jason:
[13:46] It’s a small world and I wouldn’t want to paint it exactly.

Scot:
[13:51] Cool also in the category of antitrust the the DC attorney general is going after Amazon and what’s interesting is
you know the.
Can’t put a quote here he’s alleging that not only are the fees they Amazon charges sellers responsible for higher prices across the web
then we can talk about that that kind of ties to price parity which Jason Del Rey spent a lot of time on and is Amazon podcast series but also Amazon Rewards sellers who use FBA
to the detriment of sellers who don’t but have lower prices and you know fact check,
true on how the algorithm works I’m not sure you know I think what Amazon would say on that second part we can talk about price parity next is it’s a better customer experience to get your products fast and free
and that that ties into it as well as the,
consideration not just the price so yeah so it’s gonna be interesting to see how that one comes out because I think Amazon has a good
good position there if you can’t think about the overall customer experience but the other one is a little trickier which is the price parity in your kind of a more of an expert on that one if you want to run through that one.

Jason:
[15:14] Yeah well so and it’s interesting to so that the AG actually filed the suit so there’s a real lawsuit that Amazon is going to have to respond to and that,
that triggers Discovery and all kinds of other things that make all this antitrust talk a lot more real and so sort of two things there’s the outcome of this exact lawsuit and whether Amazon.
Can defend itself and win whether loses and has to take some some.
Remedy or whether they somehow settle right which often happens in these cases so that’s the outcome of this suit which we’ll talk about in just a second but there’s a bigger implication.
Um even the process of Defending themselves or settling this suit they.
Can like get some stuff on the record that then helps trigger other antitrust actions so there’s a that’s a.
Kind of a real risk here so the the specific thing that I think the DC eiji is alleging that somewhat problematic for Amazon is.
Amazon has used to have a price parity Clause with a lot of their vendors and so essentially it said you’re not allowed to sell your product.
Cheaper somewhere else than you sell it on Amazon.

[16:44] And I think Amazon would say that they stop doing that process in like 2019 but the,
the Attorney General a can sue them for behavior before 2019 so that that alone doesn’t save you,
and then I think that the Attorney General also alleged that while they may have discontinued that process in 2019.
They’re still enforcing other Clauses that essentially.
Have the same outcome so so that the hypothesis here is if you’re selling and I think this would apply to both first party and third party but and I don’t know I give if the Attorney General had a specific.
Um example in in their suit like like the whole text of the suit isn’t available yet but.
So we’ll assume it’s third party for a second I’m selling some widget on Amazon I promise Amazon I won’t sell that same widget cheaper on Walmart.
And so what the Attorney General is arguing is hey Walmart’s bigger than you like Walmart might have been able to negotiate a lower price which would be good for consumers we’re not for the fact that you artificially.
Stop that vendor from offering Walmart a lower price and that that is.

[18:07] A violation of the Sherman Act and so like you’re you’re guilty of antitrust for doing that so that’s the.
The argument Amazon’s far from the only big player out there with price parity policies not that that defends you from a lawsuit but so that’s going to be.
Interesting to see how that all plays out there some really smart antitrust people that have pointed to that as one of Amazon’s biggest vulnerabilities.
The I don’t know like.

[18:38] The it’s unlikely that that alone caught would if Amazon were to lose that case entirely that it would force Amazon to break up.
It would probably force them to pay some fine and promise not to.
Do that that business practice anymore and maybe you know they would have to agree to some kind of.
You know more careful monitoring than they would otherwise like so.
We’ll see how that all plays out but the reason this case is super interesting to me is there’s two things you have to worry about an anti trust you it’s anti doing anti-competitive things is not illegal.
Um it’s illegal to be a monopoly and then use that Monopoly to do these anti-competitive things so the Amazon enforcing the price parity thing is only,
a problem if Amazon meets the strict antitrust definition of a monopoly and.
It sounds like that should be pretty pretty easy to know there are over fifty percent of something you’re a monopoly but the problem is.
The of something which is what we call the relevant market right so if you’re the the DC attorney general what what they said in their announcement was that the relevant Market is e-commerce.

[20:00] So they’re going to say Amazon’s more is a majority of e-commerce which a is probably not true.
Um by most people’s counts there in the like 30 to 40 percent of.
Of us e-commerce sales so they’re not even majority of all e-commerce and by the way those numbers wildly undercount certain flavors of e-commerce that like are you know people like to discount but our e-commerce right so.
People like to take out ticket sales or events sales.
People like to take out restaurant sales and you know over 50 percent of all restaurant sales in the last year were e-commerce thanks to Door – and there’s huge e-commerce categories like.
Pornography that nobody puts in their numbers right so so if you’re Amazon you’re going to argue that you’re not a monopoly,
um and that you’re not over 50% of e-commerce and then they’re also going to say even if we were over 50 percent of e-commerce eCommerce isn’t a relevant Market because the definition of a relevant Market is.
The consumers can’t.
Um are stuck in a market and don’t have another alternative and so they actually use this test called the snip test which is means like.

[21:16] Could someone make a small but significant price increase,
and you know would customers be forced to pay that because they didn’t have some alternative place to go and Amazon’s going to say e-commerce is not a relevant Market doesn’t pass the snip test because if we raised our prices people would just drive to Walmart and buy stuff at the store,
and so the market is is retail right so that that’s going to be a huge fight that’s going to you know people are gonna spend millions of dollars on both sides fighting,
but the reason that’s going to be interesting is is in the process of litigating this case if a relevant Market gets defined of effective a judge rules that something’s relevant Market.
Then suddenly that’s going to open up all kinds of other.
Other doors to either Amazon being potentially vulnerable or not being vulnerable to further antitrust actions so.
It’s the first step in a long process but it’s going to be fun to watch as a non-financial Observer.

Scot:
[22:16] Yeah and I’ve been following the Apple epic case and a lot of interesting things come out of the due diligence where you know the CEO of Epic could emailed Tim Cook and Tim Cook’s answer was who is this guy.
For service this string itself where the he was kind of his kind of arguing this the the Epic I was arguing with Tim Cook of why they the store is really long intricate
email and as if he intended like known each other and they’d met several times Tim’s like it’s those like his internal answer to the whole thing as class,
but the guy like six hours and you know five million dollars of lawyer fees to write that email looks like.

[23:10] Yeah yes no one wants all their emails out in the public but that’s what’s interesting about these things whoa.

Jason:
[23:17] Oh my gosh yeah it’ll be a great jobs program for lawyers for the next 10 years.

Scot:
[23:22] Yeah my favorite Amazon news this week is that the sum of the press has leaked the Amazon Prime day and it’s going to be June 21 and 22 or at least that’s the rumor it hasn’t been been.
Officially announced by Amazon but looks like we got a latest June Prime Day this year so that’s exciting I am actually low on some charging cords and some other things so I’m looking forward to stocking up on some,
some some accessories.

Jason:
[23:51] I don’t think my wife will allow a single more additional cord to come into our home so I that could be problematic for me,
always excited for Prime day like again Amazon hasn’t confirmed this but it certainly fits everything we know,
so what has been interesting this is always a challenge out Amazon always wants to keep it kind of secret and Under Wraps,
it’s such a big deal and Amazon wants to encourage everyone to lean into it that like all the third party merchants.
I need time to prepare for Prime day so it’s always kind of a this tricky Balancing Act of Amazon not telling us when it is but wanting everyone to be ready for it.

[24:34] And what has already happened since since has been pretty obvious that Prime day is going to be in late June some time is that Merchants are starting to panic because.
A common phenomenon right now is Merchants are getting their their FBA quotas cut by Amazon and what that means is,
last quarter you were selling red widgets on Amazon via FBA and Amazon allowed you to put 35,000 units in the FBA system and and,
there now you’re getting a letter saying you’re only allowed to have 20,000 units or 10,000 units or in some cases no more units and so all of these,
these Merchants are getting their their allocation in the FBA warehouses cut,
and that’s a huge bummer leading up to Prime day because it just means you’re not going to be able to sell as much.

Scot:
[25:30] Yeah and looking at Prime day over time.
Amazon selling more and more of their stuff right so it’s the things that get the biggest discounts are the echo this the Kendall dad and
and increasingly as they it’s almost become an Amazon Gadget day for Amazon’s owned Brands as you like to say so ring is in there and now they’ve got zero and so that that
seems to be the bulk of what’s going on and I imagine Amazon needs more room for that stuff and that’s kind of why there.
Clearing the floor for their own Goods to be sold on Prime day.

Jason:
[26:09] Yeah I mean it’s I feel like.
It’s the flywheel in action like all these good things are happening for Amazon and then of course the pandemic you know dramatically accelerated people’s use of e-commerce which means
that everyone wants more inventory and e-commerce warehouses which also means more sellers want to come to Amazon right and now we have all these International sellers coming to Amazon as a
good way to access the US market and so if you’re an existing seller,
you’re competing for FB a space with way more other sellers than you ever were before and other products than you ever were before and while amazonite
is scaling their fulfillment capacity at you know frankly a mind-boggling rate like I feel like demand is even faster and so I think Amazon’s having to make some hard decisions about,
how much room they give everyone and it it doesn’t feel good if you’re one of the towers that feel like you could make more money if you had more room.

Scot:
[27:09] Okay so then the other one that’s been in the news and kind of a lot of chatter on quote Amazon Twitter is
Amazon has really been cracking down on a bunch of these Chinese sellers that have had questionable review policies so there’s a lot of folks
you’ll see a lot of US based sellers make accusations about Chinese sellers that there
either buying reviews or you know doing some this gray hat black hat kind of review stuff and there seemed to be a pretty big cleansing if you will of a lot of this going on I saw the New York Times had an article calling it The Great Purge so a lot of the US base sellers we’re kind of celebrating the CID kind of finally seen the light of day and come home to roost
did you dig into that one.

Jason:
[28:00] A little bit there’s a couple interesting things so Amazon kicked a couple of and we don’t know if it’s permanent or not but like delisted a couple of very
significant Sellers from the platform and so one
that’s very familiar in my drawers is called aqui a UK ey I think,
which is kind of a similar company to Anchor with a lot of like interesting charger Technologies and cables and things.

[28:30] And so they’ve been a very popular seller on Amazon for him primarily use the Amazon platform for a while and Amazon took them off right and and whether it’s true or not Amazon’s kind of spinning it as.
Hey we’re.
We take all of the credibility of the of the ratings and review system super seriously and anyone that violates it no matter how big are significant to us is going in the Penalty Box and so we proactively took this action,
and a lot of other people are saying.
Yeah don’t really buy it you know the Attorney General of several States like uncovered some of this in the various behavior and only after they like brought it to Amazon’s attention and insisted Amazon take action.
Um did Amazon Deal s these guys so there’s some.
Dispute over over the sequence of events and then you know there that New York Times article highlighted a lot of kind of.
Accusations of.
They’re being kind of a to class system that if you’re a really big seller on Amazon with significant volume that you get the benefit of the doubt from all these review things and they only take action if there’s.
You know a huge violation versus if you’re a smaller cell or in your just accused of some bad behavior you get put in the Penalty Box and you have to kind of fight your way out.

[29:54] Don’t don’t know what the truth is but certainly is interesting and it certainly.
Um got a lot of traction in the new cycle last.

[30:07] There were a couple of other news items and some earnings from this week that we want to cover really quickly we’re recording this on Thursday night the 27th as I mentioned in the opening,
and earlier tonight Walmart launched a surprise event they had what they call Walmart shop along,
I’ll call it a live stream Commerce event that they hosted on Walmart.com.
So we’ve covered in the past a couple of interesting social media things Walmart’s done where they partnered with Tick Tock to do some,
some live streaming video Commerce but this time instead of doing it on Tik-Tok they did it on Walmart.com so they launched a new URL,
Walmart shop live.com,
and this first event featured this woman and Marie Ray Drummond who’s more commonly known as The Pioneer Woman and Scot will be super familiar with Hershey’s,
like the number 22 on Forbes list of top influencers and so she’s like kind of a part cook part,
you know apparel part home decor,
influencer and so she has a bunch of exclusive products that are sold through Walmart and they did a live stream event and sold a bunch of products live off of the video feed tonight.
Did you get anything.

Scot:
[31:34] I actually do hook know who this is I am not a fan,
My Heart Belongs only to the Kardashian’s those are the only influencers I pay attention to so I don’t I stop at number one and two on the list and I don’t go down to the 22s,
but yeah it is it so having you know I know you’re big on live streaming,
how does it compare to what some of the Chinese folks are doing is it is it kind of in that genre where you know you can buy light right from the stream and it’s got like a little bit of a QVC feel but kind of a different energy like.
What’s it look like.

Jason:
[32:11] The so so the most popular live streaming in China is our very bite-size nuggets so a it’s not so much,
this the the retail platform is doing a live stream like it’s not Ali Baba’s livestream it’s,
it’s thousands of third-party sellers that are each doing their own live streams and each live stream in China you know they tend to be these like two minute long segments about a particular product right so so think of them as kind of commercial sized livestreams.
The QVC and HSN historically do these like 30-minute programs where they have one personality,
in a particular genre selling a bunch of products over half an hour and so the Walmart livestream felt a lot more like a traditional,
Q VC style program I want to say,
tonight’s program was like 45 minutes long and it was just Ray and her two daughters.

[33:10] Talking about a wide variety of merchandise all from her that was for sale for 45 minutes but the.
There was very like seamless Commerce integration with the video so.
If you watched it on a browser like there’s a big window that has the video and she’s wearing all these items and demoing them it’s a three column interface on the left hand side was a chat box so there’s a,
like why live commentary from from Shoppers and they can interact with her and she very obviously could see all other comments because.
She responded to a lot of the comments in real time and then the third column had like product tiles for everything she was talking about so,
when she was talking about a dress she’s wearing the dress but there’s a product I’ll for the dress on this right-hand column and you could click on it and immediately add it to your cart and checkout of you wanted.
And you could scroll back to see any of the previous tile so it is.
It seemed like the Commerce interface and the chat was all pretty well done I don’t know what American consumers are going to want in terms of live streaming but this.
This did feel a lot more like the pretty traditional American version of a.

[34:26] Of a TV show infomercial than these kind of bite-sized.
Um Commerce experiences that are that are really taking off on taobao live for example which is like a platform for all these individual sellers selling stuff.

Scot:
[34:42] You think they built their own platform for this for others is there like a vendor out there that’s licensing always these retailers this kind of stuff.

Jason:
[34:50] A little of both so a there was some complaint about some technical problems so it sounded like and I think Walmart even,
like a Walmart moderator even said a couple times hey some of you on mobile are having a problem we’re working on it and.
It seemed like it wasn’t not everyone had a problem that it seemed like some people did it definitely seemed like.
A completely white labeled platform for Walmart a bunch of us kind of dug underneath the.
The covers and there’s a popular content management system out there for sort of codeless web development called webflow,
and it appears that this site was built on webflow,
which is interesting to me for a couple of reasons and sorry there’s a another vendor that specializes in actual video streams,
and they’re called be live and there and so it looks like they were using web flow as the.
The the rapper for all this and they were streaming the video through be wife.

[35:56] Number one these are very popular tools that I’d recommend generally to someone that needed to build something quick and prototype something but they’re not necessarily.
The scalable robust Enterprise tools that you would expect.
Walmart to be using if they thought they were going to be putting 10 billion dollars of Revenue through it and so.
That’s fine to me that says that this is kind of a pilot for them or a minimum viable product and that.
They built something to test the experience instead of something that would.
Scale to the ultimate size it could it could achieve for Walmart so that was interesting but fun fact web flow is hosted exclusively on Amazon ec2 so,
I don’t I don’t know this for a fact maybe Walmart was able to negotiate some special hosting Arrangement but the likelihood is,
that this the this thing was actually running on Amazon.

Scot:
[36:53] You picture someone at Amazon with the cause of mobile problem button ready to go.

Jason:
[37:00] Yeah yeah exactly don’t ya don’t don’t know about that either but I am pretty confident if this became something that that was going to be a recurring thing at Walmart that it would probably be a not hosted on an on Amazon solution.
And they are pretty robust it chops at the show at this point so I don’t know to me I actually take that as a positive sign that maybe there,
they’re doing fast agile stuff and not trying to perfectly engineer everything in order to just test whether users are going to like something or not.

Scot:
[37:33] Yeah I love it I love when big companies do MVPs and kind of do the spirit of the MVP where yeah just put something together pretty quick and put it out there and get some feedback and then iterate so it would be cool to see how that goes.

Jason:
[37:45] Yeah and that doesn’t that feels like the spirit of Walmart lately they’ve done the these Tick-Tock Pilots now they’re doing a pilot on their own platform so yeah props like and.

[37:57] We’ll be interested to hear what results they share with us.
Um a couple of other random things the we’re going to jump into some more earnings because there were a bunch of retail earnings calls this week and,
spoiler where they’re all across the board like for companies that did,
really well in the pandemic like they’re their comps this quarter a little soft because they’re starting to comp against how well they did in the pandemic,
and if their company that like you know traditionally wasn’t graded e-commerce then their e-commerce exploded last year which meant their e-commerce comps this year aren’t as good so,
so they’re kind of all across the board and as a result of all these earnings you’re starting to see all these articles being written about how.
Oh man you know the luster is wearing off of e-commerce and people are going back to stores and we’re starting to see store comps go up and and the rate of e-commerce growth slowed down,
and I find those articles a little annoying because they’re mostly written by people that don’t seem to understand like,
the difference between a a sales rate and a.
Change in sales rate right so they’re you know they’re they’re interpreting like hey retail sales went from up 4% to up 6% and e-commerce slow down from up a hundred percent to up 50%.

[39:22] Um therefore,
customers are stop stopping e-commerce and going in the stores and there’s like no way more people bought something online for the first time last quarter than ever before right like gets
they’re just not under fundamental it’s a fundamental misunderstanding of rates of change and one of the things I still like to remind people and inconvenient.

[39:46] Truth about the whole pandemic and Retail as well in United States things are trending in the right direction they feel good,
Pete things are opening up with gas masks retailers are rebounding all these good things are happening,
, most of the data on store traffic is still that that there are way less people in the store today than we’re in the store two years ago,
so Nationwide according to Shopper track we are still have 20% less traffic than we did in 2019,
and that’s been kind of consistently true for the last twenty four weeks so and by the way that makes the US,
more recovered than most countries like a lot of places in Europe like traffic is still down fifty percent from two years ago so it is still true a lot less people are walking in the stores,
and a lot more people are buying stuff online than ever before so,
you know interpret all these numbers listen to all these numbers but don’t don’t you know overreact to these these articles that are saying like e-commerce has kind of.
Tailing.

Scot:
[40:57] Yeah and you were you called it you predicted a lot of folks are going to talk about the two year ago metric and it looks like it’s starting to come to fruition.

Jason:
[41:04] Oh my God yeah the the if I had a dollar for every time someone said Roaring 20s or two years ago in an earnings call I would I would have raised almost as much money as perch.
So let’s jump into those those earnings real real quickly a wide variety of retailers so the first one I saw and most of these are from today so like our podcast is nothing if not Timely,
Alta which is one of the two big specialty Beauty companies reported,
and this is a perfect example so they’re their comps for stores in the United States were up 65.9% from this quarter a year ago.
So that’s you know.
A year ago the quarter would have been partly impacted by covid but so being up 65% is is a big number that,
but what that probably just means is that they took a huge hit a year ago,
and have you if you look at Ulta has comps from two years ago their up seven their sales are up 7% from where they were this quarter two years ago so so they’re up.
Um they probably you know like give if 7% over two years is like you know.

[42:22] Modest growth it’s but it’s not astronomical growth so so that was Ulta then Costco us comp and by the way Ultra does not break out there e-commerce separately,
Costco us comps were up 18.2%,
so that’s healthy but again Costco problem never had to close for the pandemic and Costco is probably a net winner in the,
um pandemic visits and so when they’re up 18% that’s pretty impressive and then their e-commerce was way up which is.
Kind of against most of the trends because last a year ago was such a good quarter for e-commerce that most companies aren’t comping that well against,
against the last year’s e-commerce numbers but Costco’s was up 41% did that surprise you at all Scott.

Scot:
[43:13] It does because Costco yeah they’ve definitely super embraced e-commerce it must be it must be I’m gonna guess it’s instacart is it like some delivery thing that.

Jason:
[43:26] Is partly instacart so it’s complicated so Costco have like shelf-stable products which they do sell via their own e-commerce on have for a while,
but for your point they don’t do it enthusiastically and a lot of Costco execs still like have Fame uh as much as recently as a year ago we’re saying why would we ever encourage anyone not to walk in a store.
And then the perishables you couldn’t get via e-commerce at all and Costco partnered with instacart so now you can get some of the Frozen and perishables.
E-commerce and so you’re exactly right like when someone has a big e-commerce quarter right now what I say is that they left money on the table a year ago and because Costco.

[44:10] Is a hugely successful retailer in spite of not leaning into digital they you know we’re not prepared for the spike in demand for e-commerce they didn’t have a good fresh and frozen solution for e-commerce which is a big chunk of their sales,
so flip side Dollar General comps are down 4.6 percent in this is a perfect example of a company that like.
Did pretty well in the pandemic which is interesting because you know,
they both had something going for them and something going against them like people were worried about their finances in the pandemic and so that certainly worked in favor of Dollar General,
but they were not considered essential goods and so had to close a lot of stores so being down four percent versus last year,
is interesting now I will say.
People all have slightly different definitions like most when I’m saying comps that’s comparable store sales and so.
We take out of that stores that opened and closed but it is possible that Dollar General is only comping open stores against open stores.

[45:27] I don’t know but kind of put this in a an overall perspective their comps versus two years ago are up 17% so generally.
Going in a good direction.

[45:41] And so then Best Buy which I was most interested in Best Buys in a really interesting category there’s a lot of evidence that.
Like some parts of electronics killed it in the pandemic everyone needed a laptop.
The that a lot of electronics products didn’t do that well in the pandemic and so it’s kind of like a mixed bag and then the overall Electronics category actually didn’t do phenomenally well and yet Best Buy reported good numbers every quarter,
and they did again so their comps were up 38% 37.9% which is very strong the.
Then e-commerce like was very modest up only seven percent and that’s reflective of them having a monster e-commerce growth.

[46:27] During during the pandemic that they’re now lapping and so that the interesting number to me at Best Buy is,
for this last quarter 33 percent of all their sales were online so almost a third of their sales were online and that’s down a little bit at the peak of the pandemic last year when a bunch of stores were forced to close because they were non-essential,
forty-two percent of Best Buy sales where online so there was a.
The overall consumer electronics category a lot of people are reporting that it’s fifty percent online which is mostly thanks to Amazon,
so it’s empty you know best by being at 40 last year you could have imagined that they would just build on that but it does appear that as people are going back to the stores.
The next earnings is a cautionary tale for me is that Burlington Coat Factory said they had good comps this quarter of their come swept 20% in general apparel company comps this quarter our monster because.
Apparel like nobody bought any apparel a year ago,
um and so 20% I would actually argue doesn’t feel that big and then I can’t give you an e-commerce number because Burlington Coat Factory turned off their website a month before the panda.

[47:48] Yeah which is at the time I felt like a bad decision but then in hindsight it looks like a really bad decision and then insult to injury,
um profitability was down on their 20 percent comp and you go we’ll gosh Jason why we’re was profitability down oh well they had a bunch of expenses related to closing their website.

Scot:
[48:07] That’s nice.

Jason:
[48:10] Can’t be fun to mention in the in the shareholder meeting and then the last earnings which.
I think was also today is the gap and they’re much more typical of what what I’m seeing in apparel companies their overall comps were up 20%,
um and they’re they’re digital was up 82 percent which that is impressive that’s.
You know we are seeing the the rate of growth of most e-commerce dip Gap was are really a good e-commerce operator with significant e-commerce sales so for them to be up 82 percent,
that to me says that a bunch of people like are are the the e-commerce habit for closes.
And to kind of put this in perspective in this quarter when people were welcome to walk into a Gap Store e-commerce still representing 40 percent of Gap sales so so you know they’re they’re almost a digital first retailer this.

Scot:
[49:09] Sidebar did I see some news out it was kind of a head scratcher and it kind of was watching seen between the background and I just kind of heard it in passing that the Gap is going to be selling in Walmart.

Jason:
[49:20] Yeah so that is interesting not.

Scot:
[49:24] How does that work does it like a micro store thing.

Jason:
[49:26] Not exactly so Walmart launched a New Home Goods line that is a gap partnership Gap designed.
Um and so you can think of this like in the past like Gap has had home good or I’m sorry Walmart is had home goods from Drew Barrymore and so you know they’ve hired influencers that have a good reputation so this time they hired the gap.
To design these products and I’m not certain of this but.
I don’t think that these products are going to be for sale in the Gap I think they might exclusively be at Walmart so this,
Gap kind of acting like a brand as opposed to a retailer and making an exclusive product line for Walmart right and you know we’ve seen a lot of Brands successfully do that with Target.
And surprise and Delight Target guest by you know having a product that traditionally you wouldn’t expect to see in Target in Target and in that feels a little bit like what this play is,
and Scott you and I have a good friend who used to run home goods for Walmart and is now at the Gap so.
It wouldn’t surprise me if she had a hand in this particular program.

Scot:
[50:42] Causation or correlation we don’t know what to see if she’ll come on the shown give us all the details.

Jason:
[50:47] That’s a great idea yeah so that was a lot of news for what we thought was going to be a slow news week.

Scot:
[50:56] Yeah yeah thanks for covering the tail end of those results I think that ties in nicely with what we covered last time but let’s jump into listener questions.

Jason:
[51:12] Question question question question their.

Scot:
[51:17] Our first listener question comes from one of the longtime friends of the show Michelle Grant at the small software company called Salesforce or something like that
and her question was what has been the impact of apples IDF a update and I’m going to sneak my answer in here Jason because I know you’re more of a guru on this
I think it’s a little too early to call because this is just pretty brand-new and I think the most interesting.
Shareholder call is going to be Facebook’s Q2 results and I’m kind of,
on pins and needles to see see what they say about it because I think I think that and Shopify could be the two places where we if there’s gonna be an impact,
that we kind of hear about it and get some information about it so so those are two that I’m keeping an eye on I did see,
Revolution clothing Revolution apparel they they kind of signaled in their q1 that guidance for Q2 that,
they felt like there could be some softness in the way the way they announced it they already had some data that showed it was having an impact so those are the those are kind of my brief thoughts where you seeing out there and in retailgeek land.

Jason:
[52:34] Yeah I would say like Top Line is you’re exactly right too early to tell it is the the IDF a changes are making their way into a lot of.

[52:45] Earnings,
like Q and A sessions at this point but like it doesn’t seem like they’re most retailers are claiming they have data that they’re being impacted their just like management teams are speculating that it is having an impact.
Um pretty quickly after the the new update kicked in there was a lot of Buzz going around about these really low opt-in rates right so again,
in all the world everyone had a unique number on their mobile phone and and so advertisers could use that number to see what apps you installed on your phone,
in the new world you have to agree to let each app see your license plate if you will,
and so there’s this requester that pops up and you have to say yes they can have this data or no they can’t have this data so that’s the opt-in rate are the people that said yes and there are all these articles coming out that like.
A tiny fraction of users are opting in that like opt-in rates are like four percent for example was a common.
Stat that came out and there are you know these,
these third-party companies that track app installs and that and a lot of these numbers were coming from them and so a couple of things to know those app companies don’t actually have any way to know what the.

[54:09] Rate is like this is people like running surveys and asking consumers if they accepted the opt-ins or not,
um which customers can’t reliably answer and might not accurately answer so don’t put a lot of stock in those numbers and then as as things have progressed a few more weeks,
the numbers are now varying wildly like one company will say 4% and another company will say 38 percent.
And one thing that’s emerging is something that seems really simple like calculating an opt-in rate it turns out all these companies have found ways to too.
Mess with the numbers so we can’t even agree on what an opt-in rate is right so a lot of.
You know again in theory you have to opt into every app so so Scott like if you opted into three of the apps and out of seven of the apps.
In theory each app should have a different opt-in rate right and then you know that the average should be across all 10,
but a lot of these companies are reporting like if you opted out of anything you’re an opt-out and so that you know caused an artificially low number that you know fit in narrative that a lot of people wanted to.
I think the real thing is we don’t.

Scot:
[55:24] Doesn’t it at the OS level don’t I tell isn’t there setting.

Jason:
[55:28] There is also a setting that’s a global setting at the OS level that a requester did not pop up asking you to make a global preference.
So you would have to proactively go find that setting some people are finding it and again how should you count them in these numbers,
another thing that came up and I tweeted some examples of this is.
Different companies did a dip a better or worse job coding the the opt-in request,
and so you know Apple use some some pretty inflammatory language and their requester but then each app gets an opportunity to explain why it’s to a consumers benefit.
To opt-in right and so you kind of got to make your case.
And at least for me on Facebook the way Facebook coded there a.
They made a case for why I should want to give them that data,
um but the way they coded the app the the Apple window with the inflammatory language popped up on top of their tests and it was modal I had to answer before I could get it out of the way so I could never see Facebook’s.
Which is wild if you think about it that they that you know a kept company with as much at stake as Facebook wouldn’t have a perfect you know best case execution is somewhat surprising.

Scot:
[56:52] I feel like behind the scenes there’s this measures countermeasures counter counter measures going on between the companies.

Jason:
[56:59] Yeah all of these things are interesting what you know the most tangible thing is there definitely are some advertisers that are saying like it feels like CPAs are going up so that the.
The cost to regen audience is going up now is that like because of other market conditions or is that because some of these ads are less effective because or you know harder to measure because of the idea of a changes again.
Too early to tell you know definitely companies that aren’t performing well are mentioning that as one of the factors that might be negatively influencing them.
It might by the way also show up later in the Epic case right so.
We’ll have to like yeah so that could be a place where we get better visibility in the some of this data if it comes up.

Scot:
[57:48] Awesome
so Michelle stay tuned we this is kind of both of our favorite topic right now so we’re going to keep our ear to the ground and keep reporting on this,

[58:00] okay our second question comes from Sean mcginnes and he asked when will supply chains return to normal lead times what’s causing the issues were experiencing today,
yeah so you want me to take her for a shot at this one or do you.

Jason:
[58:14] Yeah yeah hit me Scott.

Scot:
[58:16] All right so so to foundational things here so we you know.
Most of the products that we would talk about in e-commerce world have a supply chain of their manufactured
usually not in the United States so usually in China Taiwan
maybe India Singapore usually it’s coming out of Asia so that’s part of the supply chain then it frequently to be economical has to get your on a boat,
and then it has to get offloaded at a port and then transported somewhere at least once usually two or three times until it makes it into fulfillment centers or retail stores where it’s sold.

[58:59] So then so that’s the foundation number one is how the kind of links in the chain then number two is let’s think about some of the disruptions we’ve had number one covid know to we’ve had the Suez Canal number 3
we’ve got a really weird
unemployment situation in the United States right now where it is it is near impossible to hire people and we can talk about the root cause of that I don’t know where you come out on that one Jason but we’re you know I’m pretty squarely in the camp that it’s this unemployment insurance stuff is made it very hard to hire,
folks especially you know kind of at that hourly labor level but that that is a factor so if we kind of think about that
you know so covid hit and a lot of these factories shut down and then they
back up and then the demand coming into them whipsawed because we’re their biggest the United States is the biggest consumer that stuff
and you know imagine you were making I don’t know apparel and then you probably wound down the Factory and then suddenly you know I think a lot of people are surprised by how fast things have come back and how fast the vaccines came out
and now this now that factory is having spent so that that’s part of the.

[1:00:17] Problem in that part of the chain and then the canal caused it to be very a backup of boats coming over
the slow boats from China and you know there have been very long lines also at the ports because there’s so much coming in and
this huge surge of demand that that it’s hard to unload those things because it’s hard to find dockworkers now and it’s hard to find truck drivers
and it’s hard to find warehouse workers and it’s hard to find you know people at FedEx to hire and it’s so
so you know I think I think it’s probably not going to clear up
until in September is one of these unemployment benefits run out there are some,
things on the books to look to the extend that that I’m crossing my fingers don’t happen so I could see this you know being a
all the way through October problem and that’s it there’s no more shocks to the system so we’ll have to see there there’s been so many shocks to the system that it feels like there could be more coming,
what do you think Jason.

Jason:
[1:01:25] Yeah no I generally so I would agree with all of that I’ll confess early on when people are talking about,
the unemployment benefits impacting labor I was a little skeptical but I feel like the evidence is pretty clear at this point that it is and especially.
You can compare some states that have more generous unemployment benefits than others and the the ability to attract low-wage labor in the states with more generous benefits as harder.

[1:01:54] And then a bunch of retailers open up and get busier and retailers are fighting tooth and nail right now to hire hourly employees and having the Rays there,
their wages and all those sorts of things so I think that those are all those factors are true the the labor shortage is definitely true odds of retailers are feeling it I would add just to other things,
aside from.
The ability to deliver inventory like obviously most brands and retailers were conservative in the inventory they ordered a year ago not knowing like that vaccines would work.
And where we’d be in the pandemic and so they you know there is the inventory is low right now partly because.
Everyone was conservative in what they ordered and so a byproduct of that is.
People are having a discount less than they usually do and they’re actually making slightly more profit on their sales than they usually do,
because the discount rates are lower but I do suspect that people are kind of you know trying to Goose those orders now and and you know we’ll probably see him and Charlie levels get get higher as we get closer to Holiday.
And then one other long-term impact on this whole supply chain is the fact that.

[1:03:12] A bigger percentage of total sales is happening through e-commerce is we talked about via ship again another things on the show.
The demand for shipping Parcels was Far doubt exceeding the capacity to ship parcels and that’s happening even more now right so.
You know I think there’s some data this year that.
That FedEx is in particular like you know having degraded delivery times because and they just announced some additional surge pricing so,
you know they have a certain amount of parcels they can deliver and they want to maximize the profit for each of those Parcels so I think that problem.
Is going to be a longer term problem that’s going to be with us all through holiday that as a you know a higher percentage of all sales happen in e-commerce we’ve got to figure out the ability to fulfill all of those packages.

Scot:
[1:04:07] Yeah it was interesting because I was talking to someone that all say is in the logistics kind of you know
category that has a lot of these type of hourly drivers
and they said Amazon came in and got really aggressive and offered him all $18 an hour and basically sucked up all the drivers and kind of this Raleigh-Durham area where I am so that was,
yeah that’s interesting this is this kind of like land war going on this last mile area that’s part of that supply chain that
that I’m sure the FedEx is in the UPS’s the world are starting to feel and Amazon seems to be super aggressive it’s kind of counterintuitive because you also hear all these stories about how badly the drivers are treat being treated but,
you know what what what I found is that that hourly type worker
they’re not super loyal very coin operated which I have a lot of respect for and Amazon is offering more coins and it may not be you know you don’t get as much breaks or anything like that but the hourly rate is really good and they are soaking up a lot of those
those kinds of last mile delivery people so it could also be the case that that it’s not
evenly distributed supply chain problems that may be Amazon’s in a bit of a better position.

Jason:
[1:05:26] Yeah no for sure and Scott that’s going to be a good place to leave it because it’s happened again we have blown through a perfectly good hour of our listeners time so as always if you enjoyed the show we sure would appreciate that five star review on iTunes.

Scot:
[1:05:43] Thanks everybody and.

Jason:
[1:05:45] Until next time happy Commercing.

May 20, 2021

EP264 - Retail Earnings, E-Commerce Quarterly Data 

US Dept of Commerce Data

April Sales – Flat vs. March 2021, up 41% vs. April 2020 (severely Covid impacted month). Many categories were wildly up, most notably Apparel which was up 727% vs the same month last year.

Q1 E-Commerce – Up 7.7% vs Q4 2020, up 39.1% vs Q1 2020.

Retail Q1 Earnings

  • Walmart – US E-Commerce up 37% YoY, same-store sales saw up 6%  YoY
  • Target – US E-Commerce up 50% YoY, same-store sales saw up 18%  YoY
  • Macys – US E-Commerce up 34% YoY, same-store sales saw up 62.5%  YoY
  • TJ Max – Same-store sales up 16%  YoY (E-Commerce not disclosed)
  • Lowes – US E-Commerce up 36,5% YoY, same-store sales saw up 11.3%  YoY
  • Home Depot – Same-store sales were up 29.9%  YoY, they did not disclose e-commerce for the first time (which is usually a warning sign).

Episode 264 of the Jason & Scot show was recorded on Wednesday May 19, 2021.

http://jasonandscot.com

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

Transcript

Jason:
[0:24] Welcome to the Jason and Scot show this is episode 264 being recorded on Wednesday May 19 20 21 I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-host Scot Wingo.

Scot:
[0:40] Thanks Jason and welcome back Jason Scott show listeners.
Jason I’m still basking in the Afterglow of that conversation with Brad Stone that was really good and if listeners enjoyed that episode or any of the other ones that we put out any of the other 262 episodes available for there listening pleasure.
We would love it if you would take a second right now pause the show will after I explain this pasta show go and review us in your favorite,
podcast listening technology so if your on iTunes and using that that would be great or Spotify or.
I don’t know the Amiga podcast listener whatever floats your boat if you would go in there and rate US that would be great because.
That’s how we get paid here at the Jason Scott show we get paid by per review of so we really appreciate that.

[1:31] Jason I wanted to pick your brain before we jump into some numbers that the topic of the show is going to be looking at some of the results from some of the retailers we track and then also there’s some other data,
before we jump into that I have seen a lot of people on Twitter talking about it’s either an app or a site that I don’t know anything about so I figured you would.
And I think it’s called Chez in or shine or she in or something like that it’s spelled sh Ein
they came on my radar because it is a gues a Deca cord so it’s north of a 10 billion dollar valuation and it kind of came out of nowhere with over 10 billion dollars in Revenue last year
so what is this giant monster site that that I haven’t heard of that’s on everyone’s radar all of a sudden.

Jason:
[2:19] Yeah you you nailed it it’s pronounced she in.
And I it sent it’s a Chinese company it sounds like a Chinese word but I think that’s actually a trick I think it’s in English name and I.
I believe it was originally she’s an Insider and it got shortened to she in.

Scot:
[2:43] Nice I don’t know if that’s proper English but we’ll go there.

Jason:
[2:48] Yeah that might have been why they shortened it.

Scot:
[2:51] Sometimes that gets people attention so it can be a good good strategy.

Jason:
[2:56] And the URL is much easier to type and when you’re a deck of cards you need a good URL.

Scot:
[3:01] Yeah maybe she’s an was taken.

Jason:
[3:05] I have a feeling it was.
Yeah so they’re a fashion brand they’re a direct-to-consumer fashion brand I mentioned that they’re based in China.
To my knowledge there not selling Direct in China yet which is interesting,
so they mostly sell in international markets including they have a significant presence in the US so,
so us listeners can go to she and.com it’s glittery sh e i in.com.
Um and shop for apparel.

[3:41] And they would self described themselves as real-time fashion and so the differentiation would be you kind of have,
the original you know Trend based fashion retailers like a J.Crew or Abercrombie & Fitch,
and then you know they really got challenged by these so-called fash fast-fashion Brands like H&M and Zara that you know would bring bring products to Market much faster,
and therefore you know have an opportunity to hit Trends much more quickly,
they had you know wildly more agile Supply chains and then she and takes that to a much further extreme,
they allegedly have a supply chain that can you know get something from idea to Market in three days more typically it’s five to seven days,
and you know instead of putting putting Brands out there at the equivalent of the Paris fashion show and taking orders,
um they’re primarily working through influencers on various social media platforms throughout the world,
um primarily micro influencers and creating demand,
for their apparel and they’re using the data from all of their sales and their direct relationships with all these consumers.

[5:04] To dictate what garments they make and what styles they leaned into and how they apportion,
dollars to inventory so that’s that’s where the kind of real-time fashion comes in that they’re sort of a data-driven fashion.
Company that would kind of next-generation hm or a sauce or somebody like that.

Scot:
[5:30] Cool so these cases a Kardashian says some kind of shade of pink is going to be the hot thing and then four days their sites covered in that product is that kind of the.

Jason:
[5:40] Yeah yeah although I I think a Nuance but more often it’s a favorite yoga instructor on Instagram that has 20,000 followers that says something is really cool,
and so then enough of that gets made for those 20,000 followers.

Scot:
[5:59] Wow nursing solo actually be small small volumes like that.

Jason:
[6:02] Yeah the I do believe that they are smaller runs but it’s like they’re more likely to be working with those those kind of influencers than a Kardashian.
And arguably those kind of influencers are a lot more authentic I think you know most most.
Kardashian followers with know that like give Kim you know put something in her feed that she got paid a million dollars to do.

Scot:
[6:26] Very cool I know I know your kind of giddy with excitement about data and because last Friday the Department of Commerce came out with one set of data and then
yesterday they came out with the other so we have now got the complete look at the data and
I know I’m excited to hear your analysis and how did your data science robot do with all this new data coming in.

Jason:
[6:51] Pretty well pretty well so there were kind of two releases so it’s a big week Friday morning we got our monthly release and,
the super brief primer every month the US Department of Commerce releases retail sales data and they release an advanced version which is kind of pulmonary and has some kind of course categories,
that is data for the previous month so on Friday they release the Advanced Data for April they release a more.
Bigger sample size data set with more granular categories that’s called the standard release and that’s a month.
Inner ear so that would be the March data,
and then once a quarter they release some specific e-commerce data and that e-commerce data got released yesterday so so we have both the the monthly data and the e-commerce data to talk about.
Um and so let’s maybe start with the monthly data Everyone likes to talk about.
This month’s sales versus last month’s sales which is I always remind people in retail isn’t isn’t.
A very good way to think about it but just because that’s the way you’ll always see it reported I will tell you that April retail sales were flat versus March so exactly the same.

[8:15] But if we compare April of 20 21 to April of 2020 retail sales were up a whopping forty six percent.
And it’s probably obvious to you why they are so dramatically up but April was the,
the month in the United States that was most impacted by covid and that was you know right when like we had all the fear and people didn’t know how it was going to play out and.
Spending dramatically curtail the last April retail sales fell off a cliff so we’re comping against.
A really soft number and then there’s there’s actually still some economic stimulus trickling in to the April number this year so.
A perfect Confluence to have super high comp so and we did 46 percent.

[9:06] When you talk about this data it’s always kind of important to remember there’s you know hit there’s winners and losers because of the pandemic so the,
by far the the outlier data from from this was that the apparel category which has.
Like I would argue had a lot of headwinds before the pandemic got absolutely blitzed in the pandemic.
Apparel had the greatest comp month in the history of apparel since someone like invented the first fur to put on the naked guy.
Perry was up 200 and or I’m sorry 727 percent from April of 2020.
So good luck comping against that next year.

Scot:
[9:51] Yeah that’s gonna be a record I mean I know you’ve kept this data for a while but so I like the biggest.

Jason:
[9:57] Yeah it’s like by almost an order of magnitude it’s the biggest it’s the biggest jump I’ve ever seen in any category a bunch of in a way like.
Clothing with so soft and things have opened up a lot this this month so it is a good sign for apparel and is we’re going to you know touch on later there other reasonable signs that that apparel is recovering and I would even say.
It’s recovering a little more prominently than I might have expected it to so so that’s great news for everyone in the apparel industry.
I’m happy for all of them there are other categories that were.
Helped by the pandemic that were still wildly up right so you know people didn’t travel during the pandemic so they spent a lot more money on their home.

[10:45] So furniture and home Home Goods was a good category for the whole year furniture and Home Goods was up to hundred percent from from last April a hundred ninety six percent.
Sporting Goods which was another huge category that benefited from people not going to the gym they were up a hundred and fifty five percent from last year Electronics which had kind of a mixed pandemic some subcategories of electronics really good somewhere bad,
um but Electronics was up a hundred thirty nine percent so a bunch of these categories were way up.
Restaurants and bars you know kind of like close you know I had a had a tragic pandemic they were up a hundred and Seventeen percent so.
A bunch of the categories that that makeup you know retail were wildly up and then obviously there had to be some.
I think almost no one was down in fact I think nothing was down from April of last year but the you know some of the categories that didn’t have his biggest slow down last April,
had had more like typical typical growth like the general merchants.
You know that didn’t have to close in April at all like they’re up 15% year-over-year largely because they they didn’t have as big a drop last year.

[12:02] And all that averaged out to what did I say 40 39 percent today.
Forty-six percent so that’s kind of the story of overall retail sales,
and then you say well what about e-commerce and so e-commerce data is not monthly its quarterly so we on yesterday got the q1 data for 2021,
um so again two ways to think about that q1 versus Q for so versus last quarter and q1 versus Q 1 of last year so year-over-year and again I always encourage you,
I think you’re over here for retail data so q1 is up 7.7% from Q4.

[12:48] Which is actually a good number like ordinarily you would expect e-commerce to slow down and Q 1 versus Q4 because que no que for such a big quarter.
All of retail was up seven point eight percent so so e-commerce kind of exactly mirrored retailgeek growth looking at q1 versus q 4,
but when you look at Q 1 versus q1 of last year and so again last year was not pandemic impacted,
um it’s a much different story e-commerce was up 39.1% q1 of 2020 versus q1 of 2019 so very robust growth much bigger than typically what we see.
And that compares against Seventeen percent retail growth so that kind of in a nutshell highlights the dramatic acceleration of e-commerce as a result of the pandemic.
And again you can kind of drill down into some categories and the Biggest Gainer would have been food and beverage and that makes perfect sense right because again.
There wasn’t a lot of grocery e-commerce before the pandemic and everyone weren’t how to shop online.
For groceries so e-commerce grocery was up a hundred and seven percent.

[14:09] I’m trying to think what other categories had a the the do-it-yourself and Home Improvement category was up 63 percent,
the general merchandise which has a lot of food and Essentials in it was up 62 percent,
so you know a bunch of categories had had,
you know way outsized e-commerce growth so that’s what the industry did and so as a reminder.
When when you’re hearing all these companies do their earnings and they talk about their e-commerce growth and they throw out a big number you really ought to be comparing it to this 39 percent to see if they grew more or less than the industry average.

Scot:
[14:52] Then if I remember Amazon international did but us was a little below yes it’s like 36.

Jason:
[15:00] But in there right in that ballpark they not surprisingly they closely mirror the total industry growth because you know they alone depending on how you count our call it 35 to 45 percent of all e-commerce in the US.

Scot:
[15:16] On the crazy still can’t get the 727 percent out of my head on that number.
If you went and annualized it still would be like 60% I guess you have to compound it I don’t know.
Because it effectively the same as like not shopping for a year and then turning it back on is that kind of like essentially what happened but it seems like it’s even higher than that.

Jason:
[15:38] Yeah it is deeper than that like I’ll be honest the it’s fun to talk about this stuff but it’s such a meaningless number to comp against like month-over-month to come to comp against last year when April 20-21 was the,
the most like unorthodox month in the history of retail so to kind of,
Rebel things out a little bit what you could do is you could say well what are we your year-to-date this year versus last year,
and year-to-date apparel is up 50 percent versus last year so,
that is still very meaningful you know if you think about year-to-date it is 4 months and 3 of those months weren’t impacted by the pandemic.
Like fifty percent growth is still is pretty significant.
But it does you know apparel is a wild outlier and how fast a grew this month but if you work year-to-date you know category like Sporting Goods has grown more your today than apparel has.

Scot:
[16:41] This may be one of the first time off lines grown faster than e-commerce to.

Jason:
[16:47] In that one category.

Scot:
[16:47] I mean I know it’s a month in a quarter yeah no I mean like all in it was.

Jason:
[16:52] 7.7 versus 7.8 yeah Fair.

Scot:
[16:56] Arson.
Cool and then so then we had a bunch of retailers actually put up their numbers so then that’s super helpful to kind of so now we have this kind of Baseline so that’s the rising tide
and I know you are official Walmart tracker what did you see out of Walmart’s numbers.

Jason:
[17:16] Yeah so before we jump into that list maybe just have a moment of appreciation for all of the retail reporters this week because I feel like.
We had a ton of earnings calls and a lot of them are like late at night or off our so I do pity some of those guys that had.
Tour card for one week a year or when we could quarter I’m teasing so that being said.

[17:40] Walmart like I would argue was a significant winner in the pandemic and they continue to have strong momentum so.
I’m not going to get into all the financial numbers that you know are tied to the stock performance because you know I don’t care that much about the stock performance of these companies I care how much stuff they sold,
so the two numbers I’m can I’m caring about the most our same store sales comps and e-commerce comps,
so same store sales growth for Walmart was up six percent,
versus last year and e-commerce was a 37 percent versus this quarter last year.

[18:23] So those those are both good numbers normal same store sales growth like on average we look for is around three or four percent so six percent very healthy,
and you know e-commerce comps used to be in the kind of 15 to 25% so 37 percent,
is a good number I will tell you that because of the pandemic people are talking a lot about comps versus two years ago and so that six percent comp sounds good but,
this quarter’s retail sales were up 16% from retail sales two years ago so the year over two year calm,
is pretty pretty stellar for a retailer of the size of Walmart the largest retailer in the world to be up 16%,
is a sign that they were definitely a Shear gainer in the pandemic.
A couple of things I’ll point out that are interesting.

[19:22] One of the trends in the pandemic is people are choosing fewer stores and giving those stores more their business and so my argument is like we need to be looking at who the winners and losers are in that calculus Walmart’s a clear winner,
um their transactions are actually down three percent so three percent fewer people walked in and bought something from them,
but every time someone bought something they bought ten percent more than they did last year,
and again if we look at that on a two-year basis their transactions are actually down over eight percent and their basket sizes up 32% so what’s happening is,
you know I’m a millennial that used to get booze at Total Wine and produce from Whole Foods and shelf-stable stuff from Walmart is now getting everything from Walmart and.

[20:08] That’s a big win so so overall I would argue that that was a really strong quarter for for Walmart,
the story of all these earnings is going to be the e-commerce is still going to be wildly up but the growth is going to be decelerating so I kind of tried to pull the last several quarters from all these companies,
and kind of lay out a trend so first quarter to the pain Dynamic Walmart e-commerce is up 97% second quarter of the pandemic Walmart e-commerce is up 79% third quarter to the pandemic Walmart e-commerce is up,
sixty-nine percent so amazing run,
for the second largest e-commerce site in the US and then q1 they were up 37% so 37 percent is awesome in every way except that it’s much smaller than.
The last three quarters.

Scot:
[21:01] Yep and then I was reading the transcript and I saw that John ferner president of the US was talking about the last mile business I think one of the analysts asked about it
and you track this morning I do but they have a ton of stuff going on with Last Mile they’ve got that thing with the body cam they’ve got a
you know a drive Network kind of a thing,
this was interesting so they said we’re excited about our last small business we’ve been operating our first delivery vans that are Walmart branded in the market here in Arkansas
and we’re learning a lot as we go forward when I when I saw that I had this mental image of my street that already has a couple Prime Vans going up and down at a FedEx and UPS and I imagined a Walmart truck followed by a Target truck then a,
J.Crew truck and Abercrombie truck.
The target you know that’s a Target so I know where does this Home Depot and Lowe’s trucks where does this where does this go.

Jason:
[21:56] Yeah well first of all I think maybe Walmart just decided that there was you know it was too easy to buy a delivery van in the US so they wanted to make it more difficult.
Because as I’ve learned from you those things are in very short supply but yeah the.
Last Mile sales,
outside of the store are the story of the pandemic and we’ll be talking about that with some of these other earnings,
reports but I want to say I’m not sure Walmart disclosed it in in their earnings call but like I’ve seen other reports from Walmart that why curbside pickup was up a hundred and thirty percent class quarter.
Um so so all these these last mile things are way up and if you’re at Walmart scale you have to try a bunch of different things to try to be able to get.

[22:46] Those those groceries from the parking lot to the customer so most often it’s the customer comes to the parking lot and picks it up.
But but Walmart you know is partnering with a lot of third-party delivery services so you know I think they sort of have a network of them including instacart that they use in some markets.
Um they started their own delivery service where they contract drivers to drive for to them and those drivers were mostly using private vehicle so they you know they were competing against Uber to get drivers to drive Walmart orders to people’s homes,
that’s called spark delivery and there’s a flavor of that where they tried to recruit Walmart employees to be the drivers,
and so what I think John was talking about specifically in the earnings is a specific variant of that spark delivery where instead of the driver using a private vehicle that they’re using a test Fleet of Walmart branded vehicles,
and there’s a bunch of benefits for that when you’re delivering grocery you can have refrigerated Vans and climate control,
so you can start doing more deliveries per trip instead of like kind of point-to-point single deliveries which is what you mostly have to do with.
Independent contractors and private Vehicles so I think that’s what he was talking about but as you pointed out Walmart also has in home,
delivery that I forget what they call it but they have a porch delivery service where they install.

[24:13] Coolers in your porch and deliver to that they’re you know they’re they’re wisely,
kind of testing every delivery method you can imagine and there is demand for all those things but don’t lose sight of the fact that the high volume big money for these guys that aren’t like predominantly in,
in high density metropolitan areas like Walmart is curbside pickup it’s people coming to the store and picking up their orders.

Scot:
[24:39] Nursing so you’re not not envisioning 40,000 Walmart trucks are Vans delivering stuff every day.

Jason:
[24:45] I doubt it you know II think we’re going to I think I have a feeling that Amazon’s last mile delivery capacity is going to grow a lot faster than Walmart’s I just.
I just think when you like look at the demographics of the Walmart shopper,
the unit economics just don’t work as well but who knows maybe I’ll be wrong I can’t tell you in general consumers don’t want to pay for any of those delivery services so that’s the rub you got to find a way to profitably do that.
Now you know Walmart’s traditional Nemesis is Target and they also reported did you get a chance to look at the Target numbers at all.

Scot:
[25:27] I did I was looking for an announcement of Target Vance didn’t see one but on the results so some of the highlights.
In the u.s. stores were up 18% on a same store sales basis digitalism 50% so quite strong beating your friends at Walmart there.
That Blended together puts the us up at 22.9.
Same day which you know they’ve talked a lot about and then has been growing Way north of a hundred percent if I recall slow down to a paltry.
And that’s powered by shipped I’ve used that service a lot it’s really quite strong and they’ve done a really good job of that and integrating it right into the system and check out everything.

[26:08] Curbside curbside did give them their triple-digit grower up a hundred and twenty-three percent.
So that is interesting to see so maybe maybe we’re seeing people as the pandemic the thaws move from same-day delivery which does have a fee to more of a curbside.
As you’ve predicted pretty frequently.

[26:30] Ninety-five percent of their orders were filled from stores so this was this is one where they have been touting ship from store for a very long time and.
This number is crept up if I recall it was kind of like,
60% 80% 95% I think is the highest I’ve seen it that’s that’s a lot makes you question why do you have a warehouse if you’re only shipping five percent your orders out of a warehouse has the other flip side of that number,
and then the same kind of trend that you gave so if we kind of go back a year,
Q2 of 2020 e-commerce was a hundred ninety-five percent and then Q 355 percent.
Q 418 percent and then q1 of 2021,
it grew only fifty percent so definitely seeing these as as we’re lapping at least on the online side as or lapping the covid quarter,
the growth rates are coming down pretty substantially that’s that’s q1 you know could actually go,
yeah flat- on some of these folks as we get into Q2 because that was where the the bottoming out was just be interesting to see that but,
you know what’s nice for these omni-channel guys is the stores are picking up and you know in there comping very positively against this time last year so it’s been nice for them to have that portfolio of online offline and then even the subs of
delivery and curbside and whatnot.

Jason:
[27:54] Yeah no hundred percent and I think.
Again I think Walmart and Target are kind of the net winners in the in the pandemic so they you know both both put up great numbers like you know objectively the target numbers across the board are better it’s just against a much smaller base than.
Then Walmart so you know Walmart is impressive because they already were so big Target as are just super impressive and I feel like,
hugely beneficial that Target that they had Acquired and invested so much in shipped right before all this happened and made those capabilities.
Particularly valuable the thing I’ve been tracking is Target you know has recognized that that people like that last Mile and they like coming in the storm picking stuff up in the parking lot so they’ve been dramatically expanding what you can pick up so,
originally you couldn’t get groceries from curbside pickup at Target and so during the pandemic they slowly figured out how to add groceries to that mix and you know what they added this quarter that I think is really smart is adult beverages is alcohol.

[28:59] Which a lot of other retailers do not provide jet so you now can can you ship to get your booze so they’re both competing on last mile delivery with like the drizzly,
yeah and I guess one other thing I would just say about Target before I move on,
to me it’s a super interesting I think Walmart and Target both have Smart strategies for themselves and what’s interesting is how diametrically opposed they are I think Walmart is.
Really trying to compete on the long tail against Amazon of skus and try to have as big an assortment as possible and so they’ve leaned into the marketplace,
I think they’re up to north of 40 million excuse for sale now and to do that they’ve had you know really beef up their warehouses you know I think they’re like.
Between Thirty and forty e-commerce fulfillment centers now which is way more than anyone in the US with the exception of Amazon,
and they’ve even had to launch their own you know fulfillment by Walmart service to compete with with FBA from Amazon so Walmart’s doing all these things to compete.

[30:10] For that long tail against Amazon,
Target is gone the complete other way Target is said hey we’ve got 60,000 super desirable skus in our stores and those are the items we’re going to sell and so our e-commerce sales are going to be the same items that are in store sales are and that’s why they’re able to do that,
95% fulfill from store is because.
They’re selling you know a much smaller assortment of items and of course as we’ve talked about in the past a lot of those items are items that you can only get from Target because they’re exclusive Target brands that are doing very well so.

Scot:
[30:45] They’re digital Shelf deniers.

Jason:
[30:47] Yeah so the I think you know those are two interesting strategies that those two retailers are both employing to win.
So then there were some apparel retailers that reported this this week and I think that the big two ones were Macy’s and TJ Maxx I think Ralph Lauren’s going to report tomorrow morning so we’ll have to we’ll have to cover that one next time.

[31:10] Macy’s again apparel starting to have a recovery you know / that US Department of Commerce stuff you know Macy’s has a significant component of.
Of apparel,
so so their comps were as far as I know like the most up I would argue you know Macy’s struggled the most in the pandemic so that makes it,
easiest to comp up and their sales were decimated in April of 2020 so against work you know what kind of comping.
Um one one really bad or a partial bad month in their in their quarterly stuff but there comes were up 62 percent so that’s.
That’s astronomical and their e-commerce comps were up 34% so they’re about the only,
retail example I’ve seen where the stores grew more than e-commerce and so again following the theme.
Q1 of 2020 they had 53 percent e-commerce growth then Q 2 Q 3 they went to 27 percent growth Q4 they went to 21 percent growth,
and then q1 they re accelerated a 34% so that’s.
Um a very different shape than we’ve seen from almost any other retailer and my speculation is because they had such a rough time last year.

Scot:
[32:36] Yeah I think they mentioned they’re having a hard time hiring so I think a lot of this is cut a lot of people by surprise a little bit that you know the.
The surgeon to man so both sides on the down side of the V shape and then the upside is been hard for everyone to kind of manage them.

Jason:
[32:52] Yeah and we’re not even talking about but they’re all kinds of like supply chain challenges like you know everything still topsy-turvy I don’t like I don’t think the apparel guys were expecting this faster recovery I’m they might have hoped for it but I don’t think.
They plan from it from an inventory standpoint so there.

Scot:
[33:09] There’s a chip shortage so if you have any blue jeans that have a chip in them you’re toast.

Jason:
[33:13] Yeah yeah that is crushing some other Industries for sure and I’m desperate for a new Apple laptop so it’s going to it’s going to be heartbreaking if they delay those because of the chip shortage.

Scot:
[33:28] I think they make their own Sulkin so I think you’re okay.

Jason:
[33:30] They do but I still.

Scot:
[33:31] Is the Taiwan semiconductor.

Jason:
[33:33] Okay well we’ll see.
And TJ Maxx is I’m sort of sad because TJ Maxx is one of those retailers that does not report e-commerce growth.
You know it probably isn’t super significant because in their their industry e-commerce is tough because there.
The inventory depth is a lot less and things turn a lot faster so the argument is harder to put all your inventory up on a website,
but their comp sales had a nice recovery there their comp sales for the quarter were up 16% and so you know to kind of put that in perspective last year,
they they were down.
3% 5% and 3% so going from three- quarters in a row two up 16% is a,
a super wild healthy swing you know and I think it just kind of reflects the rebound we’re seeing in apparel.

Scot:
[34:37] Yeah and then the home builders which is home materials companies Lowe’s and Home Depot you know this has been another part of the economy that’s white hot right now in fact there are suffering shortages you can’t get wood
all kinds of things are really hard to get these days so it was interesting to see them solos I’ll do that when you do Home Depot,
Lowe’s they’re cops came out at eleven point three percent which is their same store sales e-commerce was up 36.5%.

[35:07] Which is pretty good you know if we kind of if we’re kind of keeping score here we had Target e-commerce at 50,
Walmart at 37 and then Macy’s at 34 so,
yeah these guys are right in there at 36.5 so in with the pack there,
but then if you look at the trend same story so Q 2 year ago effectively a hundred and thirty five percent Q3 of 20 2106,
Q4 of 20 21 21 and then q1 2021 36.5%,
when I see numbers like this I’m kind of thinking well if I’m the head of e-commerce there you know working on your 2021 bonus plan would have been pretty interesting you know how do you,
how do you know what you do you can’t talk about a hundred and forty percent growth so you know hopefully they all figured all that out and come in on or ahead of plan on that side,
so a big jump off there just like we saw with the other ones but to be expected and I think that Trend will continue in Q2 probably hopefully bottom out and then in Q3 will start to see them kind of get to kind of Positive quarter-on-quarter year-over-year Growth trends.

Jason:
[36:14] Yeah I mean it everything’s going to be topsy-turvy for a couple of years here but I take that is really encouraging right like there’s kind of two stories here there’s,
there’s Industries and retailers that did really poorly last year and so they’re they’re seeing big numbers because,
you know they’re They’re copying and very soft comps but Lowe’s and Home Depot which we’re about to talk about like actually did really well in the pandemic so for them to still be putting up,
you know objectively big numbers like 11% store comps and 36% e-commerce comps is a really helpful sign like you might have expected them to get a lot softer if,
if their demand was exclusively tied to pandemic Behavior so.
So that was an impressive earnings for lows and then the only bad news for Lowe’s is that Home Depot looks to have done even better,
um so their comps were up an amazing 29 percent.
And I’m I didn’t pull the data but like I think Lowe’s perform similarly to Home Depot in Q2 of last year so I don’t think this is a day against a different base I think Home Depot just,
had a better quarter than lows which is super impressive and then sadly I can’t tell you what their e-commerce growth is.

[37:36] Home Depot ordinarily does disclose their e-commerce growth but they usually disclose it not in their their earnings filings which is kind of a gap thing,
but in their investor presentation when they’re talking about their earnings and for some bizarre reason this year or this quarter,
Home Depot reported their earnings yesterday but their investor presentation is until tomorrow so we’ll probably find out tomorrow what their their e-commerce growth was but.
To put it in perspective it was you know slightly softer than lows but it’s a bigger,
base so they were a hundred percent in Q2 of last year and then up 80% in Q3 and then up 83 percent in Q4 so it’s,
it’s going to be really interesting to see if they can match rose with that kind of 35 to 40 percent growth and in q1 that’s that’s going to reflect really well for them.

Scot:
[38:29] Freckled extra walking us through that so it was really interesting to see this data as compared to the US Department of Commerce data and for we sign off it wouldn’t be a Jason Scott show without.

Jason:
[38:42] Amazon news your margin is there opportunity.

Scot:
[38:57] Yes I thought I would sneak a little quick Amazon news in here a couple things none of these are interrelated other than the Amazon connection.
So some of the logistics folks I saw kind of you know chalant Lee said hey look Amazon are which is their their network of planes that deliver Freight back and forth that the kind of competes with FedEx and UPS to some degree,
they added Pittsburgh and Kansas City as destination airports so you know they’re building out this networks they started at,
CV G which is kind of the the main airport that like near Louisville that a lot of a lot of people use here,
I’m Cincinnati Louisville and that kind of was the Hub now they’ve expanded from one airport Hub two to three and I think this is like five and six that they’ve added and there’s been a lot of reports that we haven’t had time for on the show where they’re buying more and more planes,
so this Amazon Logistics infrastructure just keeps getting bigger and bigger,
I’ve stopped I used to track the number of fulfillment centers I’ve stopped doing that there’s other people that have full-time folks that track that now but it’s just insanely massive and and even hard to keep track of they’re so far ahead on that.

[40:11] One I thought of you when I saw was they did a little Pharmacy news where they were talking about how they’re going to bring price transparency to the pharmacy.
There’s all these sheep I know how these work there and I do but there’s all these discount cards that are out there and all these different you know and then of course copay and not copay,
so they announced that they’re going to have a pretty simple place we can go and enter all your information and it’ll kind of give you total price transparency but also kind of share where the best where and how to get the best prices.
Did you feel like that was a game-changer or is that just kind of a yawn.

Jason:
[40:47] I’m not sure I would call it either the.
To me I felt like Amazon putting their own user experience on an acquisition that they made last year that we talked a little bit about on the show so they had one of these like Pharmacy,
discount plans for non prescription meds and I want to say it was I get these confused sometimes but it was.
It was a good RX or RX saver maybe so they acquired one of these discount plans and and so I think the announcement was them kind of.
You know taking the friction out of that and making that a more robust offering and and kind of rebranding it as Amazon.
So that’s it’s a step forward but I’m not sure I would call it a game changer changer.

Scot:
[41:38] Okay one small step for pharmacy transparency one giant leap for saving money
the other one that’s really interesting and this is kind of in the rumor phase but
you know I think probably saw that there was a big transaction in the movie space and as part of that it kind of shook loose mg M so the antitrust folks there’s two companies that merged they
I think MGM kind of had to be a part of that and there’s a lot of talks that Amazon’s looking at buying MGM and they have a massive Library,
I think on the new movie side they’re not super exciting they’re not one of the top top folks for new movies and new content but I think their library is pretty interesting and you can imagine Amazon buying that and then locking it down for only Prime subscriber so that could be a really interesting move,
and then there’s Jeff Goldberg Greenberg your Goldberg Greenberg Jeff Green,
Jeffrey burglars a Jeff guy that I’ve met before he’s kind of their headquarter Dev guy he recently resigned and now they’re saying he may come back to run this so that would be kind of an interesting thing.
Did you see any Amazon news that was interesting too.

Jason:
[42:47] Yeah yeah I’ll add one to your list and I feel like this is in direct response to me being a little annoyed by some of Amazon’s naming and I think they got the message and fixed it for me which I’m very appreciative of,
but as listeners will know Amazon has a lot of grocery store concept so they you know have this chain of grocery stores that they call Amazon Fresh.
Um
The na of course have these convenience stores with just walk out technology called Amazon go well astute followers of Amazon will know that there’s a couple of grocery stores in Seattle that were,
branded Amazon go grocery.

[43:28] Which felt like a weird outlier like you know originally the go concept was supposed to be a grocery store as reported by Brad Stone,
and they had trouble making that work so they downsized it to a convenience store and then they later launched Amazon fresh as their grocery.
And there are a couple of these like pilot stores that were called Amazon GO Grocery and so they’ve they’ve closed one in Seattle and they’ve rebranded the other one to from Amazon go grocery to Amazon Fresh so there,
cleaning up the names a little bit.
And it is interesting because I want to say the Amazon go stores are branded Amazon Fresh in UK as well so there still is some naming confusion but seems like there.
But it’s got I feel like that’s a overwhelming amount of news to cram into one show so we are going to wrap it there as Scott reminded us all at the beginning of the show if you enjoyed this episode or if you learn something from it we sure would appreciate it if you jump on iTunes and give us that
five star review as always if you have any questions or comments feel free to hit us up on the Twitter or Facebook.

Scot:
[44:46] Thanks everyone for joining and we appreciate those five star reviews.

Jason:
[44:51] And until next time Happy Commercing!

May 13, 2021

EP263 - Amazon Unbound Author Brad Stone 

In 2014 Brad Stone wrote the seminal biography of Amazon, "The Everything Store." In it, he discovered Jeff Bezos birth father, and even earned a negative review on Amazon, from Amazon's co-founder Mckinsey Scott (then McKinsy Bezos). Brad is also a Senior Executive Editor with Bloomberg News, and can be found at his personal website brad-stone.com.

This year Brad followed it up with Amazon Unbound, which released on May 11, 2021. Chronicling the dramatic growth of Amazon and Jeff. Bezos (now the richest person in the world).

In this episode we interview Brad to find out all about the Amazon Unbound.

Episode 263 of the Jason & Scot show was recorded on Wednesday May 13, 2021.

Disclosure: Links are affiliate links

http://jasonandscot.com

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

Transcript

Jason:
[0:24] Welcome to the Jason and Scot show this is episode 263 being recorded on Wednesday May 12th 2021 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scott Wingo.

Scot:
[0:40] Well Jason had would not be a Jason Scott show if we didn't talk a little bit about Amazon and for all you Amazon lovers out there this whole episode is a hundred percent Amazon in fact when you think of Amazon
V book that is the defining book about Amazon is called the everything store one of my favorite books and it's by this dude I know bradstone
well we have some exciting news Brad has a follow-up book called Amazon
Unbound and we are really excited to have him on the Jason Scott show to talk about the book and all things Amazon welcome to the show Brad.

Brad:
[1:16] Thank you guys it's great to be here.

Jason:
[1:19] Oh my God we are thrilled to have you I'm pretty sure that when we put together the show schedule for the year Scott circled this date on his calendar back in back in January he's so excited about Amazon books.

Scot:
[1:33] Close to me fourth which is also one of my.

Brad:
[1:35] Let me just say also you know I've been covering Amazon for you know probably 20 years to date all of us
and you know through the years I can count on one hand like the people who've been like my guides and you both you guys have been like tremendous sources of insight over the years
Scot like when I was at the times I would always bug you for insight and Jason and I think you were at retailgeek
the same and so it's just great to great it's I've been a fan of the podcast and it's great to now be a guest.

Jason:
[2:09] We are thrilled to have you we're I want to jump in but for.
The the Casual with our core listeners are super familiar with you to be quite honest bread but for the Casual listener who maybe isn't familiar with you when you are not writing Amazon
books what is your day job can you give.

Brad:
[2:31] I am an editor at Bloomberg News and I actually run the technology team at Bloomberg and so that's 65 journalists around the world who cover the big tech companies and the disruptive startups and venture capital
and cybersecurity and cyber crime and it's a great gig
Bloomberg's a great organization I've written three books while I'm there they're really supportive and we have a TV show we do a podcast we do a newsletter you can find it all at bloomberg.com Tech
and it's a really great team.

Jason:
[3:07] That is awesome and can you tell us how you sort of got the original Amazon bug that I assume triggered the first book.

Brad:
[3:15] So you know I'm at the New York Times in the late
mm first decade of the 2000s what do we call that the two thousand owes and I'm writing about the Kindle and I'm calling up
you know Scott Wingo every time they have earnings or some announcement to try to make sense of it all
and and then eventually I think I sort of decided.

[3:41] I was looking for another book I had written one book that was not well received it was about robots and I was looking for like the you know the the the makeup
project the dignity restoration project and I just you know saw that there were Facebook books and Apple Books and Google Books
and and no one had I felt it done a great job with Amazon and I was the Amazon reporter at the times and the Kindle had had kind of upended
the book publishing industry and Amazon maybe for the first time since the.com boom was sort of seen as interesting and disruptive.

[4:18] And I had no foresight that this was like the defining Juggernaut company of our time or that Bezos would be the wealthiest
person in the world it was it was simply like it it felt like a little bit of a clear Avenue for me to try it again to be an author and and to take on this really complicated company so that was the inspiration for the first book
and you know and then I know you're probably wondering like why why the heck am I such a glutton for punishment that I would do it again
and simply the story just kept on evolving and you know I'd written about the Kindle company,
but it was the Alexa company and the 100 billion dollar company was the trillion dollar company and the marketplace have been globalized and they had bought at Whole Foods and acquired a transportation arm built a transportation arm I should say
and and it's just seemed like chapter to Scotts a big Star Wars fan and you know I had written Star Wars and I felt like okay it was time for The Empire Strikes Back.
And that was kind of the inspiration.

Scot:
[5:18] Yeah you could you could squeak at work Trilogy out of this and maybe even a saga if you keep going.

Brad:
[5:23] Yeah that sounds painful right now but the metaphor does suggest that at some point there needs to be Return of the Jedi.

Scot:
[5:29] Yeah one of when you I remember you know when the first book came out
you know you broke some news you had discovered Jeff's biological father and that was kind of a really big breaking news and today actually the timing is perfect
because you had breaking news and that you discovered something about a tiny little boat that Jeff was was was buying
tell us more about this I think it's called a dinghy is that right a dinghy.

Brad:
[5:55] Exactly well as I was sort of like charting his personal transformation you know the guy who you know.
I had interviewed and who was the leader of Amazon 2010-2012 you know he never really went for big extravagant personal Indulgence has a lot of his a lot of his like
assets or you know luxury is tended to be like time-saving things a home in New York so he could crash there when he was on the East Coast or
an airplane a personal jet you know as one has to to save himself time but he wasn't a boat guy and and so.
A couple things happened which may it just made me sort of wonder if he was embracing the lifestyle he was photographed on David Geffen's yacht or maybe was Barry Diller Jack probably both and you know and of course.
Lauren Sanchez his new partner you know moved in those circles and at the same time I saw a Facebook post from Ocean
actually with someone observing an ocean Co yacht and it was like the whole of what they described as like the largest sailing yacht in existence and that sent me down this path of wondering well I should say people were speculating that Bezos had bought another boat.
Now and I was looking into that and that proved to be incorrect but yes he he has he is spending hundreds of billions millions of dollars to build a one of the.

[7:20] Biggest sailing yachts in the world and part of the Revelation and the book is it has a support yeah because you can't land a helicopter on the sailing yacht because of the mass so.
PCS gotta is building two boats.

Scot:
[7:33] It's tonight so it kind of brings another boat just to hold the helicopter kind of a think very cool wonderful and smart rockets on there at some point.

Brad:
[7:41] I wonder if any of us will be invited to the party on the boat it's probably not I would think.

Scot:
[7:48] Jason because of the successful podcast we have a jet and that the hardest part about it is sharing it with Jason you always he spills the Starbucks on their his kid comes on and makes a mouse so so if you're going to get a jet like get your own it's not really nice to share this.
Huh.

Jason:
[8:05] It's a good goal for Scott to be successful enough to not have to share my jet anymore Brett I have to be honest like when I first read the yacht thing I assumed it was a hoax and.
And I don't mean that like I don't mean to be light of that but there actually was.
I want to say like a almost equally credible news organization the Telegraph and London like into 2020 reported that Bill Gates had bought like a
650 million dollar yacht,
I don't know if you remember this but it was kind of like a meme for for a month and it turned out to be totally untrue.

Brad:
[8:48] Hmm.

Jason:
[8:49] Um and so when I and a largely like in the past Bill Gates had talked about like.
What atrocious thing it is for the earth and the planet for one you know human being too.
To own a half billion dollar yacht and so it seemed wildly out of character for him to have bought one
so then fast forward in this year and I like we're maybe jumping way ahead but I it kind of feels like there's a little bit of a Jeff Bezos reputation.
Repair program underway an element of which went live today I think he announced a billion-dollar Earth Earth fund and you know for sure in the shareholder letter he's weaning heavily into.
For a well wellness and all these things it just seems like buying a half billion dollar or more yacht like.
Is not does not fit very well in that neck.

Brad:
[9:45] It doesn't do wonders for the for the reputation and and yeah the the accumulation of wealth is so
controversial and polarizing these days that you know time of like income inequality and suffering through the pandemic but
this is the transformation this is why the book I think is in it cat tries to tell an interesting story because it's not just as a business story
you know a small or a big company getting bigger it's the story of a person changing and and like a human right who is.
You know probably vulnerable to you know everything that you know from
flattery to the attention that comes with being really famous to the luxuries that come with extravagant wealth and he didn't start out as a boat guy but he seems to have ended up as one and so that is you know I hope that that runs that theme runs through the book that
getting getting into Hollywood.
You know bringing Amazon to Hollywood owning The Washington Post fighting with Trump fighting with MBS and Saudi Arabia that these are always stations on like an incredible transformation of one of the most famous business people in the world
that's been happening really before our eyes.

Jason:
[11:03] Yeah and I mean just side know like if you're gonna pick enemies I feel like president of the United States and like Sovereign leader of Saudi Arabia are like the perfect
two guys to make enemies I do want it you alluded to it I want to jump right into the structure of the book so it's interesting this time you you sort of broke the narrative up into these three big chunks you have the invention chunk The Leverage Chunk in the inventor,
invincibility chunk can you kind of walk us through the thought process there and what readers should expect.

Brad:
[11:38] Yeah sure I mean one it was an incredibly challenging book to organize because as you guys can appreciate it's all happening at once right Marketplace and Alexa and India and Hollywood
and groceries Transportation advertising and then the personal stuff blue origin Washington Post,
HQ to the personal Scandal I mean you know and readers want to read a chronological story and if you're going to.
Describe a story of change you know you started the beginning and you know the caterpillar morphs into the butterfly and so that was a useful way to organize it
um I kind of fit into a narrative chronology but invention is essentially the new stuff it's the story of Alexa the the retail technology is like the ghost or
the expansion into India and Mexico and then Hollywood and also Jeff's.
Ownership of the Washington Post a little bit of AWS and I and that's like or I think of that is
fundamentally 2010 to 2015 with a lot of fast forwards
leverage or really operating Leverage is the acceleration of the Core Business and how.

[12:52] You know Bezos and his lieutenants built these platforms at where the revenues were able to grow as they slow down the growth of the fixed cost and they did that by building these Self Service platforms.
Like Marketplace.

[13:08] Or you know the automation the Fulfillment centers or the algorithms that govern the drivers or the ad system you know that lead to tremendous growth but also have some really significant unintended side effects.
Exploding hoverboards or fraud in the ABS system or.
You know accidents on the road so that's that's part two and then invincibility for part 3 are sort of trying to come up with a way to describe
the last part of the book which includes hq2 and the National Enquirer drama an antitrust in the pandemic.
And I probably cycled through a bunch of names and I thought you know what these are all great stories but none of it's slow to Amazon down at all
you know the the company if anything grew more in the past four years than at any time in its history at least in terms of economic growth and market cap and sales growth
and so I can't I just struck upon like in this company's Invincible they keep making mistakes and keep
steering into controversy and it never seems to hurt them so that's where I that's where I kind of gave up with that.

Jason:
[14:14] That makes total sense and I really enjoyed that structure I have to say because I probably.
Open the book expecting sort of a chronology of everything that happened since the last book but I found myself really enjoying.
Being able to follow each each individual thread in its entirety sometimes going back further than than I expected and kind of giving you the whole story.
I like to think I follow the company pretty closely but I still,
you connected a bunch of dots for me though there was interesting and useful and at one point during the book I kind of said like man this is a little bit like I'm horrible at American history but I imagine
the people that are well-versed in American history like still read David McCullough.
1776 and and find it enjoyable and dramatic and in the same way like I knew most of the facts but like.
Still like putting it together in a cohesive story was was sort of fun for me it made me remember a bunch of things and then for almost every story you uncovered new things that I didn't know so that I thought.

Brad:
[15:22] Well I was joking about Star Wars but sometimes I thought of it really is like The Godfather Part 2 which is like it continues the story picks up from the last book continue to the story but I do have flashbacks like the early years of Dave Clark
in the Operations Division
or Bezos ripping up a document in 2009 and chucking it down the table at an employee to illustrate how dramatically his
his Co style has changed so yeah flashbacks and flash-forwards.

Scot:
[15:55] One of the so I've worked with a ton of large companies and the thing that always amazes me is
even as Amazon's gotten so big you know they just passed like a million people I think in the company they're still so agile and they can still invent at scale and you know when you did that kind of kind of married invention and invincibility
you know that that's kind of you know having watched them they just don't really miss a step they make some mistakes but it doesn't seem to hurt him I think a lot of it is this culture that they've built
what are some of the cultural elements you've picked out as you've written both books that you think.
Anna and and then my follow-up I'll go and ask my follow-up is you know with with Bezos leaving do you think that's so baked in that it will continue or do you think that that he's kind of the core of it.

Brad:
[16:41] Yeah it's interesting you know basis particularly lately is likes to call himself an inventor
and he is an inventor he's come up with you know we talked about Alexis kind of springing from his mind and and some bad ideas like the fire phone too but what he's really created is a system of invention.
Like a culture that seems to to be fertile enough that you know lots of decentralization.
Lots of employees or teams moving quickly sometimes in competition with another and.
He's he's put together a lot of the building blocks and you know yeah people talk about the 14 leadership principles and folks are probably familiar with those but it's also you know the gist
the customs and the rituals of Amazon starting every meeting with the meditational reading of a six-page document.
Or you know the quarterly business reviews and the opieop 1 and op2
and the fact that senior Executives can kind of hover above everything but then audit individual business units when they get an email from a customer complaining about a problem and
the idea single-threaded leaders or a sort of team leader whose sole responsibility is the success of that team was kind of the CEO of their own fiefdom and all this stuff.

[18:03] You know the culture can be kind of criticized as mean and I think sometimes it is but it has been remarkably effective right and and they've the reason I call it Amazon Unbound is because Amazon's been kind of.

[18:16] Immune from the laws of gravity that can often bring down or slow down large companies and it's it's
Unbound from that and those sort of playing with that and I think it's the culture that bezos's invented and they answer the second question.
It's a it's a it's like the great Challenge and question for Andy Jassie you know because Bezos made it work because
people respected and admired and maybe feared him a little bit you know and he could keep the plates spinning and then return to them and you know spin him again disappear for a while come back.
Now he's not going anywhere he says he's going to be executive chairman so you know maybe it doesn't make a difference I think eventually he does drift away slowly
but you know Jesse doesn't have the same Founders magic so yeah I can't answer it so I'll just say it's a good question does the culture work as effectively when the the magic of the founder isn't isn't you know,
present as it is now.

Scot:
[19:13] Yeah I kind of wonder if he'll be able to keep his hands out of there that's you know I've done the same thing on a very very tiny set scale and it's it's a hard discipline to kind of it's almost like putting on your kids up for adoption or something there
hark there's not a great analogy for you know think of all the time and effort he's put in to hold those.

Brad:
[19:29] Why you didn't even have a luxury yacht to go Retreat to you know.

Scot:
[19:33] True yeah.

Brad:
[19:34] Yeah or 10 billion dollar philanthropy so I don't know it'll be interesting will be and also a reputation on the line with the space company that hasn't produced anything so there's a lot of other stuff that could draw Bezos away.

Jason:
[19:49] Yeah side note on now that one you know people are always I get asked these questions all the time like what
what event how does someone eventually beat Amazon.
And in they ask in the context of retail and one of my hypothesis is always that that retail gets to be too irrelevant and uninteresting for them
that you know that they it just doesn't get the attention anymore because so many of these new things become so successful.

Brad:
[20:20] Yeah I think that's true and and also you know they get so big and they have so many constituencies that they need that they have to make choices and I think
a good example is how you know the retail
you know the consumer division has really tilted towards Marketplace and and the opportunities of third for third-party Sellers and Global Sellers and one of the things that suffered a little bit I think is Amazon's relationship with brands
and Brands feeling like Amazon can be a safe space to sell you know we've seen that with Nike Etc and that has created an opportunity for
you know companies like Shopify and you know and and like those competitors don't can't take on Amazon you know the whole thing but there's a lot little.
Avenues of opportunity for competitors who want to focus because Amazon's doing so much it it can't satisfy everyone.

Jason:
[21:14] Yeah no I for sure
one of the the big topics in the book that was kind of fun to have laid out was the whole invention of the Alexa and I'll confessed I wasn't quite aware of how
directly Jeff was involved in the original ideation so that was fascinating and and frankly at the very beginning when Scott asked if you broke any big news in the new book,
I was expecting you to say that you you uncovered the voice actress behind Alexa.

Brad:
[21:49] Well I thought he was going there but then he brought up the yacht but I'm happy to tell that's I'm happy to tell that story.

Jason:
[21:55] Yeah yeah please do.

Brad:
[21:56] Okay well actually it sort of started with me thinking
for this book How will I ever top the the discovery of the biological dad from the first book
and if you guys remember and of course you can't top that and sadly there no there no hidden long lost relatives to an earth and but I thought you know I remembered that Susan Bennett
was the voice actress behind Siri.
And that was a big Revelation in 2013 and no one had ever asked the question well who the heck is coming out of the echo speakers and you know long story short so I put that as one of my goals to figure that out.

[22:36] And in the in the in my research and yeah
Alexa was totally Jeff's idea it was an email to Executives can we create a 20 dollar computer whose brains are in the cloud that's completely controllable but by voice
in the book I have is first whiteboard sketch of a of an echo speaker and but one of the things they did early on was they bought a Polish company called a vona.
And that was the let me get this right the text-to-speech engine so they created synthetic voices and you know so I was like okay I'll start there in trying to figure out who the voice is.
And I learned that actually they had contracted with the same studio in Atlanta that did the Siri voice company called GM voices
and I spent you know months trolling LinkedIn and figuring you know trying to contact people in who work there who knew people who work there
and I heard little tidbits she'll never find out it's a closely guarded secret but she's a singer and she lives in Colorado.
And then finally I got a couple of more clues and I found I found I got her name Nina Raleigh and I went to her website.

[23:48] I wasn't completely sure but I went to her website and she had a clips of herself doing advertisements from years ago before she started working for Amazon and I clicked play on a couple of them and I was like my God that is the voice of a
all right.
And I called her up and she you know immediately like you know awkwardness like felt like High School
and she said she wasn't allowed to talk to me and you know in some.
Weird awkward way it was like the final bit of confirmation that I needed but and then I asked Amazon if I could talk to her and they said no and you know you could kind of put the pieces together.

Jason:
[24:27] Yeah and side note how the heck did you get that diagram by the way.

Brad:
[24:31] I asked Amazon for it and they give it to me.

Jason:
[24:34] Now that's a clever way yeah I ask them for things all the time and they almost never give up.

Brad:
[24:40] You know and I interviewed Greg Hart who is just hiei and who
built the Alexa business in the early years and you know he was he was he had never given an interview before I think about the early days of Alexa and it was it was a lot of the I think the untold story there and
yeah a lot of it maybe yeah was actually like credit to Amazon right.
They decided that it was you know better to work with me and to tell some elements of the story I think I think big tech companies realize now that you know when they when they shut the door to everyone
you know the depictions aren't you know let's put it this way if they cooperate at least they're relaying their side of the story and things are likely to reflect their point of view.
And so on this one they agreed to cooperate.

Jason:
[25:27] Very cool and another thing that I learned in that version of the store a the original Kindle had a microphone in it that wasn't used.

Brad:
[25:39] Books like the second or third I can't remember the maybe the third version yeah yeah.

Jason:
[25:44] But it sounds like the germ of the idea was starting to form like even in this this vestibule
vestigial feature in the Kindle and it sounds like Jeff fought for that feature women when the product team wander accent.

Brad:
[26:02] Yeah yeah I mean he's a Star Trek fan like like Scott and he you know he always thought that we would talk to our computers one day like like the Star Trek computer and that was like a big part of the vision
and the reason why he fought for it to be more conversational and not just the music player or a thing that recites the whether he really wanted a conversational agent
and actually today I would say Amazon is not eat not even there yet I mean my
and about your guys Alexa but mine is dumb as a rock so you know they still have a lot of work to do there.

Scot:
[26:36] Yes still still still working the so folks if you haven't read the first book so go
go get that one so go get the anything store in the the thing I always enjoy about Brad's writing is its kind of see your tech-savvy so you kind of you're not afraid to go into some of the technology side of it but then you're also an investigative reporter and that's where you find all these really cool tidbits and the real story behind so always enjoy you doing that
on that side you cover in the book you cover a bunch of the rough spots which of those do you think has been has had any impact so the ones are kind of the antitrust which is Jason Jason's favorite con
that kind of thing to talk about losing the Jedi you know kind of over politics I think.
The hq2 thing was I think everyone agrees was a bit of a debacle that kind of over overplayed that are any of those things unraveling them at all or bother them at all or just doesn't seem to bother me at all.

Brad:
[27:31] The three you listed I mean the antitrust threat is still in the future HQ to they suffered some bad press and it went away quickly.
What was the other thing that you.
Yeah Jedi they might the government might reward that contract a judge ruled that the legal scrutiny will continue and we might see the Pentagon basically just start the process all over again
so none of those things so far I would say antitrust maybe the most but I would put.
The controversy over the quality of work in the Fulfillment centers and the unionization effort even though Amazon one that in Alabama
that to me feels more impactful because really you know none of these things make a difference unless people start to feel or think twice or feel ambivalent about clicking the buy now button
and I look the the results in the last quarter were Stellar so clearly it's not having much of an impact but you do see mostly I think because of the labor tangling.
Some stain on the Amazon reputation and I think the labor stop is more important and has had more of an impact in the other things that you mentioned.

Scot:
[28:47] Yet I think the ultimate play is they'll eventually be able to get rid of the labor with robots and that oddly that maybe a the best political move you know even though there be a lot of jobs lost it you know robots don't pee in bottles and.

Brad:
[29:01] Isn't that years off I mean how long before robot before you can have a ghost fulfillment center with no workers.

Scot:
[29:09] Well you can get it down to Cuba system gets it down to just the pickers and Packers which is which is a very small fractional I think it's like a quarter Jason fact check me like 25% of the.
The people footprint which is funny it goes back to your first book and I just saw today
maybe it was yesterday that Amazon's investing a fair amount in a robot Factory which I kind of made my Spidey Sense tingling little bit that's the.
A it feels a little bit like the Terminator but then be you know you don't start building a factory for these things until you unless you're going to really start scaling them up so,
most of the see if they'd go that way.

Brad:
[29:46] Yeah well though there will be another political storm that just as there were for the cash earless robots right the cashier Le stores you know yeah the that's going to make Amazon a Target in the different way.

Jason:
[30:00] Yeah it is into I think there are parts of their business that will
you know the Amazon could certainly automate a lot of Labor out of pretty quickly but there are other parts of their business that that that's not in the short term Horizon right like I
I'm a big believer in driverless cars but driverless Last Mile.
Or you know human let's last mile is going to be a long time and at this point like the labor force in last mile is growing faster than the the Fulfillment center labor force.

Brad:
[30:33] Yeah and we'll all we should say write a contract labor force and that's another threat to Amazon like well it's another critical decision at what point you know do they feel like those
drivers need to be employees or do they do this the criticism get much louder because
you know they can't control the last mile or they're exerting so much control over those drivers in terms of the uniforms and the surveillance cameras and the rules
that ultimately you know the lawsuits basically I mean FedEx fought these battles for years but ultimately a judge somewhere says you know.
Like if they have with Uber drivers these are employees you got to start treating them like like employees.

Jason:
[31:14] Yeah although Uber found a way out of that is it if you spend 200 million dollars you can just make your own laws.

Brad:
[31:20] All right.

Jason:
[31:21] And Jeff has that kind of money but I did want to ask you a question about that because you you kind of painted a picture that like anti-union is much more in Amazon's DNA than.
Then maybe was like.
Super obvious right in you you highlighted that like they made decisions about how to scale their their last Mile in their Logistics.
Based on you know avoiding the traditional fulfillment model which like is heavily unionized right.
And I'm kind of curious if you have a hypothesis why I like you you had an interesting sentence in the book that kind of you know made me think for a second.
I'm not sure Jeff is just like fundamentally unions are bad for America and I don't want unions because then I can't exploit the workers the way I want like I almost wonder if it goes back to his day one.
Philosophy and just this fear that if you.
If you you know get this a large entrenched Workforce you know which is often epitomized by unions that it reduces your ability to be as agile as.
He aspires to be.

Brad:
[32:42] There's a canonical story inside Amazon I tell this in the in the day of Clark Logistics section of the book of like.
You know one of the early fulfillment centers
2001 2002 and Dave Clark and the colleague named Arthur Bell devs are like themselves in a Ryder Truck delivering the last batch of packages to the UPS facility and I think it's Lexington
through a snowstorm eating Burger King on the way and they get there you know with Christmas in the back of this truck and the and the
the teamsters at UPS won't let them in
because they're not union workers and eventually they get managers to allow them to come in and the union guys are banging it on the truck and and yelling at them and that is is a you know a story that's passed on like lure at Amazon
because yeah what you were saying
Jason it's like they want to be flexible the customer is Almighty they want to fulfill their promises to customers and they view you know an inner mediating Force like a union as
as you know interfering with that and and I and Amazon fire me bitterly on this because I quote Jay.

[33:57] Jeff saying to a colleague an HR colleague in the book one of the greatest dangers to Amazon is an entrenched and hourly work force and he was looking at the the auto makers and other you know manufacturers and and concluding that
you know the unions were really impeding their ability to be flexible and to innovate and their little things that he encoded
in the worker relationship and Amazon for example you know you the raises stop after three years unless you're promoted.
That doesn't get a lot of attention it seems really unfriendly frankly but he does doesn't want employees sticking around getting entrenched getting comfortable.
Possibly organizing and you know and and it's maybe a little bit lacking in empathy but it's just a brutal kind of Ruthless tactics
tactical decision that Amazon is better off having a direct relationship with its employees.

Scot:
[34:54] One one question I wanted to just kind of explore is in lately here on the show there's been an increased tension between Shopify and Amazon did you pick up on any of that as you're writing the book.

Brad:
[35:06] You know I didn't really Veer in that direction I would say that you know the the the tent and you know now I'm like in the territory where you guys are probably
you know
much more deeper you know than I am but I what I sense was that Brands felt increasingly uncomfortable and the detention is between Western brands
and a Marketplace that seems to favor,
overseas Sellers and scrapping newcomers and people with lower cost structures and and you know the brands on Amazon are like crazy right it's like
sometimes you feel like maybe there's some software coming up with some of these names and the and the big Brands you know who may be charged a premium.
For their label
I don't feel comfortable there and they don't feel like their brand is protected and they don't feel like their prices are protected and that's maybe more the tension and Shopify has come in you know to take advantage of that
and Amazon which you know fights on all fronts all the time you know has identified the competitive incursions try to do some things to kind of shore up that flank
I haven't spent enough time looking at Shopify and I'm looking forward to doing that a little bit more but that seems like a tremendous success story and the virtue for Amazon is that when they get hauled in front of.
Congress you know to get the Jason's favorite topic you know they can point to.

[36:31] Strong competitors on all fronts and it's not just Google and Microsoft in the cloud or Walmart in retail
but now it's a company like Shopify which is a real competitive threat when it comes to you know online retail and representing Brands online.

Scot:
[36:47] Yeah it's funny you mentioned the brand thing because we've also followed on the show really closely and we've had a couple folks representative of this is there's these new
kind of like super combinations of FBA sellers they call them that if you know like thrashy oh and.
I think what are they raised Jason like two billion dollars globally were tracking no to go yet to go buy these little micro brands that are kind of born and on Amazon's that that's kind of yeah if anything that's going to accelerate it.
Excuse me how about you mentioned ads anything interesting going on in the Amazon ads world.

Brad:
[37:24] I am so in Amazon Unbound I tell the story of the ad business and you know so interesting how they started out a decade ago and they were bands also skeptical of ads you know he thought it could interfere with the customer experience that it could jeopardize
you know the the main.
Revenue model of you know selling things on amazon.com and they experimented they went through banner ads they went to.
Sponsored links that send you off the site to like Nordstrom you know or another retailer and then finally they kind of ReDiscover the Google gold mine and start search.
Advertising and first it's the bottom of the search page and then it's on the side of the search page and here's the interesting point Bezos himself.
Makes a decision to start toying with them at the top of search results and they study it and they determine that there is a decrease in customer satisfaction and in customers purchasing items the.

[38:28] The app the tabs on the top of search results are meaningfully like harmful to the customer experience small but but trackable.
And this is a little bit of a turning point in the book I think because basil says you know this impact would have to be implausibly large
to really outweigh the gold mine the new Revenue source and he agrees to do something that you know arguably is not a great customer experience if you look at,
searches the search results on Amazon it's kind of you know I'm over merchandise like it's ads and private label stuff and.
You know pay-for-play but the revenue stream is so enticing to him because he can invest in movies and TV shows
you can build the next Alexa he can expand internationally
and maybe that is the Turning Point the inflection point and Amazon being fully customer-focused and really compromising a little bit on the customer experience to pursue these grander goals of world domination.

Jason:
[39:32] Yeah it was interesting too well a on the I did want to touch on one thing on the add thing first
the we get asked all the time you know we do all these Amazon talks and and we still have to debunk that Amazon's not profitable
and so we talked about you know obviously the marketplace is overwhelmingly profitable and and AWS but I have a hypothesis that the ad business is now as much or more profitable than a WS.

Brad:
[40:03] Yeah yeah.

Jason:
[40:05] And I.
You know it's interesting that that Jeff is like accepting the revenue even at the expense of customer when you think of kind of the original premise that will be the most customer-centric.

Brad:
[40:19] I mean when just on that point Jason like AWS profits go into building more aw s right you have to keep building data centers
advertising like what are the fixed costs right they built an auction system and they basically you know I call that chapter the gold mine in the backyard because it's there all along and they just have to go kind of dip into it.

Jason:
[40:39] Yeah I was there's one Inconvenient Truth in that like in general I like to say like oh gosh that ad business is 96 percent margin for them because there's no.
There's like you know there's almost no costs against it the one Inconvenient Truth in that fact as Amazon is also the largest Advertiser on Google so like there's a way in which you can almost think of it as Arbitrage that.
Did they buy 11 billion dollars worth of customers from Google and then sell it for 20 billion dollars on Amazon.

Brad:
[41:08] Right right.

Jason:
[41:09] Um what yeah so it is interesting I a couple of the things that also jumped out at me you.
Wait I know Scott wants to go deep into the antitrust story and obviously you know Amazon you know.
Often says like hey we don't see search we would never you know play games with prioritizing Surge and we never use.
Brand sales data to inform our own private label but you had people go on the record in both cases that are X Amazonian saying we absolutely did do that.

Brad:
[41:45] I mean I think yeah the truth is the Inconvenient Truth for Amazon is that it's a decentralized place.
And employees are given ambitious goals and
they're trying to keep their jobs and the safeguards the guardrails weren't there for a couple of years and it's not just my book yes in my book and I've got I had employees showing me
the data the spreadsheets that they took.
You know from looking at third-party sellers to go build private Brands but it's also been reported elsewhere and frankly I think Amazon said in DC that they were going to study it.
And I've never seen anything I don't know why they are incapable of admitting an error
and announcing maybe a new set of precautions because it really does call into question The Trusted third-party sellers have
in the marketplace but no clearly you know they had they were exploiting their data Advantage I don't know if it was that significant I mean what they might say is that look every retailer has the data at their disposal and you don't necessarily need
the third party sales data to go you know look at Nielsen report or whatever to see you know what the customer trend is but.
Clearly for a Time gave Amazon at an advantage and building that private label business and and in prioritizing their private label Brands giving them a head start in search results.

Scot:
[43:11] Yep another one of my favorite topics is fulfillment and you and I have had this conversation probably for 20 years and I've every year on this podcast we do a
prediction and I've historically predicted that old Bill compete more directly with with FedEx and UPS is taking longer than I thought it would but I think I think
most people can kind of see that did you get any any kind of Vibes off of what's going on in the Fulfillment side.

Brad:
[43:37] I don't I don't see that in the short-term just because their own needs are ramping so quickly
that you know it's hard to imagine them being able to kind of offer turn around and offer that,
the third parties and if they did they get into the awkward situation of you know Peak comes along and will absolutely of course Amazon's going to start prayer you know prioritize its own packages particularly you get closer to Christmas and.
You know in suddenly UPS runs out of capacity or FedEx and you know that would be just awkward right so I don't.
I don't know that I see that in the near future I think Amazon.
Yeah is its own biggest customer for its Logistics arm and I don't you know and it's only customer I don't necessarily see that changing in the short-term.
I don't know maybe we settle that in five years.

Jason:
[44:34] Yeah that that that's going to be an interesting one I mean even if ba which is I would argue wildly successful for them you know you still see like them them strain to scale that and
you know kind of curtail the amenities that they offer to have ba.

Brad:
[44:52] And during the pandemic they did that right yeah.

Jason:
[44:55] Yeah absolutely the.
We are running up on time I want to make sure that we get all the good stuff in are there any favorite stories or topics you have from the book that we failed to ask you about.

Brad:
[45:13] There's one okay here's the here's the one of the stories I like the most the story of the single cow Burger
you know we talked about Bezos the inventor you know his love for new technologies but he really is like this maniacal sponsor of.
Of all sorts of bizarre wacky ideas and basically in like 2050 nereids a Washington Post article about how
a burger can contain the meat from like a hundred cows and the article says that making
burger from a single cow would be hard and expensive
and those of course you know those are the keywords for Bezos and he authorized the see the creation of a single cow burger inside Amazon Fresh
and then he like he taste test the early burgers and he'd like rejects them for being too fatty here heard the grill and and he makes everyone's life miserable on the team.

[46:08] And you know and illustrates a couple things one you know as he has gotten wealthier maybe he like has a little bit lost the the
touch in the taste of the Common Man
dare we say but that it's not just technology like he says advocate for all sorts of new things inside Amazon and he is kind of capable of turning up
you know like like Samantha and bewitched I guess Rick did she twinkle her nose I can't remember
you know at the desk of any unsuspecting employee and suddenly their life is you know they're they're off searching for a single cow Burger so to speak and to me it was like this weird bizarre wacky delightful story oh and by the way
that thing is still for sale and that hasn't certain been a game-changer and yet you had the CEO of the company and probably at the time one of the wealthiest people in the world spending all this time trying to advocate for it.

Jason:
[47:02] Yeah I have to say though just like superficially it sounds like a brilliant idea we my family rushed out to try the single cow Burger I have to admit.

Brad:
[47:10] How was it how was it.

Jason:
[47:12] It was good and you know I'm not I can't remember if you mentioned this in the book or not but.
You know people have different preferences for their temperature of meat and and like traditionally you have to cook ground beef much higher than other flavors of beep because of the risk of mad cow because.
Of all those cows in there so you can actually it's safer to eat that single cow Burger more rare of that sir.

Brad:
[47:37] Yeah I mean he he looked at all that stuff and he he advocated for a couple different varieties of it and I you know it is a little distillation of Life at Amazon.

Jason:
[47:47] Yeah you well the distillation of me was like you relayed the conversation when he was you know he's like how hard could it be and I might thinking like that's got to be the worst question to ever get from Jeff Bezos.

Brad:
[47:58] Totally totally.

Jason:
[48:00] Well you also during that story you kind of highlighted his increasingly exotic taste you talked about the iguana and whatnot and it reminded me of a story in your first book.
Of the Blackhawk ink octopus breakfast which was also a fun.

Brad:
[48:16] Oh that's right wasn't that the CEO of woot Maybe.

Jason:
[48:19] It was Matt Rutledge yeah yeah I talked to him occasionally and I always remind him of that story because of you.
We'll listen Brad we could talk all night but it is happen again we have used up all of our allotted time so we're going to have to leave the audience wanting a little bit more.
As always if folks enjoyed this show we sure would appreciate that five-star review on iTunes and if you have any questions or comments about the show please hit us up on Twitter or Facebook.

Scot:
[48:52] Yeah the name of Brad's book is Amazon Unbound it's available now your favorite book sellers and hardcover it's on e-readers and then also the audio book is available for those of you that like to listen to things while you commute
Brad if you working obviously people can find you at Bloomberg so you're right there on their TV but
but do you where is your favorite place to kind of for people to check what you're up to is it Twitter or.

Brad:
[49:16] Brad Brad - stone is my website at bradstone on Twitter and let me just thank you guys you know you both have been sort of mentors to me and the in the wild.
World of Amazon e-commerce and it's like a pleasure to be on this podcast.

Scot:
[49:32] Thanks Brad we really appreciate you taking time to join us.

Brad:
[49:37] Okay thanks guys.

Jason:
[49:38] It was entirely my our pleasure and until next time happy Commercing.

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