Podcasts about sapientrazorfish

In this episode, Stacy and Joseph chat about how to lead with SEO strategy before optimizing your website so that you guarantee success versus accidentally losing your digital status. We'll learn what works from Joseph perspective, what should be avoided, and how some businesses miss the mark. About Joseph DeVita Joseph is one of the Managing Partners at Moving Traffic Media, an internet marketing agency focused on search marketing, social media, and display advertising. Joe has spent over twenty years working to revolutionize digital marketing and driving business growth and oversees operations, with his expertise stemming from a decade at SapientRazorfish, working with renowned clients like Marriott Hotels and various Fortune 500 companies. --- Send in a voice message: https://podcasters.spotify.com/pod/show/hollywood-branded/message Support this podcast: https://podcasters.spotify.com/pod/show/hollywood-branded/support

I interviewed Kurtis Powers who is a Creative Director at Analogy and a Broadcaster, Curator/Speaker and DJ. He has amazing experience in the creative and digital space and he has worked at some of the largest agencies in New York including JWT and SapientRazorfish. In this episode we discuss what the differences are between the large agencies and then also working for smaller consultative agencies in a contrast piece. Kurtis shares his many years experience in working on large projects with huge brands and this really gives an insight for people looking to get into the world of agencies. You can get in touch with Kurtis by emailing kurtis@thefaceradio.com or following him on the handles below: Kurtis Powers on LinkedIn Kurtis Powers on Instagram @kurtispowers on Twitter We hope you enjoy the episode and if you have any questions please email caseydigital@gmail.com Connect with the host, Paul Casey https://www.casey-digital.co.uk @caseydigital on Instagram  Paul Casey on LinkedIn  Youtube Channel - Casey Digital @casey_digital on Twitter

EP154 - Turkey-5 2018 Recap Episode 154 is a quick recap of all the retail and e-commerce activity over the Turkey-5 weekend (Thanksgiving through CyberMonday). Jason interviewed by eMarketer about AmazonGo stores Jason article in Forbes "The Future of Brick-And-Mortar Retail is Mobile"   Adobe    Revenue YoY Growth Thurs $3,700,000,000 28.00% Friday $6,200,000,000 23.60% Sat $3,200,000,000 25.00% Sun $3,200,000,000 25.00% Monday $7,900,000,000 29.00% Turkey 5 $24,200,000,000 26.41% Nov-Dec $124,100,000,000* 14.8%*       * Adobe Forecast   Amazon Cyber-5 Press Release Salesforce Holiday Insights Hub Adobe Holiday 2018 predictions, actuals, and analysis IBM Analytics Outage J Crew Website Outage Google and Facebook Outages Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 154 of the Jason & Scot show was recorded on Tuesday, November 27, 2018. http://jasonandscot.com Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Transcript Jason: [0:25] Welcome to the Jason and Scott show this is episode 154 being recorded on Tuesday November 27th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your Cohoes Scot Wingo. Scot: [0:40] Hey Jason welcome back Jason Scott show listeners we sincerely hope you had a great Thanksgiving an awesome profitable Black Friday and a record shattering Cyber Monday Jason did you get enough turkey over the break. Jason: [0:55] I did indeed it's my favorite time of the year my two favorite things shopping and eating. Scot: [1:01] I have been dying to ask you two questions what's your favorite pie if pies are the favorite Thanksgiving dessert which pie and if not what's your favorite Thanksgiving dessert. Jason: [1:13] Do you like I'm a traditionalist I go with a pumpkin pie with whipped cream on it what about yourself. Scot: [1:18] I am a southerner so it has to be pecan pie with a little scoop of ice cream. Jason: [1:28] So my grandmother's family my grandma Daisy who's no longer with us is also a southerner and we always have followed her Thanksgiving Traditions but oddly somehow somewhere along the line she added a German chocolate cake to the mix so full disclosure I sort of Miss now that she's not with us anymore the grandma Daisy's German chocolate cake in addition to my pumpkin and pecan pies. Scot: [1:54] Maybe she was Southern German. Jason: [1:56] Exactly Daisy just was at a head of her time she was just a multicultural. Scot: [2:02] And then I've been dying to know how you survive when Starbucks closed for a day. Jason: [2:07] That is a great question there have been years when that was a challenge for me but I feel like at this Advanced stage of my life I have pretty much mastered at so a Starbucks wasn't Starbucks strategically close early so I like to make a visit before they close and then Abby as a back at the Starbucks I do have a super fancy automatic espresso machine that makes my Starbucks drinks at home. Scot: [2:36] Call and I saw you have published couple articles before we jumped into the meat of the show toast us what you been putting out there into the interwebs. Jason: [2:43] Yeah I was prolific the time off I give me a chance to catch up on a few things I've been meaning to do so you and I are both Ford's contributor so I published a Forbes article today and it's about a topic we first started broke on the the podcast it's called the future brick-and-mortar is Mobile in its talking about all these new store Concepts that are opening up and and how the customers mobile phone is increasingly becoming a mandatory part of the in-store shopping experience in an increasingly you need a mobile phone to get into the store so that that was interesting to me and then I did do an interview in emarketer all about the Amazon go store soap again probably not any, opinions that would be new or surprising to Jason and Scott show listeners but nice concise article of sort of every swear I think the the Amazon go stores are going so I'll I'll post a link to both of those in the show note. Scot: [3:46] Cool this is kind of a the first of a Trilogy of shows were put together that really are looking at kind of the halftime report of where we are as far as holiday 18th concerned we're recording this the day after Cyber Monday so we've got those key 5 days out there and some data starting to roll in then our next to Gaston the show or going to come with some more proprietary data someday we're going to do kind of a hot take on what we're seeing out there from Publix results from all kinds of sources that that will try to slip note as we go through and we want to jump into that and it wouldn't be a Jason Scott show without some Amazon used to kick it off. Jason: [4:34] Amazon news new your margin is there opportunity. Scot: [4:42] So Amazon is one of the most secretive companies you'll ever come across and holiday is no exception typically they did Issue a press release which was some of it was interesting and revealing and others of it was frustrating leak looked so I just wanted to walk through some of the highlights there. First highlight is a tortoise a new term where Amazon is calling it instead of I like the Cyber 5 they're calling it The turkey-5. Jason what you think about this rebranding of the five days from Black Friday to Cyber Monday. Jason: [5:13] So I think I don't consider rebranding I think both terms are important so you were actually the first person I heard you cyber 5 and it was quite some time ago way before the podcast and so I've embraced that when I'm talking about e-commerce sales over those five day. But when I'm talking about omni-channel sales and brick-and-mortar sales then I feel like we need to talk about the turkey-5. Scot: [5:36] Okay well next time they can both look together so. What are some of the highlights of wood Amazon announced they announce the Cyber Monday was their biggest day ever and they sold millions quote-unquote millions which you know I think. Is a range between 1 and 100000. I don't know how to arrange that I know it starts at 1 and goes Tenpenny so millions and millions of Amazon devices were sold the new Echo dot was the top Amazon device, they sold Millions more this turkey-5 versus last over 18 million toys and then over 39 fashion items and I always find it interesting to Think Through. And some of this is probably much mind-reading but herbal Tea Leaf reading that goes on here you know why do they pick out these two categories I think 21 is kind of like Hey we're picking up that Toys R Us business that evaporated out there and then fashion everyone there's been a lot of negative kind of Amazon Fashion Stories where people are saying Yep they're not really doing well they're fashion designers aren't embracing Amazon so this one I thought was just a little bit of hay. Fashion industry check us out. [7:05] This is the most revealing data point they said in total and I believe this is a u.s. number over a hundred eighty million items were sold over the turkey five and when I try to do the math on that if we assume, $50 average order value that comes in kind of 9 billion now sometimes Amazon average order value is tricky because sometimes they include didn't see if this was paid or unpaid items as soon as paid items unpaid items would be free books to Kindle stuff there free apps on stuff like that. So this could be as high of us as a $75 ASP 1213 billion dollars. [7:48] So I wasn't ashamed actually kind of put a number out there that I could actually anchor off of and get to a real number that's the first time. [7:56] It's a third party sales grew 20% year-over-year Which is pretty good you know I would expect so so you know. E-commerce is going around 15% according to the US Census and Cubs score. Amazon has been growing in the mid-to-high 20s so it's actually little loaf I felt for this third-party datapoint if I understood the metric right I've only grow 20% year-over-year and then couple of highlights they said Black Friday alone or million toys and electronics are sold through the mobile app so I think they're they're highlighting you know I think there were talking a little bit about showrooming where I think they're trying to hints that people are out in the stores shopping toys Electronics on Amazon from their phones while they're out couple other highlights of the top sellers. Obviously Amazon devices everywhere you go you see that mentioned so this is Nivea. Echo Christmas there should be a lot more Echo devices out the world after this holiday looks like instapot the classic is a top seller I am now seeing it everywhere so around Prime day you only saw it at Amazon and now I can't run into a store without Nintendo switch is hot this year. [9:20] Such a platform has been around awhile but has, new Breath of Life Jason what did what did you think of Amazon's results on Turkey 5. Jason: [9:28] Yeah it's always interesting to try to parse anything out of their press releases because that you know they're the pretty expert of giving you these numbers. That we don't have any frame of reference for a right like everything's the biggest ever but you know they said all these records last year so if they were .1% growth it would be, it would still be the biggest ever and they let you know they give you this many items in these big categories you know it's obvious they're trying to paint a Rosy picture without disclosing too much real information but to me some of the things that jump out like your math is super interesting if we take that $50 aov and say they're like. You know it will you don't 9 billion to 12 billion that puts them at a third to about a half of what a Dobby predicted. Overall e-commerce sales were for the the December 5 so. Normally we think of Amazon as being about half of e-commerce so if they're only a third to a half of cyber 5 e-commerce that actually means. Other retailers are doing a better job of of grabbing a little bit of that traffic so that to me is interesting. [10:38] It does make sense to me that 3-piece sales would it be growing as fast on Cyber 5 because I think Amazon promotes the bejesus out of the Amazon owned products particular The Echoes In fires and the Rings were heavily promoted and so you know when they're selling. Not even just one p items but Amazon owned Brands so heavily and kind of crowds out that the three p a little bit. And it is interesting to me you know this these guys are increasingly becoming the largest retailer in North America get on the biggest sales days of the year the things they're able to sell the most of our the things they own which is like completely unique like you know prior to Amazon you know Craftsman was not the number one selling item at Sears on Black Friday for example so that feels like a. That's sort of interesting Trend and you know it'll be interesting when we get some of the other guests on that have some datasets to kind of get their point of view about all that. Scot: [11:39] Now Adobe has been probably the most prolific this holiday with getting their data out which is interesting because I haven't seen last couple years IBM made of big push but I didn't see them out there really pushing hard on the data so it's almost like a one kind of company show now with Adobe and I know you gathered some of the highlights what what did you see there. You don't want to spoil it for 4 we have us be coming on the next shows we don't want to spoil too much but what were some highlights. Jason: [12:11] Just a quick primer on data sources the route to write like the the most ubiquitous best data source out there that I use the most of it kind of track it is Adobe there's three big analytics platforms that e-commerce lights tend to use Adobe IBM and Google Google you know his never liked had an evangelist kind of you know posting real-time data out there IDM some years does some of your doesn't they actually had a very meaningful outage on their analytics platform this year which will talk about a little later so even if they're planning on it I suspect they they bailed when they started having problems and Adobe did a phenomenal job so it will hear specifically from Adobe tomorrow but just so listeners have sort of a frame of reference. Adobe is heavily used by the largest. Brick-and-mortar retailers in in North America so I feel like they're their data ranges a very broad set of retailers from. Serta medium size two very big you know they don't have much data from Amazon who doesn't use any of these platforms for their main main site. So to me Adobe is kind of the broadest and definitely best representation of the biggest sites that are most meaningful. [13:27] I do have some data from Shopify which I think of a sort of the long tail so it's interesting to see what's going on there and then we do get some data from Salesforce which is. Salesforce Commerce cloud is the old demandware e-commerce platform and to meet a man where is a little more than itchy it's kind of in the middle between. The really big sites and the long tail it's these like pretty darn big predominately apparel sites for example. And so it just it's interesting to see where the date of matches between those different sets and where it's different but that kind of. [14:04] Key things up adobe gives us a number for every day of cyber 5 so Thursday was 33.7 billion. Which is up 28% Friday with 6.2 billion which is up 23.6% Saturday was 3.2 billion. Which is up 25% Sunday was 3.2 billion which was up 25% Monday the biggest day ever for. Ecommerce with 7-point not in North America is 7.9 billion which was up 29% so. Hopefully you're not doing math while you're driving in the car you add up those 5 days and there were 23.1 billion dollars worth of sales during those. Those 5 days. [14:53] I just realized I had a slight air in my spreadsheet so we'll actually see Liam and then I caught 24.1 billion in in sales over those 5 days. And the gross for all 5 days was about 26% and what's interesting about that is Adobe predicts. 124 billion for the entire November December. And a growth I would like 14.8% which is. Kind of similar to all the other e-commerce estimates we see you in that 10 to 15 to 16% and so you go wait. These five days grew 26% they represent about 15% of the whole holiday right there. You know about 19% of the holiday right there so it's it's it's interesting that that it seems like these days are getting the disproportionate amount of the. The grout sensor you sometimes your talks about how promotions are stretching out longer and in that stretching out sales but the data makes it seem like people are still very habituated to shop on these Amy's 5 cyber 5 days. Scot: [15:58] So yeah. Jason: [16:01] I was just going to add to it in Shopify doesn't provide super granny or data. But they did give us an Insight that on the the four days between Thanksgiving in and Cyber Monday they sold about 1.6 billion and about 1.8 billion over the Cyber 5 so if that's true again Adobe says 24 billion sold all over the Cyber five and Shopify alone sold 1.8 billion that would put Shopify at about 7.5% of all. Cyber 5 sales witch. I kind of doubt year-round that they have that big market share again that we don't have good data to know for sure. It's believable to me that more shopping shift to do some of the Shopify sites over holiday so I don't know what what's your initial reaction on that Scott could you. Scot: [16:53] Kills High you know but. It's hard to say the thing that always confounds me about some of these things is when you add up the pie slices I always get up to like 130% so no matter whether it's holiday data or quarterly data or annual data I always get a little confused by how all the stuff adds up. The number to supposed to. Jason: [17:18] Incident if you compare that so again and that the Dobies kind of this broad look if you look at like Salesforce you see like more like a 16% growth for e-commerce to see traffic going 9% what what's interesting to me about salesforce's they share some of their mobile numbers and sales for says that like 62% of all there traffic was mobile. And a 45% of all their sales was Mobile on Cyber Monday for example and on. Black Friday mobile actually Pete that slightly over 50% of all of all sale so so you know. [18:03] In the demandware Echo System the majority a strong majority of traffic is mobile and almost half of all orders is of of Revenue is mobile orders are actually number of orders is actually even a little higher so if you think about like you got dollars in sales you got number of orders and you got traffic. The the Salesforce number to look kind of like the Shopify numbers from mobile so we have a couple of vendors that share their data that mainly live on the Shopify platform and swim it was one that talked to you on Twitter and they were claiming 73% of their Shoppers were mobile and 62% of their shop their purchases were mobile those mobile numbers are way higher than what we see from Adobe where it's going to be something like 45% of traffic was mobile and only like 30 or 30. 5% of of orders were mobile so it's going to be interesting to talk to Adobe about about that if it is. In their mind true that this a longer tail is more mobile than than their whole user base or what were missing their. Scot: [19:09] And I also wonder if it Dobie is including any Magento data because historically it was mostly kind of that omniture I did it right that they were effectively tapping into so I wonder if they're able to pull in the Magento data analysis. Jason: [19:26] Yeah that will be interesting I'm going to Mike Hess is going to be no for this year the murderer wasn't that long ago and remember. Magento can't see the majority of their data so most people are running the gento on-prem they they have the software but magenta wouldn't necessarily know whether the revenue was unless they happen to be either one of the the minority of Magento customers that's hosted. Scot: [19:50] I forgot that they were more of an assault versus has. Bottom line this it feels like online were definitely kind of more in the 20 to 30% Reigns versus kind of the traditional 15 so that feels good and then it feels like a brick-and-mortar is a little slow. Jason: [20:10] Yep so well it depends on what you mean by slow so. Scot: [20:18] They have been drawn at kind of like three or four percent right kind of mid single-digit. Jason: [20:22] Some MasterCard says that like on Black Friday brick-and-mortar sales were up 9% there. Scot: [20:32] What's good. Jason: [20:33] Yeah that sounds great MasterCard is predicting that November December sales will be up. 5% right and of course you know you can imagine what MasterCards dataset is they have like like a 1/3 of all the credit card sales. [20:47] So so those are good numbers there's a couple companies that rent Hardware to retailers that gets installed on the front door to the store to measure traffic in the store so one of those companies is called shoppertrak and the other is called retailnext they aggregate all their data as traffic data shoppertrak says that traffic was down 1% over the holiday over by Friday retail next said the traffic was down five to 9%. [21:20] They do tend to attract slightly different customer so as I sit here I can't tell you exactly what categories they tend to be strong in butt that sounds to me like fewer people are going to the store then they have in years past and yet we still see higher sales in the store and we have in your past which just means the conversion rate of Shoppers to buyers is higher and the amount they're spending when they're in the store is higher and so you add all that up I think before the holiday started people were kind of forecasting they're like 16% e-commerce growth like in a three to 4% brick-and-mortar gross I think it's possible we're going to see like 5% he, brick-and-mortar drugs which would be the biggest year since 2011 so we may see some big numbers on the revenue side when I'm more worried about is that it it potentially was super promotional revenue and said the earnings may may suffer that that commonly is the yin and yang of of holiday sales. Scot: [22:23] Yeah unfortunately won't have a read on that until some of the January did I start to come out right before results. Jason: [22:29] Exactly it mostly shows up in earnings where people are like oh we had our Revenue goals but we missed our earnings goals Adobe does get to see some interesting promotional data so when they're on we will definitely get their perspective about whether the holiday felt online more. Lesser the same promotional is past years. Scot: [22:49] Call a couple other seems I saw out there there was this kind of is Black Friday dead a lot of this circles around somatic Mall while getting your everyone is there's a whole controversy around the opening on Thanksgiving Day itself and. Some retailers like REI stand on that others are kind of messaging that up even more and more and they're doing their doorbusters around that so there's a dinner I had some day. [23:20] Where they actually had several buckets of Shoppers they reported on so they said 41.4 million people shot online only from Thanksgiving to Cyber Monday so the I guess I'll call that cyber 5 and that 6.4 million more who's been shot exclusively in stores so they have an online exclusive bucket stories lusive bucket and then they have an omni-channel bucket and then the omni-channel bucket they say 89.7 million hour Shoppers. So I'll see you in a day or calling a reference so so that was interesting and there's an article that was kind of saying because more people shopped online than offline during that. It was kind of the end of the traditional Black Friday. Brick-and-mortar holiday discount Holiday in your reaction to that. Jason: [24:22] Yeah it was it yummy you here to Reasons by Friday is going away because people are shifting online and because black Fridays you know keeping earlier tough to Thursday night it didn't feel like, more stores open on Thursdays then did years pass so I don't think that really affected by Friday I do think / that interested anymore yeah if you're only going to do one of the other there more people that are opting for the convenience of online shopping and that that seems reflected in the the few datasets we had that show store traffic was down so I could lie but honestly it doesn't feel like. [25:03] A dramatic shift to me over your you know it seems very windy or change versus sort of an exponential change and I think all this is happening in a climate in which like most of the consumer macroeconomic factors are really favorable and particularly for the first time in a long time the macroeconomic factors for low-income Shoppers are favorable in those are the Shoppers that are least likely to shop online right like so that's the the low-income Walmart Shopper probably feels like they have more money in their pockets and they have the last several holidays and until I feel like you know some of that the trends that we try to predict do I get office gated by the fact that there probably just are more people shopping and more people spending money this year than they then we've seen in the last couple years so that's that's a good problem but it makes it hard to really. [25:59] Really have a strong opinion I have I will say one of their data points from UW data is that buy online pickup in-store orders were up 50% over your past so I think like driving with an RF data what we're seeing is that the this notion of these being separate channels is going away and people are increasingly using digital tools whether they. Go to the store or not and you know you tease me for talking too much about grocery on the show I feel like this is the first year when people could potentially buy online curbside pickup their their ingredients for their Thanksgiving dinner and so I haven't seen any data on that yet but I but I know as an amenity digital grocery shopping was available to many more consumers this year than ever before and so I'm going to be really interested to see if Shoppers take advantage of that and if that you know changes behavior and all of those are two things so I think there's going to be a lot of fun fall out to follow from this holiday. For the next several months we should keep doing the podcast. Scot: [27:01] We we will another theme that was interesting and you kind of touched on this little bit with outages Amazon seems to be pretty robust Facebook had an outage kind of like right around Thanksgiving so happy for freaking out. It was kind of a yeah that was interesting and then you would mention coremetrics an outage Amazon I've been kind of rough for Prime day then they did Cyber Monday and end so that's interesting it seems like they must have tweet whatever they had some lips on on Prime day good warm-up for Cyber Monday. I did see some articles that highlighted some other stuff it's hard in today's news climate to know kind of what exactly is going on and how bad it is with what did you see as far as I was just. Jason: [27:47] Yeah I think there were some partial out I mean the number retard saw some partial added outages for you know for some subset of all the people that tried to get to the site for some small. Of time during the day and it's really hard size how significant those are I would slide side note on the Facebook one when Facebook has an outage it has an impact on e-commerce in an unexpected way there's a fair amount of eCommerce sites that let you use your Facebook credential as the keys to your eCommerce account in your stored payment information so it is possible when Facebook's down that the people can't log into their account on an e-commerce site and and Shop so it has the potential to have that impact and Facebook tags are all over these e-commerce sites so even. If the outage and I don't think this was such an outage causes those tags to not respond it can really have a material impact on the page load speed on all these e-commerce side so there's. [28:46] Town of best practices that site should do to mitigate those risks and and frankly wait way too many sites do do to those best practices so it's always surprising to me. But you reference IBM and their analytics package which I think officially is now called IBM Analytics all ice Old-Timers would know it is coremetrics and from my perspective they had a pretty catastrophic outage so I think they were out for most of Black Friday and then, I were able to resolve the issues and then they have another significant outage for most of. [29:24] Cyber Monday so that's a huge deal if you're running a site in your using the analytics to make decisions about you know whether you should get more less promotional you know what what marketing you should be doing on the side how much additional email you should send you know that. Data from that from your analytics platform is critical and you know some heavy rain Deluxe platform out is a huge deal I will tell you I had several clients that that had an outage and the only reason that they weren't Furious is because many of them are now using more than one analytics package so pretty, and that you had a IBM and Google which meant you were exclusively. Using Google for the holiday and it probably is not going to bode well the next time you know IBM comes to have Yuri up your your contract and you had this outage in the most important time and you were forced to use Google and probably found out that that that Google Map most your needs so I think from a business standpoint that that IBM analytics at outage is going to be pretty catastrophic I think they were probably struggling to maintain market share against Adobe and Google anyway and so this is probably going to be a. Another black eye to them in that regard. Scot: [30:42] Quick question did this. So I know that mosites almost every page of a site while will reference to the underlying analytic system and there's a lost tag and stuff did this cause the retailer sites to either go down or be sluggish or to those guys. All currently have that kind of asynchronous so that if it's down it doesn't really. Jason: [31:02] Exactly so what you want and what the in finished all these vendors at least the analects vendors sort of beg you to do is have these tags load asynchronous way which essentially means it doesn't block anything from happening lower on the page from still happening while that tag loads and so it's still even when you load it asynchronously there still you know some ways in which its it's hurt hurting your rendering budget but but the impact is much lower than having the screen be white while you wait for that tag to fail and so for analytics most people have them well implemented and I didn't hear about any anyone that had coremetrics tags blocking the whole site. You do like to also put all these vendors at the end of the page but for Analytics. [31:50] That means you miss out on a lot more analytics if someone like interrupt a page from completely loading or their clicks away from the page before for renters and so you know the analytics vendors like to have their their tags at the very top of the page so when there's an outage. It's even a little more prominent so. Bad deal all around but to my knowledge there were no there were no sites that were like literally WhitePages while they're waiting to find out that the idiom tags didn't work. I don't think Google analytics had any problems but Google had a problem with her at platform over the holiday and I know that impacted a lot of people's promotional plans that you know I felt like the number of clients that had. Plan spins and open the spins that they you know we're going to make over holiday depending on how things went and they literally were like locked out of their AdWords account and weren't able to make some of the adjustments that they intended to make. Scot: [32:46] Yeah that the Facebook ad platform was down during their outages well so it could be some pretty material. Jason: [32:54] Yep that digital marketing tends to be about the third-highest source of traffic to the site so that's a big deal and then the retailer that I think at the most news for having a complete outage unfortunately it was at J crew had a very aggressive sale they were they were offering 50% off on everything and I think they were there down for like the majority of of. Black Black Friday so that's a pretty tough outage I know that they probably offered to extend that sale. Extra days to try to catch that that Revenue but in most cases you know a shopper. Likely move to some other other site and spent that money somewhere else so so you know that that's. Pretty material impact to be down that long on this holiday so sorry for my friends at J.Crew and that's probably going to be a perfect place to wrap it we promise to keep this is a short concise show just about the holiday folks have any comments or questions as always we encourage you to jump on her Facebook page and will continue the dialogue there as always if you found the show useful we'd love it if you jump on the iTunes and give us that 5-star review. Scot: [34:10] Makes everyone we hope that you're cyber 5 / turkey-5 crushed all your expectations and that you are going to finish strong in Holiday 18. Jason: [34:23] Absolutely and then till next time happy commercing.

EP153 - Pre-Thanksgiving Industry News and Listener Questions Thanksgiving road trips with Jason & Scot have become a tradition in the digital shopper marketing industry.  Here is an hour of new and listener questions, to get you ready for the Turkey-5 holiday! Spiffy announces connected car initiative.  The first connected car feature grants limited access to vehicles through OEM (Original Equipment Manufacturer) connected car capabilities. Eliminating the step of handing off keys prior to a service makes Spiffy's on-demand services even easier for customers. Amazon News HQ2/3 discussion Amazon offers free shipping w/o Prime (how will Target/Walmart respond) Apple establishes an official presence on Amazon Other News 11.11 Recap Walmart earnings (e-com up 43%) Walmart CEO Doug McMillon on Tim Ferris podcast New store concepts dominated by mobile experiences 7Fresh (JD Grocery) New Nike NY Store "House of Innovation 000" 7-11 scan and go Sams Club Now Amazon Go / 4-Star / Books Listener Questions Sri Rajagopalan Is the Amazon business in consumables really growing? Why are we not embracing Alibaba in the USA? Anonymous Anker rose to be a powerhouse of an Amazon business. Can you analyze their changes to highlight the overall marketplace transition to differentiated product development? Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 153 of the Jason & Scot show was recorded on Sunday, November 18, 2018. http://jasonandscot.com Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Transcript Jason: [0:25] Welcome to the Jason and Scott show this is episode 153 being recorded on Sunday November 18th 2018 I'm your host Jason retailgeek, and as usual I'm here with your co-host. Wingo. Scot: [0:41] Hey Jason and welcome back Jason Scott show listeners. Tonight we are sitting here on the cusp of Thanksgiving which is the official kickoff of holiday 18 we got some great guests on as we get into the thick of that but we thought we'd take this kind of opportunity here before at everything hits to go over some industry news and we I had some listeners that were really dying to ask some questions so we have some listener questions and we have hopefully if our sound engineer is doing his job we should have this out before you do your travel for Thanksgiving so hopefully this gives you something to you get the folks in the car asleep so that you can pick about some e-commerce and get really super hungry as you ride to that, great turkey dinner that you're going to enjoy. Jason: [1:34] That's a lot of pressure you just put on the audio engineer thanks a lot. Scot: [1:38] Well we have a we have a big team and I'm confident they can they can get it done. Before we dig into news and Lester questions Jason you were at something to deal with a bonfire so tell me about this big block party with you. Jason: [1:55] Sorry I did not get to light anything on fire. Loyal listeners will have heard of last week show where we talked a little bit about some joint research that my employer poop assisted with salesforce.com and so we did this. Speak study called The Shopper first study and you can listen to episode 152 if you want to learn more about the study but one of the things we we've done is leverage pieces of that study in various social events around the country so one of these we called the retail retail bonfire was in Manhattan a couple weeks ago we had three or four hundred clients in. To the Dream Hotel put on a cool event and shared some of the research but I also got to, talk a little bit about one of my favorite topics which is personalization and I I got to share this story that I enjoy sharing that I call hashtag United you don't know me and it's essentially this. This tragic story about how I'm United's best customer and I'm in their Secret customer Infinity program and I travel millions of miles with him and I. Do all my spending with a very expensive United credit card and so imprimis they should know everything about me and they should have tons of data. Dramatically reduce friction and make my my experiences with them easy and. [3:23] There's just numerous touchpoint I have with them every day where they missed that opportunity and so. I used that story to sort of underscore the point that at the moment in the industry were talking off a lot about personalization but in reality, nobody's doing a very good job yet and we we have all that the data and insight to treat customers much better than we in fact actually are and so that's kind of. The kind of said my my talk which seems like it was well-received I got some good feedback at the retail bonfire. Scot: [3:57] Yeah there was a video posted in I couldn't hear what you were saying because it was from the audience there and but there was a lot of laughter I thought you were doing your quit this whole e-commerce retail gig and doing stand-up. Jason: [4:09] So you may have busted me I'm a little Overexposed I flew straight from the retail bonfire to the Home Improvement Aerie tail summer in Chicago which was that show for the Home Improvement industry at talking about digital disruption and so I think the video you're referring to is actually a little bit of my my sort of omni-channel presentation at the retail bonfire and I always. Put some jokes in there and occasionally one of them lands. Scot: [4:38] I don't know you're saying but those people were very rolling in the aisles. Jason: [4:43] I got super lucky that they accidentally recorded the one one segment where where they thought it was funny and they didn't record what I said so you will never know that they just don't have a very good sense of humor. Scot: [4:56] I was guessing that maybe you would like you're like the 9 p.m. and then going to dinner and had like 45 drinks or something. Jason: [5:04] Yeah well that for folks that are interest in having me speak to your event you should know I do have a two drink minimum so I only accept it and swear people are likely in that state already. But yeah so I've been traveling a lot since grocery shop doing a bunch of fun events and I've been trying to keep up on stuff, I feel like everytime I open my newsfeed all I see is a big giant picture of Scot Wingo, doing something with speed and I think there was some pretty cool news this week if I'm not mistaken. Scot: [5:35] Yeah it's kind of you know you would think that my car washing world would not intersect with our digital world that much but the increasingly dense and so one of the things we've been working on it's 50 for a long time is a fair number of Manufacturers have connected car initiatives big Tesla do so I've been in Connected car world since 2013 and what would connect the car is essentially is your vehicle has a 3G or 4G or an LTE connection, that essentially connects your car to the cloud and then usually the manufacturer will give you a nap and I'll let you do a lot of cool stuff so for example with the Tesla app you can lock and unlock the car to put it in the valet mode you can now actually. [6:23] It has a mode where will we will come to you that's pretty cool kind of Tony Stark mode and then so various other manufacturers have other features in addition to the app haven't connected car it in the vehicle you will have Wi-Fi and then you can have just like over the air updates you can have better Maps so there's a lot of really great reasons to do this from a consumer Behavior perspective so 2015 people started in it and it was kind of spotty because a lot of them would charge you extra a lot of consumers didn't sign up for it within the last 2 or 3 years OEM zarchive including it in the the first three to five years of the vehicle ownership so we're that ties in with our world is 50 is for doing Car Care car wash and oil changes those kinds of things and we're having watched Amazon for 20 years yeah I think they think they get right as a musician is being really obsessed with with customers so we. [7:24] I'm thinking how can we make that customer experience better and one of the painful things, drives us crazy is we have to get our customers keys and that can be kind of an arduous process so this allows us for those customers that you have connected cars they can give us permission and then the day of service we can come in and our technician can walk in the black car and get the keys to our service without having them involved. Inet School transparency in mission control of that so that was really well received a lot of good press and thanks for bringing up it's it's it's fun to see how these things overlap. Jason: [8:00] Yeah it's that's kind of cool. It reminds me a lot of sort of it's the carwash equivalent of the Holy Grail of Amazon or Walmart delivering the groceries right through my refrigerator. Scot: [8:12] Yeah Amazon does have a program So within the Amazon key there's two flavors to key there's that home one where they can you can grab them permission with a Wi-Fi lock that come in or out and then you have a camera to watch Lily person I've been else have a car delivery system within tea and they're using a lot of the same technology that we are in the connected car to do that. Jason: [8:33] I will say I know you. Joke about there being a lot of overlap but it's kind of annoying for me because I feel like I'll go to visit a car client and you don't be talking that e-commerce and. You know if you start to feel like you've moved on from e-commerce the car and then they're still out yet we're sick of Jason can we meet Scott. Scot: [8:54] Funny Cooks so it would not be the Jason Scott show without a little bit of. Jason: [9:07] Your margin. Scot: [9:16] Cool well the big amazon news that that has happened since our last news podcast is they they did make the final hq2 decision. Good news is it lined up the rumors reported on so this is kind of like old news in a way but I guess we should say. [9:33] So what Amazon did I is they did kind of did the proverbial the Old Testament splitting of the baby and instead of announcing they decided to split it into two so, New York's and Virginian were the winners so specifically New York City somewhere around Queens called Long Island City which is maybe you can explain this list I don't understand this particular thing. It in Crystal City and they're actually, asking people to kind of create a new names there's a whole new name there that they're going to kind of call where they're going to be, something like National Landing so that's interesting and so there was a lot of controversy after Nelson super small lot of people were upset they split it. I and our cock will this isn't really another headquarters is just two things. You know dr. Holloway was right he had predicted this and so he was indicated in his whole thing about you know it's convener to abduct businesses houses and their political influence. The light people of observed that now Amazon has data from sunlight 240 cities and Metro areas about. [10:50] All this data they had them put together for Amazon is now sitting somewhere in a database I hopes Amazon in the variety of different ways young next time they build a building center or a Dana Center they can kind of go and say well you know for hq2 you said this, certainly give us portion of whatever you promise, and then the other big one is now that it's public the subsidies have been released and it turns out we add up New York in Virginia it's over 2 billion dollars and subsidies, so this creates a lot of consternation from citizens who were like wow why are we paying so much and then company exist, okay we've been here forever when are we going to get our tax credits and it's just really kind of, yeah I probably read 5 articles a date so kind of from the aftershocks this that's been and, you're so that's good be interesting to watch and see where they they plant more flights would you think about it all Jason. Jason: [11:59] I'm a little over at my wife asked me today and I she pointed out that I kind of snapped at her in the answer. Cuz I'm a little tired of talking about it out of course I want to share my myhumboldt pod with our listeners. [12:20] So they're opening a new headquarters in a suburb New York and they're going to 25,000 employees Google already has close to 25,000 employees in New York and there was no year long. Contest or you know this constant drumbeat of news Amazon set. Nothing's up by calling at hq2 and having this kind of formal contest and all of us to follow the industry and in the media. [12:51] I feel like sort of overreacted and bought into it too much because it's in some ways it's it's not a heck of a lot different than. Then the way every other company behaves I mean all all companies you know try to extort these business development funds from cities when they moved new infrastructure there I mean. Towing threatened to move their headquarters from Seattle to Chicago McDonald's and moving their headquarters like they're all these things that happen all the time. And it's it's kind of annoying that the Amazon one stayed in the new cycle for a year and then had this anti-climatic ending right so. They split it up between two City so it clearly isn't that co-equal headquarters like I'm sure the center of gravity for Amazon is going to stay squarely in Seattle so people that like that or going to be happy people that don't like Amazon's presents in Seattle and probably. Going to be disappointed they're going to hire a bunch of people in New York and compete with with Google and the agencies protect tires in New York but that's not. [13:53] I think a game changer you know it's. I feel like it's a little overhyped I will tell you that Steve Carell was the host of Saturday Night Live this week and he played Jeff Bezos. In the opening and he had a bunch of funny lines but one of them he's like we are excited to announce hq2 last week and everyone was really excited with our result. What are the people in one of the cities that we selected as hq2 or any of the people that live in anywhere that is not hq2. Scot: [14:25] Spring Arbor. Jason: [14:30] Pretty funny and summed it up pretty well side note. Anytime a city cut these Economic Development projects with employers one controversial thing is right. How much input you gave the citizenry in this and what you know sort of checking balance process were followed and obviously. Particularly in New York Amazon negotiated for these things and the governing politicians a largely. Agreed to them without any public discourse and so now that they're revealed there's there's a lot of folks on City councils and Andreas capacities that are sort of. Outraged and obviously the Optics to Amazon probably look pretty bad because they're. There you know compared to many companies there they're doing very economically well now these these. Subsidies that they're getting our are publicly revealed there was no there was no sort of public comment. [15:33] And it looks a little shady that they promise this whole hq2 thing and then they they split the baby and you know we all assume that the subsidies they got are not half of what was offered because they split the headquarters in half they probably. Got most or all of the the offered subsidies even for the the half the jobs that they promised and as you kind of pointed out. Every single time they open up a filming center from now on they're probably going to remind that municipality what kind of. Program was off and you know the try to get as much as they can and I think they even announced a big new facility in Nashville the same time they announce these two headquarters. I'm not I don't think they're behaving that much different than any other employer but I feel like. Some of the overhyped pr maybe sort of backfiring on them at the moment because there is a big backlash. And it almost even feels like Amazon recognized it again overboard cuz I feel like they they'll eat the announcement on Election Day in that like I assume that was to try to. Can I sneak it in and a busy new Psycho. [16:40] So another interesting one that I was following this week is there's been kind of a fun arms race on what retailers would do for their free shipping program for holiday. So Target. [16:57] Several weeks ago and asked that they would drop all minimum thresholds on their free shipping so you know if you want to shop from Black Friday to Christmas it Target no matter what you buy what volume you get free 2-day shipping. Walmart normally has free 2-day shipping with a $35 threshold so we are all curious to see if Walmart would respond to targets. Offer in Walmart did not respond they announced that they were going to keep their $35 threshold and so at the time I thought that was kind of interesting Walmart didn't feel like they had to chase. Target in this particularly expensive to offer promotion over holidays I thought that was kind of fascinating and that in a way I, I sort of admired Walmart's position there and then the totally unexpected thing happened Amazon came in and said, oh and by the way we're offering free shipping with no threshold whether you're a Prime member or not for the holidays Inn in effect matching targets offer and undercutting Walmart and well haven't been in Walmart was comfortable, not matching Target I suspect they they did not anticipate that that, Amazon would have a significantly more generous shipping offer than they did. Scot: [18:14] Yeah I had some people tweet at me in there like what why I would even pay for Prime and you know I think what those folks are missing is this is the Super Saver quickly a program that used to be you had a minimum car that you have to get to get Super Saver but it's still the Super Saver service-level just Hard series things to say but essentially you know that's kind of the slow boat and it's a 4 5 6 day kind of a shipping window not a not a two-day so Prime Sole is the thing that makes sense in my mind to pay for it because now you're getting free 2-day shipping for pain description so that's the difference in yiay Prime and Super Saver can still co-exist even when Super Saver is free. [18:58] One thing I noticed it was interesting is there's been a lot of kind of friction between Apple and Amazon over the years and then also Facebook their Style lot of drama going on with with all these companies fit specifically between Apple and Amazon you know there's been no love lost there they had, what example is Prime video for the longest time wasn't available on Apple TV devices you know I don't think apple is ever available on Amazon Fire devices and then I'll dig up that resolved and then one of the ones that got resolved that was kind of nursing is is Apple app that apple is going to really increase its listings on Amazon with kind of bring that the main product lines up there with iPhones iPads and that kind of stuff so it was actually Apple selling on Amazon, I thought the timing was interesting it feels like if your Apple you want to do that for the holiday, the water of Wall Street on Judith at the new iPhones aren't selling it, the pace ever thought they should be and suppliers are swimming in inventory so that was interesting you know what is the quid pro quo if I'm if I'm. [20:15] Amazon and I say alright I'll let you somewhere your stuff here you know obviously you're getting it cuz of that, but then you got it feels like there's something else going there and one of the big friction points as a Kindle reader so I use my Kindle app on my iPad is can't really buy from the Kindle app you have to go to the Amazon website you can buy to the Amazon apps Can't Buy Kindle content website order it and then download it and what they're doing is it getting around the 20 to 30% take right at the store level not selling right from the iTunes Store. So I would love to see you know that is a big friction point that with the Amazon ecosystem I'd love to see kind of hopefully as he's guys get along better let's see that go away. Jason: [21:07] I totally agree you know I assume one of the things that that Apple's getting in the short run is that by being on on the. The popcorn formula that they're going to get more brand protection help in more policing with all the the counterfeit product and because am is Apple so popular. You know there's a lot of speculation that there's a ton of counterfeit fit product and I'm I'm thinking mainly like Chargers and cables and things like that that that. Probably part of the quid pro quo of Apple being on their formally is that they'll get more help with their brand protection and so in some ways it felt not too dissimilar from the like the deal Nike cut earlier for example. [21:52] But I will throw one thing out, I share your frustration I can browse for books on the Kindle app but I can't buy them I have to go to the website and prove your point it's because when you buy something through an app you pay a commission to the app store owner right and so. Amazon doesn't want to pay Google and iTunes the big Commission on those. So they make you go to the web there is now a traffic solution for this Amazon should release a Kindle Progressive web app. An answer that that essentially like would be. Functionality that you don't get from the the App Store and therefore don't have to pay a commission and so they could basically have all the same offline capabilities that they have in their app that can let you put an icon on there on on the. The homescreen let you read books offline and all those sorts of things and they could sell you books which without having to pay on iTunes or Google Play. Commissioned so regardless of whether this deal makes apple and Amazon more friendly in that way if you like Amazon needs to get off the dime and embraced pwa. Scot: [23:04] So then how do you it's so I'm going to do it for dummies question if they're not in the app store which everyone's been trained as a way to get this stuff how do you do discovery. Jason: [23:15] So that still is the that is the problem with pwa today. [23:21] Never trying to con in Discovery they're not discovered in the App Store but they are much more discoverable in Google then amps are in so. I if I were a Amazon I would certainly still have. My app in the app store for Discovery but I would give them an alternative which is this pwa version so instead of throwing someone to the Amazon website to buy. The book and then having them come back to the app to read it I would throw them to the pwa version of my sight to both by the book and read them going forward and it will see if the App Store. Track down on this pain at the moment there's no restriction against having an app in the app store if you get that app away for free by the way you pay nothing to the App Store have utility in that app. In that app you can totally promote your pwa and even had a direct link for someone to download the PJ pwa version, as having greater capability than the App Store version so. You can kind of use the app store version of the Trojan Horse for your pwa version but at the very least the pwa version would be a good would be a better alternative than. Send him to the website to buy and then having them come back to the Kindle app. [24:46] So we'll see how that all plays out. Scot: [24:48] Search Jeff listens I'm sure he's taking care of since Jeff call Jason if you want details. Jason: [24:53] Or I'll just send an email you can add a? In forward it off to someone to ruin their life on Thanksgiving. We you did not record a show directly adjacent to it but. Of course singles Day November 11th was happened since the last time we did a new show and it's kind of a big milestone it's the 10th anniversary of double eleven day. Did you were you up late buying some stuff from Hong Kong. Scot: [25:29] Wasn't you know I think it's been interesting over the 10-year Ark where you know I feel like the last first nine years there was all this hey this is going to spill into the US and then feels like this year there's finally capitulation and I didn't even get a single email I think from us retailer promoting it like last year I got a couple of your before I got a lot and you before you a lot so it feels like, we kind of given up on the spilling over in the US and then Prime day is kind of become are on the singles day. And now everyone is anchoring on that and offering their own kind of deals around that time for 11:11. Yep. Jason: [26:10] The number of years where singles they grew dramatically and Jack ma would threaten next year. We're coming to the west and mostly what that meant and this has definitely been true. Every year alibaba's done a great job of recruiting more Western Brands to participate in singles day, in Asia and definitely singles day has expanded Beyond China so Alibaba now you don't has a presence in other cities are other countries rather, they have is it was Zada. In Singapore did they extended it too so it's it's definitely become a bigger Regional event and there's a ton of Western Brands I have a ton of clients that are excited about it as an opportunity to sell to. The indigenous populations in those countries but I would agree with you right there was always some type that there might be some play for for us consumers and it most there's like a kind of soft play for. Scot: [27:14] Like a kind of soft play for. Jason: [27:17] But I definitely know I haven't seen any any traction with with Western Choppers. Just what happened they sold 30 billion the equivalent of 30 billion dollars in US 30.8 billion so huge day. Compare do I cut prime day that might be 4 billion or a Black Friday or Cyber Monday they could maybe hit 6030000000 the normous number, that's up from Mike 25.3 billion last year so, in a superficial you look at that and go man this this thing continuing a crank it does seem like the rate of growth is starting to slow down so that represented a 27% growth over last year to put things in perspective last year was a 39% growth over the year before that and I'm pretty sure every year other than those two has been over 50%. [28:14] Feels like the growth rate is decelerating a little bit and. In some ways even though was the 10th anniversary it felt a little bit Mewtwo number one Jack ma who played at the super prominent role in the first nine was was there but had like a much less significant role as he sort of stepping back from the company a little bit. I think Alibaba issued some guidance either right before or right after, singles day that they sort of downgraded their the revenue guidance for the year and there's a lot of talk about how the Chinese economy is slowing down a little bit so. You know it's it's one of those things like objectively. It did really well but against expectations it was a little bit of the year if you will. Scot: [29:06] Yeah absolutely and dumb Alibaba stock is spelled it so even after you know what kind of a crazy number like 31 billion essentially if you around up a tad which is crazy to do in a 24-hour period the stock is trading kind of New Year Of Glow and it's that pressure up lowering the forecast China economy slowing down the tariffs you know everyone is thinking. Is, assuming the worst with this tariff environment that were in so yeah it's going to be a little bit of a rough time there yeah I did see another article that to your point about brands that they had the most semi 200 Western Brands sold pretty considerable amounts on there and it it's funny it's kind of like you know everyone goes to China and tries to set up a.com to give up and they essentially saw Auntie mall to you're looking at, even Amazon who runs their own Chinese store they sell a lot of candles and devices over there which be like let's see if you like Amazon selling on eBay which you would never have so it is interesting to see it even though they're slowing down there quite dominant and huge portion of e-commerce goes to Ali. Jason: [30:24] For sure what one of the thing that seems what is containing attractions every year they make significant progress in trying to turn this into a omni-channel event so Alibaba owns a bunch of stores they only like a hundred of these fancy digital-first grocery stores they don't like 500 convenience stores. Increasingly there their soliciting other retailers that they don't, direct Lyon to participate in double eleven day in so what that usually means is some kind of digital enablement so maybe they have a digital sign in the front of the store with the deals and you can. Activate the deals in the store you might take the goods with you or had the good ship from home but you don't really trying to expand from being a pure e-commerce holiday to being an omni-channel holiday. [31:15] E-commerce is bigger in in China than is in u.s. it still is true that it's like e-commerce is like 15% of the total. Retail spend in China and that's. More true in a lot of the West develop cities so you know it. Yeah you got a really big tier-1 cities there's kind of a premise that they're they're getting saturated with e-commerce and that you know everybody knows about it and use it as much as they want to and that really is driving the. The swelling growth rates in China. There's a huge untapped Market in China which are all these West develop cities that you are more likely to have like real farmers in them and to one of those you get singles day to reach him or them is you. Enable that one physical store that's in that City to sell stuff from. From that singles day in that store and so it seems like there was something like 200,000 stores that participated in singles Day this year so so that to me is is. Kind of interesting and you know frankly that's going to have to be the future of the growth story in China right like you. [32:30] It's already bigger than the US that the addressable Market is even way bigger, but they increasingly have to get these not digital Shoppers to to get in online before they are able to get them to become e-commerce shop. Scot: [32:47] Yeah so pooping so we've covered Amazon Ali Baba and now another large Global retailer is Walmart they announce their quarterly earnings and this was weird once were they that came out in and you exceeded. Expectations and it seems like they raised him in the stock went down and I'm not exactly sure what went on there I bet you made his watch that little bit closer than I did the headline that caught my attention was they announce that e-commerce group 43%, I think that's a pretty good acceleration for these guys and Baseline about kind of 15% growth rate that's the top scorer number and government is a lot of people that anchor on this 15% growth number so it feels like Walmart's e-commerce is growing 3x Amazon's quarterly earnings were more in the mid-20s range so feels like they're growing faster than congratulations to our friends at Walmart there sounds like. Jason: [33:49] And kind of put it in a frame it a little bit if the investor Day last year mark Glory promise 40% annual growth in e-commerce and then the next quarter out they slightly miss that at 39% and, a 1% misses apparently enough that they took a pretty big beating in the in the. Financial press and in their stock market in their in their market cap so the next couple quarter since then they basically hit that, percent exactly in fact it almost seems suspicious cuz I hit that exactly so this quarter getting 43%. With big holiday quarter up is pretty favorable and good news for Walmart, you know I do like to remind people in my mind a big driver that huge number so you know what we're doing a lot of things to grow e-commerce they really turned up the heat on the marketplace and they've dramatically expanded their selection so I think. Not very long ago that they were selling about a million rescues online and today they're more like 40 or 60 million skus online so making huge progress on the assortment. But one of the big drivers of e-commerce at Walmart is. [35:03] Selling groceries online in the way Walmart predominantly sells groceries online is you order them online in there for field from the store so either curbside pickup. Or home delivery and. You know you can add a new skew to your eCommerce site and it instantly available to everyone in the US but to grow grocery sales. [35:26] You have to make more stores available to fulfill that order so Walmart has like 4,000 stores in the US. As of this quarter they had 2100 stores that did curbside pickup and 800 stores that did. Home delivery that's twice as many curbside pickup stores that they had last year so. In a way they've doubled their capacity to sell groceries online in the last year and they're promising another thousand next year and so a lot of this e-commerce growth is be coming from. Like this this significant investment the Walmarts making in grocery. Scot: [36:04] When will that be in every story like when will they laughed that that whole thing. Jason: [36:10] Yeah they haven't said yet but like if you. Last year 2000 stores next to a thousand stores if we if they keep up that linear progression they have two more years before they max out and so then it's another year after that before they really lap the. The 4000 store number so there's there you know could easily be two or three more years of. Benefit from this kind of digital same Source Tails phenomenon that's playing out at Walmart. Scot: [36:39] What's going on with our friends in Bendel. Jason: [36:43] I want a few things but the other one I would have just hit on right now it's kind of fun to Doug mcmillon's the CEO of Walmart impressive guy started out as in internal Walmart work in the stores and is now I think according to Fortune Magazine like the 40th most powerful man in the world which I remind myself every time I've been meeting with him he did an hour-long podcast on the Tim Ferriss show so, like you know he speaks a lot but not really long form like that and so it's kind of fun to hear him and he got to share a little more personal stories then then he's normally known for so if you're interested in Walmart I'd encourage you to listen to that podcast on the Tim Ferriss show and frequently the Tim Ferriss show is kind of a feeder for this show so we watch that show carefully if a guest as well there then we might consider having him on our show so you know maybe that bodes well for Doug's chances of getting on the Jason and Scott show one day soon. Scot: [37:44] Tim doesn't have the reach we do so we try to help me out by by mentioning his podcasr once in awhile. [37:55] So there was a lot of brick-and-mortar stuff announced involving phones and I wanted to pick your brain on that one I saw was 7-Eleven they have this kind of Scan & Go technology what's interesting is kind of pivoting from from Walmart there Walmart had this functionality I think they've actually kind of liked it so you could kind of self checkout at Walmart so now you can't do that but everyone else is trying it so, what the heck's going on with that. Jason: [38:25] So what we kind of genetic I'll scan and go is the ability to pull out your phone scan a product yourself in the store and then pay for it on your phone on and therefore not have to go to a cashier to pay for it and that the expressive been around for a while they weren't the first ones but actually Apple Store is offered this for quite a while so you can walk in and grab your accessories scan them in the Apple app, pay with Apple pay or whatever payment methods you have on file and walk out of the store never have to get help from anyone. [39:00] And we're seeing that increasingly being used Macy's is rolling that out one of the big complaints and these big department stores is that it's hard to find a cashier to check out. So that, potentially attacking the number one complaint at Macy's is you mentioned they rolled it they piloted it in Walmart and Sam's Club and they should have turned off that pilot in Walmart they've doubled down on that pilot in Sam's Club we haven't officially heard from Walmart what what's going on but, my suspicion is in this is kind of a funny side note about anything you do in retail. I'm willing to bet that a bunch of the clerks in Walmart did not love promoting Scan & go because it peten, the potential to reduce the number of shifts they have for cashiers in Walmart so you can imagine this labor force that's responsible for educating customers about this feature. [39:59] It feels like that picture is competing with their livelihood and so, wouldn't surprise me if Walmart is having a retrench How They Roll that out in the Walmart stores but they definitely have embraced it in the Sam's Club stores and in fact Sam's just announced a new. Concept store called Sam's Club now and not only can you scan & Go in Sam's Club now it's the only way to check out so you absolutely have to have a phone and you have to have the Sam's Club app installed before you're even allowed in the store you scan all your items as you put them in your car. And you you self checkout before you leave the store that's a interesting pilot. [40:44] At the same time since they now know every customer is using the phone in the app in the store they've added a bunch of features to the app so they actually have one of my favorite features they've added an augmented reality feature so you can name your phone camera. Add a shelf in the store it recognizes the products on the store and it gives you supplemental information about this product. So you can do the like kind of product comparison where you compare two products and see how the attributes are different than what the pricing is. With why products in the store you can also see ratings and reviews and things that were used to an e-commerce, Sam's is now enabling in the Sam's now store but using the the phone that they're forcing the customer to use and to me that's a big Trend in brick-and-mortar so I'm calling this Tran the future brick-and-mortar is mobile. Because we're increasingly sting same-store Concepts where you literally can't shop the store without using your mobile phone so. We talked a lot about Amazon go and this show can't get in the Amazon go store, without using the mobile app Amazon has book stores in these four star stores in if you want to know the price of any book in the bookstore you need to use the app if you want to pay in the stores are highly encouraged to use the app in those Amazon stores. [42:05] Jd.com that the second biggest e-commerce site in China has just rolled out this new digital grocery format called 7 fresh and they're requiring customers to use their, the phone to get in the store and to do scan and go and have all these features in the store excuse me. And Nike just opened a new, flagship store in on Fifth Avenue in New York it's a cool store for variety of reasons but most of the cool new features are digitally enabled features that require you to have your phone in the store that day, stores geofence the app so when you watch the Nike app near the store the app goes in the in-store mode and it gives you all these unique capabilities. Help you shop the store better so we could eat that in the future episode on any of the specific store formats but to me the big takeaway is. [43:00] 15 to 20% of all e-commerce sales sales happen in e-commerce the rest happen in stores, throw these things people are getting used to online like Dynamic pricing and ratings and reviews in more detailed product information and, the very consistent answer that we're seeing to solve all those problems for brick-and-mortar Shoppers is to have that experience on the phone. Perfect sense because. Customer bring the super expensive phone with a big brilliant screen with him to the store that's a lot more appealing than putting thousands of super expensive screens in the store at the store would have to pay for so I think there's a train we're going to continue to see play out. Scot: [43:41] Yeah and judging from your voice to get pretty you're pretty emotional about the stuff man. Jason: [43:48] I love me some mobile brick and mortar shop. Scot: [43:50] Cool that's the all the News That's fit to chat about any Commerce in retail with that let's move over to listener questions. Jason: [44:08] Question question question question. Scot: [44:14] Our first question comes from, Patrick and he says we're a small retailer with about 30 or 40 employees and we're transitioning from selling other people's stuff. To developing in manufacturing our own brand of products any suggestions on building a team within a retailer that is responsible for manufacturing your own. Brand of products does seems to require a new skill set of employees that we have not traditionally hired for for example Engineers product Developers osetra, Jason had any advice for Patrick on how to counter if swivel maybe not pivot is Right work but too kind of gradually go from selling other people's stuff to developing your own products and sign this. Jason: [44:56] That will sew a congratulations on leaning in that direction I absolutely the dad is a important part of the future of Commerce is more more companies are going to be selling their own stuff it's going to be increasingly harder to make a living selling other people's stuff and I do think you're right like I. You need a lot of different skills to be a product developer manufacturer and marketer, then you do to be a wholesaler or retailer in so I do think you want to think about. Adding those new capabilities via VIA dedicated teams. [45:39] A picture of the things I really want you to think about in the places I would start thinking about investing in in shifting my labor force the most are the successful products that people watch today. Are based on. An intimate understanding of the Target customer and their needs wants and desires and so like all the companies we've seen their been really successful launching new products have a direct relationship in some way or another with a customer, and they use that relationship to test launch new products and quickly iterate and that is Maybe, not best done on platforms like Amazon where's your. Pretty heavily disintermediated from the customer and so you know one of the things I encourage companies to do is they pivot part of their business from from wholesale to to being a brand of manufacture. Is [46:34] Thinking about how you can develop a direct-to-consumer Channel or some way to have meaningful intimacy directly with customers so that you can get. [46:44] Feedback from from customers and so you can more quickly iterate on five development and by all means once you have a great product. Use all those other channels to sell the heck out of it so I have no problem with you selling that new product you invented. On Amazon but I think you need another Channel besides Amazon to test and learn and really develop those those product quickly. The other thing I would remind you is when you're selling someone else's stuff someone else is invested a lot of money in creating awareness and demand for that product when you're making your own product. You really need to have a marketing strategy around how you're going to treat that awareness and brand and usually the, different skills the dirty secret is when you're selling someone else's stuff the Big Marketing skill you need is actually B2B marketing skills, you build a relationship with those retailers but when you start making products that you want consumers to buy, because they recognize that your unique value proposition you really need true b2c marketing skills and said yeah you need to start thinking about, having the right people with the right skills and the the appropriate budgets to do that and so you know those are all some of the things I would. I think about as I made that transition Scott any important stuff I miss. Scot: [48:04] Yeah we're going to have a question in a little bit about anchor spoiler alert and so listen. Don't stop listening. Here at this point Patrick Patrick didn't tell us the categories in so sometimes this works or doesn't but one what area is kind of July feedback like you talked about is Kickstarter or Indiegogo and a lot of the biggest campaign to see on there already pretty well put together so but there's this kind of, level down or maybe two levels down if you kind of Explorer to there and companies are using those platforms to do a lot of experimentation around features so let's say you're going to come up with a widget and I kind of want to find out if people want feature 1 2 3 or some combination of those use those platforms for that what you do is you put the basic product out there then as you date they have different terminology for this but it's actually there's these different levels that that people can commit to. I'm going to vote with their dollars so let's say your base product is $30 and then you can add these features and. You can use that that feature set on those platforms to kind of let people vote with their wallet for different features that you may or may not want associated with your widget. So if you still a little time poking around there you'll see what I mean but that's kind of a cool way of of kind of. [49:29] Killing three birds with one stone so you're getting dressed feedback from consumers you're getting people to pay for YouTube product which is always nice, I did the third one is your building that direct channel so that those platforms can be really useful way that I don't think a lot of Amazon sellers may think about leveraging those platforms for for for doing that. Okay our next question is from Street, and we'll do kind of lightning round here so his first question Jason is is the Amazon business in consumables really growing. [50:06] All right. Jason: [50:08] But clearly there's categories like the Amazon basic battery famously has. 31 market share which is 10% bigger market share than Duracell tons of brands are seeing huge growth on Amazon subscribe and Save. I think it's fair to say that like Dash replenishment well super interesting and potentially the future. Isn't huge yet but absolutely Amazon's having I think very meaningful success in in consumable type product. Scot: [50:39] Are there any consumables that aren't doing well. Like maybe razors like me up Dollar Shave Club and doesn't seem like Amazon's really directly address to that that market that seems to be where razors are going just going to rain in my pickle. Jason: [50:55] That so you know we're going to do is we have to invite one of our data friends like 10 10 data onto maybe share that but I would not be shocked if Amazon sells more razors than Dollar Shave Club or Harry's. So I haven't I'm guessing I haven't specifically seeing the data on razors obviously there are a lot of people buying razors as a single order from Amazon. What's the mixture make a note and we will find out from from some folks that might know in the future shop. I think one of the other questions that tree ask got was why are we not embracing Alibaba in the US. Scot: [51:37] Yeah we kind of talked a little bit about this on the singles day coverage and there's just kind of an interesting little history lesson here, not a lot of people may know so Alibaba acquired a eBay selling platform full disclosure this is a kind of small competitor of Channel advisors called Activa in August of 2010 and then one of the things that Activa team did it and I'm good friends this guy's name is Jeff they pitched Ali Baba on building a Marketplace so essentially aggregating the products from those eBay sellers that now we're kind of also buying a lot of products from Alibaba to sell in the US and they came up the little Marketplace called 11 mean that never got traction a lot of people kind of a room you'll see felt like that was Ali Baba's bet on the US and that's not true and it was just kind of experiment Within that ended up getting caught wound down in 2015. Combined with a bunch of other marketplaces and then. [52:47] Alibaba you know where they're investing heavily is so special to have a very large US presence in New York and their they seem to be expanding that AliExpress is, have a B2B site where you can buy in bulk you know products and then resell them so lot of these Marketplace sellers Source from AliExpress I don't think Alibaba disclose exactly how big that is in the US but I I know it to be quite large so that's a big Market Place a lot of people don't know about because it's kind of weird B2B and then the other kind of technical of Alibaba that reaches into the u.s. today is they invest in a lot of companies. So let's see I always get some of this mixed up with Racket and who's the other company that kind of comes in and buys a lot of our companies so alibaba's a big investor in ShopRunner and then they see today by some The Flash show cat is or was that. Jason: [53:48] I know for fact rocket on about a few but it wouldn't shock me a volume also has. Scot: [53:55] So it seems like most of their their plays in the US have been to really kind of, invest in things and keep an eye on it where you know where I think they're they're doing a lot of the US is more China in so we mentioned earlier the show getting large Brands sell into China that have done some experiments we're trying to get Chinese Francis on the US yep that hasn't really play doubt busiek Park is flowing through Amazon right now or through AliExpress or from Alibaba which you know back to the first question how do you start building questions how do you your seller of other people stuff how do you start the Liam one thing we didn't talk about is finding a Chinese manufacturer alibaba.com is great for that so you can go on there and literally find a factory to make you any. [54:45] So those are the ways that there is some connective tissue between kind of the the China Alibaba world and the US so yep there's always been speculation to sew on eBay and PayPal split up there's rules around this I think we're past the time frame around these rules there's a lot of speculation that it was being done so that the eBay asset could be sold off mom and the number one company admission does find that would be Ali Papa so that would become an interesting way for Alibaba to really get serious about the US market is by eBay retool it and kind of what's worked in China which is splitting the people kind of oriented auctions from any of the B2B sotol Ballentine mall and and then taking a run at the US with some combination of putting a lot of Chinese sellers in the mix so so we'll see the jury still out on that I think it's definitely something Ali Baba has it keeps an eye on and want to the kind of in a weekend position right now like we mentioned earlier so out so I don't think it's you know if I was there I would do that right now, but you know it is something to keep an eye on and we will report any news there on the Jason Scott show. Jason: [55:56] Nice. We're starting stats for Tom little bit that you dirty tease this question so I want to make sure we get it in I think it came from an anonymous listener but it sent you the question was anchor which is a nktr which is the. The accessory mobile and PC accessories manufacturer anchor Rose to be a power a power house on Amazon business can you analyze their changes to highlight the overall Marketplace transition to differentiated product development. Scot: [56:28] Yeah and so my knowledge I've never works directly with these guys but I've read a lot of articles about him and I know people that have worked with him so it's all second-hand knowledge so Jason you may have more knowledge but urban legend at least on this is Anchor started as just kind of in one of these companies that sells a lot of accessories and then they started to see a hole in the market not and I think one of their. As they started to get their know their customer a lot of them are Travelers like like you and I and the one of the first things they noticed or heard from their customers was, hey you know I want, more USB ports on my power supply so that I don't have to buy as many of the Scituate of the bricks so one of their first products that came out with was a multi USB plug-in kind of power supply that was wildly popular and now they've taken that and really run with it and you know they have a whole, Kohl Mansion whole group that that innovates around these kinds of things talks to people and understands you know what what is their next gadgets need look like, I'm I'm sitting here and. [57:43] I got 30 or 40 different anchor thinks I have a thousand Jason and it's one of my favorite things to buy on Prime day because they are pretty aggressive song and to my knowledge they pivoted from Simply a Marketplace seller all the way to a top manufacturer I've read articles that kind of put their sales well north of of several hundred million dollars would surprise me I bet they're probably three to five hundred billion dollar company at this point so, back to that first question this is a really good example of how they do it but I also know, it's been a lot of time looking at Amazon search results there's various services that give you Amazon searches and the results, so for example we have a customer channelizer that spoke at a conference so I don't feel bad saying this they you know there's just this classic Han Solo in carbonite image there in the Star Wars world shockingly so I know a lot about them and they kept seeing people look for that in different ways and they came out with a beach towel that had it on it so it looks really funny the beach towel is just like. [58:50] The exact Han Solo in carbonite so it looks kind of funny when she was sitting there on the beach and they discovered that two looking at Search terms so people are actually looking in towels for Han Solo Carbonite not finding it and they saw the no search results there and decide, and I've heard danger guys talk about they spent a lot of time looking at the Amazon Marketplace in these inequities between Supply and man and then they figure out how to be the supply that meets that again. Jason: [59:18] Yeah it's an awesome tactic if your own e-commerce site it's one of the most valuable, places to mine are those zero results found on your own site but for sure using tools to get disability in the like what's happening on Amazon searches super valuable the other area that they they tend to farm a lot for good Insight is the reviews on the. Amazon so you you can actually learn a lot about the attributes people are looking for and products by reading the reviews of people that actually bought the. The previous versions of products which is another good tactic, and you did correctly surmise I feel like I am a little bit of an anchor hoarder I have some weird wait in fear that someone's going to come to my house with a weird device that they need charged and I'm going to be a bad host, and not have the right the right stuff so I feel like I I buy way too much of that stuff and every new Gadget that comes out open the door to replace it all right so. Now are our latest iPhones can be charged by 18 watt Chargers and they charge a little faster so I had to replace all the the the older usb chargers with USB C Chargers and one of the things you'll find from a company like anchors they have now moved in a differentiated products is. [1:00:36] Actually have competitive advantages over the ocean of of generic products that are there on the market so you can find, 18 watt USB C charger from anchor that are much smaller, that have like nice usability features like folding plugs and all these things then almost in the other sellers on Amazon so it it it are a little tip of my hat. It's always surprising to me when you can offer a differentiated product on Amazon where they now have like 600 million. Million skews and so that's going to be a great way to leave it hopefully you're listening to this show, in your car on the way to. Your relatives for for Thanksgiving and when you jump on your phone to look for some of those Black Friday deals make sure you check out some cool new usb chargers, from our friends and anchor and so, if I'm wrong or you have another paper product or there's anything else you want to discuss from the show we did encourage you to jump on a Facebook and leave us a question we do try to get to all of them we can. What is a good enjoy the show we sure would appreciate it if you would jump on to iTunes and give us that 5-star review. Scot: [1:01:48] Thanks for listening when we hope you have a great Thanksgiving and we're thankful here at the Jason and Scott show for you listening to these crazy ramblings through over a hundred 50 episodes we have no idea why you do it but we really appreciate it. Jason: [1:02:05] Absolutely and so until next time happy turkeying and happy commercing.

EP152 - Salesforce.com Shopper First Research with Rick Kenney  Rick Kenney (@rickkenney) is Head of Consumer Insights at Salesforce. Rick recently completed a "Shopper First Retailing" study in conjunction with Publicis.Sapient. The study included data from: Shopper activity: Digital shopping behavior of 500+ million shoppers Consumer survey: Preferences of 6,000 global consumers Mystery shopping: 70 brick-and-mortar stores evaluated for consumer experience Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 152 of the Jason & Scot show was recorded on Monday November 12th 2018. http://jasonandscot.com Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Transcript Jason: [0:25] Welcome to the Jason and Scott show this is episode 152 being recorded on Monday November 12th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scot Wingo. Scot & Rick: [0:40] Hey Jason and welcome back Jason Scott show listeners Jason all the trade shows going on in travel that you have been plugging in over the last month's we took a little bit of time out and haven't had some guests on the show they don't like it when you're like well we could do 1 a.m. or 3 a.m. I'm so not the good news is continuing here with episode 152 and through the holiday season we have a really strong slate of guess they're coming on the show is a theme they have one thing in common they are bringing to the Jason Scott shows some really awesome data and insights around consumer paper. And kick off that thing we're excited to have on the show Rick any and he is the head of consumer insights at salesforce.com Salesforce in publicist Sapien and full disclosure that's Jason's company and he played a role he would say pivotal I think Rick would say minor so what. You played a role in the project and it was recently completed and has some really comprehensive research and Retail consumer Behavior Jason I Jason's kind of been talking about this a lot Rick and we are really excited to have you on the show welcome. [1:50] I am thrilled to be here I'm a long time listener first-time guest so thanks for carrying the torch on Commerce podcast and let's let's talk about it. Yeah I think any good geographies interesting I am in my home state of North Carolina Jason's in Atlanta and you're in Seattle so I think we got kind of the you know by coasts and covered here Coast to Coast. Jason: [2:14] Exactly it's pouring rain here are you guys going to do some weather. Scot & Rick: [2:18] It's beautiful outside in Seattle today we are rainy here as well. Jason: [2:23] So the West Coast wins this week so you will know we always like to get things started by getting a little background about our guest and how they came into their role so can you you share your your story with. Scot & Rick: [2:38] Yeah so so as you know I'm I'm in a sales Force uniform now but it all started with the boy and a dream about e-commerce back in the early 2000s when the what I said a company called Zildjian so is Elgin mini know as symbols and drumsticks and that's a very entry-level. Participant in the marketing department I figured I'd hitch my wagon to e-commerce. And I found my way into email marketing and then threw some acquisitions. And it has been a time since I'm just really been infatuated with all things Commerce and Performance Marketing since early 2000 so that means. Carly Salesforce in prior to that company called to man where was e-commerce ranks and then GSI Commerce. Which was a another e-commerce provider back in the early 2000. [3:36] Lucy got some GS either I'll have to ask her are you a musician is that why you went to cymbals and drums. Yeah you know I thought early on in life that I was going to go pro in in the Rockstar thing but. Change of plans went pro in e-commerce and look back but. [3:59] Rickles so then see you were at GSI and then demand and then. That's that's the exact one in Gs I came in through an acquisition of a company called the dialogue which folks may remember from the. Earlier days of email on the 2006 well Brickell and then the sales force is obviously a huge company and after acquiring demandware it became part of their what are there many clouds have Like A Thousand Clowns so maybe just for folks that aren't familiar with that 100% maybe give a little high level overview of of that cloud and then tell us about your role. [4:37] Yeah so so Salesforce many know is the number one CRM provider in the world in particular to folks who are listening in now on the e-commerce space you may know Salesforce Commerce Cloud so Salesforce Commerce cloud is B Enterprise leader for all things Commerce providing and so we are my team particular we are part of our retail team so I've got a really fun group but really fun jobs at our aim is to tell that true story of shopping. [5:07] And the other super Advantage build in that we get to look at the actual shop activity of half-a-billion Shoppers globally and that's. Direct-to-consumer Enterprise Brands and retailers in inside all those quicksand all those Taps UC the change in retailing to the pace of that change and really how Shoppers are acting today and it provides really a great canvas to tell a whole lot of cool stories I don't really wear retailer should be putting their Investments and working towards these days cool well we're all here for the data so let's jump in I think the the name of the the program here is chakra first couldn't go shopping first so let's lay a foundation tell us about how did this come about sounds like you want them part of this you have all the stator I'm through the demandware system it's based so obviously you can see all the analytics and things that your your aggregate. Retail and brands are generating their and you said something like half a billion so tell us a bit more about the research and what was the goal. [6:17] Yeah and this is really this is my favorite piece that we've done over the past 10:05 or 6 years of doing this and we had first some some great call authorization mention heike Young from Salesforce and he'll be Anderson from pupusas. Safety and then there were three of us and we also did this three-dimensional data said I talked about that shopping activity we look at a half billion Shoppers a recorder and inside that we see a whole lot of really great things to devices that use the thracian they stand box that they by Cecile a lot about the Shopper activity. When will you want to look into Shopper preferences we added some survey data and then we also had this really fun mystery shopping expedition across 70 stores in the US and London as well. What are the three things together and we created this what we we consider this blueprint of retailing success sends who tells the story of what it takes to succeed in retail given the climate that certainly we all know about of some really interesting macro pressures that are facing the retail Market overall. [7:21] Did you guys to 501 Shoppers is a lot do you guys just close the GMB going to the Wyndham and where was Private or a public separate they did disclose I can't remember the number but you have any idea. Dollar amount of transactions work we're talking about here. Yeah we disclosed last year for 2017 calendar year we had more than 25 billion in gmv across the across the sales work on her class about that is sore retailers for retailing brands are those gray lines exist now they're really looking to see how they compare with other Enterprise Brands to retailers. Direct-to-consumer space nut is the Wheelhouse of All Things Early Salesforce but to the state of set as well. [8:12] And then again I remember so in demand where was Independence the the set of customers kind of skewed have the fashion I would say you're or apparel did you guys do anything in the data to kind of normalize it against kind of a categories drinking like that. Yeah there's some really good depth in a few of those vertical sea mentioned so all things apparel General active luxurious three different flavors of apparel overall there's a really healthy component of Health and Beauty inside of theirs as well so that that spans from high-end Beauty all the way down to something more cosmetics. [8:54] Epgi felonies and then as well as Electronics there's well this really cool view of a really strong Brands and retailers for this year's report this actually the second year that we ran it last year we gets the splits based on those different verticals we do have some other assets where we look at those verticals in particular and and see how they compare with each other but the I think we tried to get out and in this report was how do you tell the story of all the Shoppers and. What's interesting though we see differences that exist between Francis Health and Beauty and apparel we do see is the general shopping at tivity thanks for the foundational items like what device they use when are very similar average order value certainly be different for luxury apparel then more of a fast-fashion set but overall for this predictive group that spans of kind of file, specialty Branson retailers we see a lot of similarities across those. Jason: [10:01] That's awesome Rick I am sort of a geek on the data set I ask you questions all the time and. I'm trying to avoid the temptation to go down a rat hole and get into Super. The new show level stuff but so in addition to that data what you have all the time you did this one time survey and remind me how many consumers were in the survey. Scot & Rick: [10:27] Yes we had half a billion inside of this the particular data set for it's generally we looked at for this one egg quarters worth of data against the year of your peers you before so 2018 you won against 2017 QR codes. Half a billion little bit more than 500 million Shoppers voice. Jason: [10:50] Call n&s on the survey data haven't how many consumers did we talk to. Scot & Rick: [10:55] Yes the survey was 6000 consumers that Global across six Market split evenly US and Canada UK Germany France and A&Z as well 4,000 from each of those those Cheetos. Jason: [11:11] Cool and then we visited some stores and how many store visits do we do. Scot & Rick: [11:16] So Physical stores you visited more than 70 stores it was for in San Francisco New York and London as well. Jason: [11:24] Perfect in so one of the fun things is the story you can tell by by seeing the the sort of. Intersection of those three data sets together and so. Like I know that you came out with these like three big categories of insides as a result of what. [11:44] The things and we named them make it fresh be where I am and give it meaning so I'm hoping we can do a little bit of a dive into each one of those and explain to the listeners what we mean and and what some of the key takeaways were but did you have a favorite of the three buckets. Scot & Rick: [12:03] Absolutely that the first one and we we share this together last week but her on stage together my favorite of the mandates and again we consider this the blueprint he do these three three things really well you're able to can be Pete Wentz the first one though make it freshers is my favorite other couple really interesting things that jump out at me with naked fresh we like to look at what is that product catalog look like how important throughout the year at the very top of the catalog what does that contribute to what we found is that the top 5% of your very best Frost the top 5%. [12:40] Driving 48% of Revenue and a lot of folks talking about the Pareto rule here at the 25%. Is driving 48% of Revenue what's interesting though is when he compounds that. With what's happening with 5% those those top products are changing really rapidly 59% all of the top 5%, are changing. So we're entering the Sarah where you're God or these days of Evergreen products that you have to make it fresh you have to be fast and fresh with your Shoppers and this is really a nod to what happened or rather what fast-fashion did to all of retail that it has Inspire The Shopper to expect to see new whenever they come to a site or stored back when surveyed, they say 69% a shop or so yeah I expect to see something new whenever I get to the site or store in the catalog data saying the exact same thing you need to be fast you need to move quickly and you can't just Sand by the old the old guard of products that may have gotten you somewhere previously. Jason: [13:48] Yeah and that that like it's pretty well with the data like Google typically shares on search right like that. An overwhelming majority of the the search volume is on these head terms but still something like 80% of the searches Google Seas have never been searched before I write like so it you know there's there's this constant churning of what people are thinking about and what they're doing or not when I saw your data on the catalog. [14:19] It was very similar to that white people are coming to these sites with different problems different challenges different occasions and contacts every single time and they expect the retail to beat the meet the needs of that particular occasion in contact. Scot & Rick: [14:37] And I love that you brought up that Google example because I've seen that day. I think I heard it from you from one of your tweets right back went and we decide to look at the same thing of what we look at our site search the Google data is all about SEO and what they're singing in their box when we look at site search so when you go to the top right-hand corner of your phone or to recite you want to see that how often is that changing as well and we know that site search is extremely important extremely productive what does it look like a cross Shopper in turns out that 75% of site search queries are new every month. So this is the hardest part of e-commerce iste the plane simple basic active merchandising is really hard because there's constantly new things than these Shoppers are looking for and if you don't really. Yes I sent you a lot of different topics about merchandising help or is it is but just that number always jumps out of you need always be fresh you need to not just showing freshmen also responding to all this activity is happening all this change the chopper. Jason: [15:50] Yeah for sure it's super easy to do too so that's the good news the wheat we said this a bunch of times. At 75% of queries being new every month totally underscores one of those my one of my favorite Tools in analytics Platforms in my mind when the most valuable. Analytics views we get our these Zerorez search results found right and so you know I'm always encouraging Merchants like there's gold in. [16:21] Typing in your search you're on site search and expecting to get results for an arms and you know that. Telling you all those new items that could be part of next month 59% on your site if only you were able to respond quickly to the to these new emerging demands and to me that. No results found search queries are kind of the canary in the coal mine is as trans and interests and indications are shifting. Scot & Rick: [16:48] Yeah site site search is an endless waterfall of just great things that can happen if you take care of it if you are seeing no results coming to 1518 20% you're starting to get invite big trouble at that point we actually have a a benchmark that we've run for number of years for our customers which is how good are you at site search and looking at conversion on site search no results search and it is always a source of found money for retailers of. [17:17] Cultivate your side search always go back to it the good news today and now is that they're a lot better tools and then just the analyze how much stronger and. Utility trucks the applied intelligence artificial intelligence into merchandising is much more of a chore today that was gosh 5 or 7 years ago. I want more manual orbis extreme rules rules ribbon that is today. Jason: [17:45] For sure and it turns out those this hoax using site search have very high buying intent so so there are good cohort to take care of. Scot & Rick: [17:51] Absolutely. Jason: [17:52] I know that the next foundational thing was called be where I am can you tell us a little bit about about what you meant by that. Scot & Rick: [18:01] Happy where I am just as it sounds this is about making sure that you are surrounding that shop or wherever she or he may be but also maybe more importantly is reducing friction in that experience and Jason you rightfully so bad on your soapbox about things like mobile buying how much friction that has the still in that process the books of not getting rid of them we look at beer I am is that opportunity to inject or rather reject friction and inject a lot of that seamless opportunity what are the easy things we we jump into is the use of mobile wallets and it might seem like a basic and and maybe even in Alyssa is here and and and the three of us we're somewhat tired of talking about mobile but there's still so much opportunity with it and you know we look at where we are today that's as of Q3 2018. We see 65% of traffic is just coming through phone and we need to get better at converting that one of the ways that books are starting to do that night I look at Johnston Murphy Footwear retail job. Bringing Apple pay into their experience and I love the story of Southern Marsh who runs Commerce Johnston Murphy that they actually launched Apple pay last October so over 2017 on a Friday. [19:23] Soft launch no promotion and LSU folks know you don't typically like to launch features on a Friday but they weren't if we're not there they came in the office on Monday and already Apple pay accounted for 15% of all their mobile orders. It made me more over what was really impressive and they were glad to see at the speed. [19:47] At which folks were actually getting through that shop attorney that folks who use Apple pay would 90 seconds faster than someone else who bought with a credit card so that bottom half of the funnel essentially has been sliced off. Buy Mobile balls in particular Apple pay for their example and we're just seeing that when you can reduce friction and be with that Chopper is in their context really great things can happen. Jason: [20:14] Yeah that's that's an awesome example and you see similar results with other mobile wallets like PayPal or Android. Scot & Rick: [20:24] I'm glad you brought PayPal everyone forgets the PayPal at least in the states is still farther away than a number one mobile wallet that sits PayPal. Apple pays doing well for those that are inclined to use and have Amazon payments that is performing well in those really the three that in the states are carrying some real Cher. Last holiday season we saw just the last couple of days we let up to Christmas than 40% of mobile orders were using one of those three. Mobile Wallet site PayPal Apple pay or Amazon his and what we expect to see this season is actually very similar so there was three absolutely Carrie Carrie the share we haven't yet seen evidence of the other ones that are out there we're starting to see more discussion and more information of some of the financing options for the VA. Says all after pair but right now it was three wallets just by themselves are really caring you all the share of. Mobile Wallet. Jason: [21:36] Nice and one of the other things that's really interesting me in be what I am is something it's kind of talked about a long time on the show and you ordered two is is what we call this mobile Gap that essentially you know traffic's increasingly shifting to the mobile device which is great news but bad news the conversion rate you know tends to be you know a half or third on the mobile device what it was on the desktop so that's if you follow that Trend out that's not a very favorable trend. The. And a year 2 years ago Scott and I would debate like what the causes of the mobile Gap was and if it's something that would abide over time as people got. More used to mobile and is the mobile checkout experience got better or whether there's something endemic and in phones versus. Apps that was causing it and most of the data source I do sort of show that while there still is a mobile Gap it is starting to close. Scot & Rick: [22:37] It is an indoor really interesting things about Mobile in end the story because a couple years ago I got to go to stage and it's actually did my big convert speech it was welcomed with open arms because what's happened. Overall in Commerce in the past bunch of years is that no way back when if you go back to the earlier days of when we're all doing this we were trying to educate our boards of directors to start a conversion rate online at. 2 or 3% is it okay that's that's where we're all at is an industry and the folks who had a store back bro we're pause right there 30% of folks who who crossed the threshold goodbye and condition them. Digital reality of to 3% when we did that as it as a group of of e-commerce leaders we also decided that we would put our bonus against increasing conversion rate so soon the practice of conversion rate optimization was born and we pindar are bonuses against that in and we saw this nice Rising tide of conversion right or wrong a bunch of traffic went there but no conversions went there so I'm sending the birth rate started to fall. [23:58] And we had folks coming to us saying hey Mike anniversary it's falling what's going on and it was pretty easy to point out that mobile Gap that you talk about. It was causing this is decreasing conversary you could still have higher orders per Shopper which is a really cool metric to look at us just a look at all your Shoppers look at the orders and walleye you have a nice healthy message to look at compared to this old star geometric. [24:26] And if we start to get their folks are disabled how can I actually Benchmark myself. Permobil in as you may know we have a benchmark and practice in Salesforce but we have one super easy metric that anyone can use and put themselves against now we talked to her. And you take your order share on a device so today that order share on phones is 45%. And if you divide that by the traffic share which today is 65% you get a decimal it's like .67 metric conversion indexed by definition that showing that you have a lower conversion on your phone than your overall conversion rate in the other devices always gives you the sense of what the Benchmark is. That leads me to is the mobile Gap is still there they're still friction we need to get rid of but. [25:24] The goal should not be part we're not trying to be 65% or 65% traffic because the intention mobile Shopper is very different. Attention is when you're in a store and you still want to bother the associate or don't want to be bothered by this so if you take care of your phone into research. And we found that in the research they already uses their phone illegal to walk into your laptop and start checking something out you walk into the phone 83% of those score 18 to 44 year old Chopper are using a phone when they're in the store generally speaking those folks are not buying on their phone while they're probably going to check out through that store and actually buy with a credit card on the way out so the the actual potential of buying on the phone is lower set intent is just naturally going to be crazy so while we haven't figured out the exact value we do know that the Benchmark of what mobile looks like today has risen nicely in the past 40 years we have been monitoring that conversion indexed the past 3 or 4 years and we see that it was 33 if you go back to 2014 reptile that point 67.7 rage now so we are seeing good things happening, we still have that mobile gap insurance the traffic Sharon or share. Jason: [26:46] Yeah I know it makes perfect sense and I love your point that you like we're not the goal isn't conversion parody because all of these are our different circumstances I would like to remind people conversion is a metric not a kpi. There's a lot we can learn from it but it it on its own is a very poor goal and to your point. A 50% conversion rate might be great for a store because there's a heck of a lot of friction to get to that store people only get to that store that had a very strong buying intent you had to drive 5 miles at the park in the scary parking lot yet she weapon in the store you know people were pretty committed before they got through the front door that store in the further away your story is from the the customer the higher the conversion rate of that store is going to be because only more committed customers will do it. The closer the store is to the customer of the worst the conversion rate gets and of course there's way less friction to jump on your laptop then there is to get in your car and drive to a store and there's. Even weigh less friction to hop on your phone while you're standing in line at the bank then there is to hop on your laptop so these are all sort of. [27:56] Different situations then um you know the goal isn't parody I'm embarrassed to say I still have clients that you know come to me with it. Jason we just want to improve conversion rate and frankly more often than you would expect they're even willing to do a performance agreement when I get paid based on how well I can prove right now I have to tell him. Will totally accept that contract but just so you know the first thing I'm going to do is only allow previous purchase orders to to visit your website. Scot & Rick: [28:28] I love it yeah I didn't I love that point about the friction that it's involved with the digital environment compared to the friction involved in the. Is a teaser we have to put this research out but some point early in 2019 will have an analysis of location-based Uber traded in. Eat the spoiler is the geographies that have lower population density which generally have less access to store tend to have a better conversion rate in digital because that is the channel they have to go to. There's a really assuming top of that when you look at the metric. We use the term you always be careful data because it's Dana and other lies you can be really careful and what day that you accept what day does that you need to focus and say I don't know if I believe what's underneath that lets get into it and any any retailer worth their salt knows that they can't take anything at face value and what are you actually measuring. [29:26] Yeah your ear point about previous purchasers making sure that it's true there's reason why when you think about old school direct marketing based on our FM right recency frequency monetary reasons why the are Whispers because recency wins and you can predict who is going to actually be a good shopper based on how they bought from you before and if so how frequently rather are they grow the business. Jason: [29:59] That that's terrific advice in an attention to the third pillar give it meaning can you tell us a little bit about that. Scot & Rick: [30:08] Yeah give it to me anyway we want to do a lot of a lot of diving into really that relationship between the Shopper and the brand of the Shopper and retailer we can have some really into three pieces within this one that there's a side of giving meeting in the it there is the relationship. There's a side about values in about how you as a brand stand for something I hope to connect with the shopper because of that and there's there's some evidence that shows that yes shoppers do and will be more likely to buy from you if you have something that you stand for and they connect you there's is 45% Shopper said that they are more likely to buy someone we also saw a lot of evidence to say yes loyalty programs matter to Shoppers we didn't we didn't ask particularly which types of oil favorite within to give it needs that give it meaning section. It's all about how do you connect Shopper with product and the Art of retailing is doing just that. [31:12] And one of the best way to do that is by using recommendations it's not a new tactic in fact it's one of the oldest and we've had a digital Amazon years ago. Absolutely astounding numbers on what's happening with. Product recommendations next Shoppers then click or tap on a recommendation account for about 6% of all visits. But that group of Shoppers is driving 37% of all revenue. And when you talk about connecting Shopper product there to foundational things on product find ability got to be great at. [31:51] We talked about one earlier which is site search. Site search is always going to be massively overweight in a good way that you'll have 10% of visits and will yield 25.6% of Revenue. This product recommendation finding of 6% of Shoppers and 37% of Revenue is just. And just goes to show you how the power of suggestion the power of connection in a relevance is driving outside results and in there should be other couple folks are still run a nice day is generally the luxury space that. Art ready to rest her or give control over to to some of the algorithms that make up those recommendations bide relevant product recommendations good things happen, With Your Shopper cool some kind of sitting here and that's these are all insightful, what's landed plane for listener so keep it fresh if I'm in fast fashion I'm already doing that but let's say someone is not in that category are there any any tips or tricks for keeping it fresh outside of the national. [33:04] Yeah I know I'm sure the store last week when I was in Stockholm about this time last year I tried to broach the topic of fast fashion with a premium apparel brand and it was it's really what I once I said the words out loud and Fast fashion just the visceral reaction of we are we are not disposable I think it was lost in that it is the baggage attached fast fashion but what the concept has brought us is this the Snead inability to be. Fast in terms of how you turn inventory how you release product how you get away from the know by fashion Seasons into season list and into micro seasons. [33:48] We see more evidence of folks and Jason actually bring up the example of Woodbury launch just less than a month ago that now they've started to actually have these monthly. Drop Cadence's limited edition 24 hours available only through social social channels or least new newer media channel and they started that series and we see. More and more evidence of folks that aren't in the fast faster that might be premium. Or might be entirely different sector that there. Pretty nice limited edition products that are only available for a particular holiday or sees it and the other side of that is expressly bringing customize good maybe the hottest topic that applies not just to retail but also into supply chain components of retail light is who you bring those customized products they made for me just for me. Over to a larger set of your Shoppers and that we see countless points of evidence of some success in there with a lot of the Footwear makers we see apparel brand even toy brand American girl who's doing some. A customized it all inside make it your own this is a lot to be learned here. [35:03] Yeah I think Doug from Fanatics voices like over half their goods or customize that that's definitely people love customization. It's also you know not to take it back to the shop or but it's generally not promotional. And it is insulated from Martin head because of that you not discounting it either so you you can put that van without usually the premium, and not need to take the 30% off at the end of the season so if there's some really good things happen with. Jason: [35:33] Payless returns as well. Scot & Rick: [35:35] We less returns yeah okay I think I think that was the one kind of the pillars are that the make it fresh is probably the hardest to get your head around one question on be where I am used to talk a lot about mobile you know we miss you a lot of Echoes out there and other voice assistance did you guys discover anything about that is that work somewhere retailers should be spending some time. Data voice remains this curious beasts that we we haven't seen shopping activity evidence 2.2 here's how well is performing at its 8 is it difficult to measure this point because of what's coming through from the players the survey evidence supports that. [36:17] There's some interest and activity in terms of shopping related activities the folks. Only one these devices are taking that number was 70% of owners of one of these smart speakers are doing something Commerce related within the past 3 months and realize there's a lot of caveats on top of that I think that's that's kind of where we are right now that there's there's not a whole heck of it is 22. Massive success of this and honestly this this coming season don't expect it either will get more of these devices in homes will see a lot more use of them for basic activities but we're not ready especially in the break the world into wants and needs especially in those those kind of wants of products that might have some. The Peril in the Shoppers that are looking for the technical Goods inside or performance Fabrics not yet just reorder your replenishing through a device that actually researching and getting himself excited and inspired by those goods your little while until voice catches up and maybe you can meet us at team up. With some other elements of behavior trashley when that Chopper through that. [37:35] Put it wouldn't be a Jason Scott Schofield and talk about Amazon a little bit too can I take the B where I am to the extreme and say well you know there's a lot of people on Amazon and. I put that in the bucket of marketplaces and your eBay is in there and even the Walmart marketplace essentially if I follow be where I am to The Logical conclusion is the Dana telling you to sell on Amazon another Marketplace. Yeah I know they were say maybe are our most important finding regardless of what Mandy that lives in is really what's happening in terms of how that how did The Shopper is relating to these different models of retail like that on one side you have a Marketplace if you fall the Spectrum to the bar other end you have the brands and in the middle you have your retailer and what was really interesting was when asking shoppers. Where they choose to buy they said won't of course I go to the marketplace for pricing convenience and access to products. [38:40] And then when it comes to product Innovation and authenticity and just a cool fact of course it's the Brand's because you are able to go dressed as friends to buy now and what's what it shows then is the only reason the chopper said I will go to a retailer in this is where we talk about the squeeze. Only reason that someone will go to a retailers for customer service, CBC the squeeze and bird with brands on one side of the retailer Market places on the other and what is really interesting to me is thinking about the the winners in retail in the past. Five or so years and you'll get folks like Nordstrom in REI and even Stitch fix at putting that list of just really good retailers that had and have a service proposition. Compared with the folks will be there falling or failed you can certainly look at Oakland Toys R Us and pennies have intelligence. I think what the what the retailing world has become as you got to be good at that way that you attracted to shop with it. Brands are great at showing how great they are at being your friend. [39:55] Marketplaces are winning in being so successful because they have access meat provide such value that access. And then if you happen to get stuck in the middle you better have a way you can actually serve your Shoppers and for those that have hooked on the service they're doing well for folks that, so no one we think about what it takes to compete alongside folks like Amazon these days it might very well be that you need to be there that you need to be on that Marketplace but you also as a brand should we consider it well what do you think about me that will actually bring Shoppers back to me. And that's where all those things about make it fresh about limited edition products about collaboration about customized Goods but that could be a real differentiator for you sure put some of your Evergreen product on Amazon that's a great way to meet some of those Shoppers first time but you better have something unique. They actually get to your shingle that you had to hang up your own. Jason: [40:57] Rick one of the points. One of the things is really interesting to me in the research that related directly to marketplaces was this whole notion of how important it is to get the second purchase from that customer can you talk a little bit about that. Scot & Rick: [41:14] Yeah that the wanting to jumped out we we put it into the to make it fresh because there's this sense of needing to act with urgency and we talked about our FM early on about this. What we found is that when Shoppers see that first purchase that sure they're they're going to retailer or brat but when they want to buy something again. [41:36] They go straight to the marketplace and it's actually rather concerning if you look at what's happening that your first purchase you might win. But your second purchase is essentially a shopper at writing and going towards at Marketplace the challenges that we see in this is end for for smart press retailers that are you driving their acquisition cost based on, their lifetime value of a customer and lifetime value the function of how many purchases generally more than a couple. Then your challenge the Beretta retailer is if you only get that first purchase and you lose that shop in the marketplace your economics are totally upside down. Add this we think about acting with urgency the need to anticipate right and immediately after they buy for that first time where you need to take that Shopper and where she wants to be so she does not at right and no chores that Marketplace it's something you've got to be really really good at and side and we just it's it's astounding how many folks are not yet prepared, to do that and not yet prepared to participate that second action. And some bad news is you will lose your Shoppers to the marketplace and the second or bad news is it might not be your exact product the next time I feel better. [43:00] Another interesting output of the research you guys did are what you called for quote on quote foundational retail truths and they are lead with mobile the power of the store Infuse intelligent and connect experiences summer obviously Mobile in empower the store. No maybe it was some highlights you like curious about the last two because on their surface at school. Harder for me to understand what there. [43:28] Yeah you know what we talked about using intelligence it really comes down to what are you doing to really Drive value from the date of that you know and can access and now there's a very basic kind of hierarchy piece around boy talk to her live person you got to be really good at personalization or at least be able to start those recommendations in place increasingly it work or maybe better put the standard is the bottom of your product detail page you have to have recommendation. The challenges a lot of people stop their most folks say alright check I've got recommendations on site what we're seeing is this this new Renaissance that I actually using personalization to create recommendations and create better experiences in whole bunch of other places throughout the shop or Journey not just Aldi shopping for that so yes you need to have. [44:26] Throughout those two site experiences go beyond the product detail page that means having more relevant search results that might not just be rules driven or rather you can service product. The shop will be more interested in because of what you know about their last Clicker. So text me if using personalization site search or even sorting the category Pages based on based on the things that you know about that shower so that's kind of level to it's it's just barely above the product recommendation. [44:59] But now we're seeing this evidence of better mortality experiences like in customer service that we're seeing this will be the year that when we're all shopping will see a whole lot more. The folks at Adidas at the 34% of their inbound increase are generally some of those basic and a wizmo type pieces that a chat box you just take the bottom off of your service increase for though so you're going to see a lot more uses in service. And then finally I think we're finally at that spot and I say finally because I heard it on a commercial last week that Home Depot is advertising. Hey you can take a snap of a product and you can no search our product catalog based on that so you know when the big boxes are doing something like that and there is good investment in good technology around visual search and we seen this for a few months with Pinterest and with Asos we have just one of our customers Rebecca Taylor is actually a piloting some visual search elements right now as well so we're starting to see the intelligence it was beyond sodiq reporting personalization into this in a higher level of actually connecting Shoppers with products in more unique ways that. Can we have not been done before the last few months. Jason: [46:25] Yeah if I'm not mistaken right I think there are two or maybe even three National advertisers that are prominently featuring visual search in their in their television advertising right now so that that definitely tells you at the rabies it's at the top of the hype cycle or or maybe it's it's starting to really add value. Scot & Rick: [46:44] Why I think that's it was just one of those funny moments of I was half listening to the TV in the background when I heard the commercial and it referred to you take steps that way I'm glad I got to DVR and record show that live in a week or two is real Oaks or actually implementing it and that's good news because you know this is this is one of those areas that. Who is Kenna beyond the basics into something is a little bit higher. More compelling for Shoppers and it's actually use case this is a real use case it's good to see that what's happening. Jason: [47:23] Yeah I know you don't need the DVR anymore to capture the interesting commercials much every Advertiser upload their commercials to YouTube now so you can usually find it. Scot & Rick: [47:33] That sounds like a fun day activities at sifting through commercials. Jason: [47:36] Don't bonus tip there yeah anything come out of the research that that struck you as counterintuitive or there was like sort of a fun surprise for you who you know who's been looking at this stuff for a long time. Scot & Rick: [47:49] Yeah I know it's funny one of the one piece of advice when I started doing a lot of this was he never be surprised by a result weather still thinks it did jump off the page I need one of those for me we talked about the Amazon second purchase thing which was may be jarring Morrison surprising because we put that together with the speed at which we see Shoppers terminating as well so if you run a termination to see when your Shoppers mites actually leave you what we found this that. [48:24] Half of your repeat buyers will make that second purchase within 16 days and I think it would when you talk about it talk with retailers of what do you need to change what do you need to do differently. One of the most important things that we found in the surveyor in the in the research overall is that notion of anticipating because. Now you are your butt respite of toothaches Amazon her once I was going to Take Your Shopper if you don't stay tight or going to put a bubble around a shopper and then even for those that stay you only have a couple weeks before you start to lose a whole bunch of your Shoppers so just the speed of which are retailers Brands need to operate today to eat is I think it needs to be jarring to to all bran to retell it today because. Your clock is literally taking on you and making sure that you bring that Shopper back is maybe the most important activity that you can get into. [49:27] So we spent a lot of time talking kind of in the in the present when you look at the data can you extrapolate it and give us kind of your thoughts on and feel free to mix in your own personal lease obviously where do you see the future of e-commerce. [49:42] Yeah I know one of the one of the things that I think is most important today is that we've cut forgotten what we we've been wanting to do that for years in I'll go back to marketing we moved from batch and blast into segmentation and then have been injecting marketing with more personalization recently. Ed in Commerce we spent so much time trying to get those recommendations on the side and if I knew areas of bit of the experience that can be more relevant in meanwhile on the side we had customer service which is really need the true one to one channel. The entire time and it's been largely ignored and looked at as a cost center in silver profit Center and if there's one area that we're learning and I think we'll take a lot from is next couple years is that will start to see this service LED retailing model starts really take shape and take take effect across retail in. I mentioned the datapoint earlier that retailers are successful retailers are ones who do have a service proposition I think it goes deeper than that in the success that we seen from and I can point to stitch fix because their approach has been a service letter the fact that they have a box to get sent to you because there's there's there's a lot of hype around subscription models. [51:09] And it just like any Eddie hot treasury hype cycle topic. [51:15] Those things will will at some point fall and get quieter just like if you go back five or seven years when we saw the flash cell model but, every one of these friends leave something behind in the flash sale model turned us on to the concept of emergency in Access and it even rate ethically showing the word sold out on the website which knowing in the early 2000s something wrong product next Leona Group HST sold out it changed after that after the plastic model to be over this about brand heat look you should have come here earlier this time what we will see from all of these box models that have happened isn't the infusion of this relevance alongside this notion of service and it created just for you and curated just for you will start to be something that retailers and Brands need to differentiate on actually relate to their Shoppers in a much more 1 ton weigh it and to be honest it's an asset that brand retailers have and it's one that the other competition i e Market places, might not yet have holder might not be using so for those that want to succeed try to play the advantages and it said of just fighting the swamp take him out of it. Jason: [52:40] That is a a great piece of advice and that's going to be a great please place to leave it because it's happening again we've used up all our a lot of time so folks if you were eager to get one last question in with Rick or you want to follow up. [52:55] During the show feel free to leave us a note on our Facebook page and what will continue the dialogue there I will put a link in the show notes for where folks can go to download a digital copy of the research we've been. Talking about on Today Show and as always if this show is valuable to you the best way you can repay us is by jumping on the iTunes and finally giving us that five star of you that you've been holding out on I know you're still out. This week would be a great week to do it. Scot & Rick: [53:28] Rick we really appreciate you coming on and spending about an hour with us while you're traveling I know that's never a fun thing if books want to follow follow you on social media and learn more about what you're up to where should I go. Yeah on Twitter you can find me at Red Kenny and I think Jason like you mention you'll drop their link into show notes but if you want to find this Shopper first retailing report it will be a test for stucco get Shopper first and really hard to take a race. [54:00] Are you guys going to be doing any holiday Updates this year to the demand play the band work platform. Absolutely we will have our flash reporting so every morning after those big days you'll have a nice blog post of flash report results from us so your Friday morning after Thanksgiving your Saturday after Black Friday and your Tuesday after Cyber Monday. Will be glad to pick up your inbox with some really cool findings of what happened the day before. And I'm assuming if people follow you on Twitter you'll be throwing this out there absolutely. Jason: [54:37] Awesome Lil Rick thanks very much for joining us and until next time happy commercing.

EP151 - Tyson Food E-Commerce VP Tim Madigan and Samir Bhavnani of 1010data Tim Madigan is the Vice President of eCommerce at Tyson Foods.  Samir Bhavnani is the Vice President Consumer Insights at 1010data.  We caught up with Tim and Samir at the 2018 GroceryShop tradeshow in Las Vegas.   "The State of Grocery" PDF Report from 1010data Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 151 of the Jason & Scot show was recorded on Monday, October 29th, 2018. http://jasonandscot.com Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Transcript Jason: [0:25] Welcome to the Jason and Scott show this episode is being recorded live from the grocery shop trade show in Las Vegas on Monday October 29th 2018 I'm your host Jason retailgeek Goldberg, unfortunately Scott is unavailable for this episode so you get twice the Jason for half the usual cost but to make up for it we have some great news we have two great guest for this episode returning to the show third timer Samir bhavani is the vice president of consumer insights at 10:10 data welcome back to the show Samir. Samir: [0:58] Thanks for having me Jason it's good to be back for the third time. Jason: [1:01] It's a it's a rare full of people that have made it three times so we expect you to continue to be a, bassador for the shows you've been and then joining us is a first-time guest Tim Madigan is the vice president of e-commerce Commerce at Tyson Foods. Tim: [1:19] Thanks for. Jason: [1:21] Sofa, books that are not listening to every episode of the show and shame on the three of you that are doing that Sammy was on show 103 which was our Amazon private label show and then you came back for one, talk shows if I'm not mistaken which I think was episode 125 and so folks would probably hurt a little bit, background but remind everyone exactly what it is that 1010data. Samir: [1:48] Yeah sure so I think many of you guys are familiar with tents and we've been around for over 20 years now what we do is, we help companies take big data and turn them into basically smart insights using a very powerful cloud-based analytical platform. Jason: [2:05] They go in like more specifically you have visibility into like how consumers make purchases consumers make on some of the big platforms that are not very open themselves. Samir: [2:18] ESO a great way to kind of distill things down is that we have a very nice lens into how consumers are spending their discretionary income so it's things like you are people buying Huggies or Pampers right Fiji or hints are they taking Uber or Lyft. Jason: [2:33] Very cool and so we will hear more about that throughout the show and then Tim of 1 ways we always like to start the show is share a little bit of background about how you how you sort of matriculated in your career to this current role. Tim: [2:46] Sure yeah I started my career with Procter & Gamble and kind of came up with your traditional sales marketing and did that for about 12 years and while at P&G I done had the opportunity to, work with Walmart as they were trying to figure out consumables e-commerce they wanted to sell diapers and beauty products online diapers.com was becoming a thing Amazon was getting into the space so Walmart realize they needed to, going to start selling products and I was tasked with the opportunity to leave that relationship for Procter & Gamble and so over the course of five years, and we built the team I built a business from United basically zero to a hundred million dollars and just really learned, from the very early stages and consumers e-commerce what the effective ways to do e-commerce online wear for consumables then had the opportunity to go to SC Johnson. [3:43] And work with us in Johnson and creating an overall strategy build out a team going to put the foundational elements in place to, do e-commerce across a company it was a really great learning experience for me and also really help icj kind of take that first step into digital income, in about 2 years ago had the opportunity to come to Tyson at that time grocery e-commerce was just beginning to be a thing, and I'm Krogers in Walmart and Amazon Raw, looking to Tyson as a major food supplier to understand you know how to how is the space going to evolve unfold online and expected Tyson to really have a seat at the table to be as strong, partner in that and so I was asked to come Tyson to help create that capability for the company. Jason: [4:32] Very cool, so am I'm so jealous I feel like every place you've ever worked at Super familiar you never have to explain what your company does, the people in an elevator when you work for a goofy agency that changes his name every week you don't necessarily have that luxury, in your P&G days was that sort of like that, business units or was it like winning a particular product family. Tim: [5:14] So gay a straight question so it was very early and that, we had an amazon.com team which was probably to three people and Seattle and then we had one e-commerce person that was sitting in Cincinnati banging on the brand managers door saying there's a thing called e-commerce coming we better figure out how to do it, so I was one of the very first teams outside of that we didn't really have a corporate approach yet, I'm so very early days I was sitting on the couch typing out content forms and really figure out merchandising marketing strategies cuz we just didn't have a Playbook yet, within about 2 years though doesn't take PNG long they very quickly created at centralized capability and brought in the central team, created at corporate strategy and capabilities so that other folks like myself out in the field we're working with retailers had that sort of enabling Center of expertise that were supporting. Jason: [6:15] It is funny one of the things I have observed in a lot of companies is like that initial Amazon team like they almost always they started out as the interns right. Tim: [6:25] Yes. Jason: [6:27] Let you know most Junior people in the organization got assigned to this like relatively meaning less account and then obviously like as it's it's grown in prominence it's now, like one of the most significant roles in all these companies and so it's a it's an interesting Evolution to see those interns grow up to rule the world and then, sort of fun I want to dive into your rolling your scope at Tyson but before I do that I want to jump back to Sammy and I know you guys just published this size of digital grocery report and not I think you can download it for me website so I'll put a link to that in the notes but I'm wondering if you can tell us a little bit, like what that report was an and maybe share some of the cool insights. Samir: [7:07] Yes sir so I'll finish for some of the insides as we're talking and says to bring some things up but, one of our one of our analysts her name is Julia Mello author author the report and it's just Fantastic look into will work on the rise of online grocery and it's very time we obviously right being here at 8, grocery shop talk to grocery shop show and some of the things that that we looked at were, how successful are places like Peapod or Walmart grocery right versus some of the other more traditional players and you know some of the stats that popped out one is like just the growth of it is, outlandish Rye were seeing over 30% year-on-year growth and in specifically in the online grocery space, and we Define that is in a different than buying something from you know Amazon.com or target.com you know it has a lot to do with, cooking class with places like instacart Etc and one of the findings that was kind of unique is that people who do shop, online grocery 10:10 to spend a lot more money than the general populace, which is certainly good news I found some of those like as the touchpoint changes the behavior change. Jason: [8:22] Changes the behavior changes. Samir: [8:25] So fascinating just around Orlando but it's been really into. Jason: [8:30] Interesting to me to see you like foods that don't sell as well in store. Samir: [8:33] Yeah it was not obvious. Jason: [8:38] Up to me but like sometimes these in. Samir: [8:39] Is there a shopping cart around the store with a giant. Jason: [8:46] NBC. Samir: [8:46] And be seen by their neighbors but that but when it comes to having nothing loaded right in your trunk. Jason: [8:51] It's get. Samir: [8:52] Get the big thing I've been in, so that point is very important right the ice cream thing and dodging items the other thing to is the ability for people to discover items if they wouldn't ordinarily purchase, partially for the same reasons also because online gives you an opportunity to be marketed to write whether it's like a vegan burger for example, yeah I think there's dent above a challenge and an opportunity in the different marketing vehicles that are available. Jason: [9:17] Digital Lake but let's. Samir: [9:18] Zoom in a little bit on. Jason: [9:21] I want to think I was interesting to me. Samir: [9:23] Ecommerce in your title which is very near and dear to my heart so I was like that but I thought you can have very different scope a different company. Jason: [9:32] So can you talk maybe a little bit about what what it means in texting. Tim: [9:35] Yeah so are primary go to market is through retailers and so the key for us is you know we've spent, decades in creating category management and Shopper Marketing in all of these other, analytics and skills on how do we optimize the in-store experience in a what are those right tactics and tools to to really make our business performance. [10:01] I look at my job and my team's job is doing the same thing but for online, through those retailer so it's now it's no longer and I all but it's now a screen that we've got to figure out how to optimize our portfolio for, so that's everything from the basic content to merchandising marketing to understanding you know what's working and optimizing across those three on a letter, and then you know I think Sam made a great Point around the the portfolio in understanding the portfolio that performs well and store isn't necessarily the same one at the forms while I'm lying so, as a company we need to send to rethink and reprioritize what we're focused on, I'm at work think about online that said we are also considering the drive to Consumer and we have several brands in our portfolio that do some direct-to-consumer today Adele's premium sausages one, where there's a really big fan following for it and it's not available everywhere, and so that's a great product that you know is pretty pretty Nick pretty Gourmet, we want to make sure all call the consumers who want to have access to the brain can find it. Jason: [11:10] Very cool and send me a little bit earlier to like this notion of hey you have different tools for digital marketing than we did in traditional Shopper marketing. Samir: [11:19] Shopper marketing once one of the two. Jason: [11:22] It was weird I allowed on Shopper marketing is like Shelf adjacency. Samir: [11:26] Want to launch a new product one of the best ways to get eyeballs in from the new product is that new brother. Jason: [11:31] On the Shelf next to a popular existing. Samir: [11:32] Will pop your existing product. Jason: [11:35] Use all the traditional instrument in vehicles to drive tension to it in. Samir: [11:39] In digital it like I feel like we have a lot more spearfishing people are searching then go you no right to. Jason: [11:42] Fishing people are searching then go you no right to a search result and then do a product listing page. Samir: [11:49] Or you know God forbid there. Jason: [11:50] Lowe's customer they start shopping off a recurring list. Samir: [11:54] It's a one of the things I always worry a little bit about is we lose some of the Opera. Jason: [11:55] The things I always worry a little bit about is we lose some of the opportunities for those impulse sales and for what I like to call serendipitous Discovery just cuz it's super fun to say Serendip. Samir: [12:06] I mean you at now that later in the hall when you're just saying. Jason: [12:10] I'm just saying serendipitous you're going to think of me so. Samir: [12:14] Like is like part of that challenge. Jason: [12:15] Part of that challenges the onus is going to be on the Retailer's to figure out but is that a conversation you have with retailers and is that something you guys think about or worried. Tim: [12:24] An app for sure special on new innovation right and that's our company's life like it is you know we want a significant amount of our growth and our sales every year to come from new innovation so, definitely something we spend a lot of time thinking about your point, where sometimes a limited to the tools and capabilities of the Retailer's platforms, so it's starting there and also bringing ideas and I'll right now especially in grocery the shopping experience is different you're very much at a shelf view versus you know item-by-item at like you having a. Com you so, the platforms involving for sure in a different way so we've got a partner on intestinal are no way there little bit, but I will say you don't know the area that we're really trying to think through is what are the, opportunities we can bring outside of the retailer platforms that enable that Discovery so we are spending any time we launched a new Initiative for spending money on driving awareness, Across the Universe online digital in other other kind of places and so that that question is how do we connect, I'm not point of awareness or inspiration directly to the cart and saw things like recipe to car is a great example, have a capability that you know is it's pretty new but really unlocks that opportunity to say, I found us they are interested in us let's just kind of try to close the deal and put a ride into the car. Jason: [13:52] That one is fascinated by that use case tell me if I'm wrong but this is the first year of grocery shopping show dedicated to digital. Samir: [13:53] Fascinated by dad use case tell me if I'm wrong but this is the first year grocery shopping show dedicated to digital online. Jason: [14:01] And regular listeners will know I spent a lot of time in line and Starbucks I'm pretty sure. Samir: [14:06] Second person in that Starbucks online. Jason: [14:07] Second person in that Starbucks online is somehow involved in a recipe to carts business. Samir: [14:14] Like that I ran into to today. Jason: [14:20] When people are are at experimenting and pilot. Tim: [14:24] Absolutely it's funny you say that but you're right and it and it went within a year, it's it happen like that and I think you know it's in there are several different approaches they're taking everything from you know I'll be a widget within your media to know know I'm going to be the media platform and you got to work through me, which puts and calls for each of those I think you know the more you can I think that's this is true across most of what we're dealing with, you got to be able to play within an ecosystem, and so if you're going to be a supplier in a survey new piece of innovation you've got to be able to work with an existing Partnerships and and relationships that are out there, I'm guessing it's too hard to just come in and sort of kick out an existing agency relationship and partnership media investment it's been really challenging. Jason: [15:14] So when you have a lot more experience and cpg than I do but in my observation it like traditional mod. Samir: [15:21] There were two Big Marketing budgets in in. Jason: [15:24] It's in in most most I mean probably more. Samir: [15:26] That I mean probably more marketing budget that earmarked for specific retail accounts right. Jason: [15:31] For specific retail accounts right and get spent on various activities that are mutually beneficial and then there is a brand marketing function usually what you know run by some see him know that's famous for going to South by Southwest in. Samir: [15:40] Usually what you know run by some zmo that's famous for going to South by Southwest and and doing some of those. Jason: [15:47] Does Advanced Khan and Davos and all that crazy stuff as we moved to digital I feel like, to me is sort of digital Shopper marketing like summer. Samir: [15:59] Shopper marketing, Sears on the Shelf in front of content but in a way that's analogous to the original account Bay Shopper marketing but then some of those other activities you just mentioned like the the recipe. Jason: [16:15] 2p stuffing and some of those other activities. Samir: [16:19] Digital versions of traditional. Jason: [16:20] Digital versions of traditional brand marketing. Samir: [16:24] Do you feel like digit by it sounds like something booked. Jason: [16:25] Do you feel like digit like it sounds like something booked of some of those functions are in your scope and that maybe wouldn't have been true in the old world. Samir: [16:32] Shopper Market. Jason: [16:34] Stars and brand marketers. Tim: [16:35] No it's really interesting so I'd say neither one of my scope and that's been the challenging part right we we grew up in the silos and we're going to figure it out over the course of decades this is how I play this is where you play and we wrote the rules so that nobody would, you know step on each others toes and, budgets could be really clearly defined and blame could be a sign when things didn't go so well but this is absolutely disrupted that and I think, going to be a, we've got to figure out new ways of working together and so literally at Tyson in the last six months we've created a digital Innovation group, which is the combination of a brand marketing organization going to lead our Shopper marketing myself and our technology guys and so we've created so this, that's really focused on understanding and what are those emerging spaces recipe to cart being one voice being another and how we are going to go play in those spaces and who's going to take point, but it's much more of a collaborative effort and we were going to do this in conjunction with one another versus lots of one-offs you're doing this over here and I'm not aware of it because unless unless we coordinate we're not going to do this. Going to go swell. Jason: [17:55] Interesting so am I. Samir: [17:56] So he my mind like you guys are evolving to sort of in a boat organizationally figure out the right up. Jason: [17:59] Going to sort of in a boat organizationally figure out the right approach and then we have to figure out what the right digital tactics are. Samir: [18:06] At the same time. Jason: [18:07] Most of these activations require some partnership with a retailer and it feels. Samir: [18:10] Partnership with a retailer and it feels probably like. Jason: [18:13] The retailer silos are also involved. Samir: [18:16] And I think it's sort of. Jason: [18:19] Early days at Walmart. Samir: [18:19] Walmart labs in San Bruno or still is in and most most of the merchants are in Bensenville in, yeah you did yesterday had a lot of collaboration between the digital arm and and traditional arm of the retailers are you. Jason: [18:36] Of the retailers are you seeing the functions at various retailers. Samir: [18:40] Evolved. Jason: [18:43] With you on these more integrated programs or is that still a challenge. Tim: [18:48] What's funny because I I started and cpg and shelf-stable world through that, I felt like, it was definitely that Dynamic you were talking about but over the course of several years especially as diapers as an example some of these categories became meaningful businesses that really impacted the store Merchants bottom line they, forced that collaboration between the two and integrates between the two groceries back to where that was 8 years ago, so it still feels very much like you have a lot of digital teams, responsible for the interface and then the merchants who you know because he's our store pick models by and large, their decisions for what's happening in the store is reflected online but there's really no coordination between the two around you know I'm going to choose this assortment because, you know it could work in both our I'm going to add this item that may not be a big store seller but could be bigger there's none of those types of conversations happening right now and it's much more you know I'm going to focus on my store I know it's going to do something over here online, adult digital guys that are part of my company are going to go figure that out. Samir: [19:59] So for sure. Jason: [20:02] It seems funny. Samir: [20:03] You're jumping from as as Industries material you're jumping to the last mature markets that are having to reinvent the Roundup. Jason: [20:07] Two less mature markets that are having to reinvent their own approaches and stuff which is week we talked about before the show there's there's no play but for that it's kind of fun cuz you get to. Samir: [20:17] It's kind of fun cuz you get that to figure it out. Jason: [20:21] The it was my thoughts I'm just going to put enough. Samir: [20:29] Pause. Jason: [20:31] The awkward pause 2009. Samir: [20:36] Everybody doing alright, so Jason: [20:47] Retailer is also evolving. Samir: [20:48] Evolving I just want to work with you like in this New World by any. Jason: [20:54] Any particular best practices or tips you. Samir: [20:59] Have a branch of you thinking about. Jason: [21:00] How Branch should be thinking about partnering with retailers in in this sort of new integrated digital world. Tim: [21:07] The first the first thing we had to do was reassessed the landscape, one when I got to Tyson we had decided that we were going to make a big investment in Amazon, what course you did right Amazon's the underground gorilla that dynamic in our world is in grocery specifically online is there not quite there yet, Sammy I don't know if you want to come to speak to who is there right now. Samir: [21:39] Yeah I mean that's that is that is such a big piece because like if you look at what the general consumers going to think you think Amazon is winning, everything and the reality is is that Amazon is still very much in its infancy and just finding its feet in grocery right so, if you look at online grocery on Amazon's not even the fastest growing right so Walmart's the fastest growing right instacart one of the fastest-growing, and while Amazon is growing it's nowhere near the, for the scale of of what some of these others so that Walmart has that over a third of a share of online, and amazonfresh is under 10. Tim: [22:22] And says so is we reimagine our structure you know that the structure that a lot of cpg companies started with was we're going to build this little e-commerce team, that's going to fix own care play build the capabilities to enable pure clay and then eventually those capabilities will sort of, go out to these in a brick-and-mortar brick and click stores as they start to accelerate, we've almost got a flip it a little bit and grocery because of that point RR Walmart team is feeling the impact already of grocery, online and some of those stores are doing between 5 and 10% of their business through online grocery and Walmarts in wow and that's really changing then that Walmart customer team that grew up and built all there, skill sets and functionality around in-store execution, they need some support now they need capacity expertise now to focus on line and so that really part of what we've had to Pivot on over the last year too, it's a-okay yep it was important we're going to work on instacart so that's part of the eye space that we own Cuoco pure-play, big enabler for us now is how do we go and really focus on the Krogers in the Walmart because that's really where the size of the businesses today and a growth is happening. Jason: [23:43] I don't know what the data is. Samir: [23:43] Is granular nuts about this or not but in my mind. Jason: [23:49] Part of the secret to Walmart success in and also. Samir: [23:52] Kroger is curbside pickup. Jason: [23:55] And in. Samir: [23:56] That's one of the like differentiators between Walmart and Kroger and Amazon. Jason: [24:00] Amazon is like Walmart has 4,000 store. Samir: [24:02] Walmart has 4,000 stores over 2,000 of them are now in. Jason: [24:06] Free pick up Kroger I think has like 800. Samir: [24:08] Flag store and you know Amazon wasn't in the pickup game at all until they bought Whole Foods. Jason: [24:15] And to their credit I feel like they've. Samir: [24:16] If you've all of that I've been very quickly but it's in. Jason: [24:21] 400 stores and it's in the. Samir: [24:22] Stores in it in the stores in the markets that are most friendly to delivery versus pick up in a half of them so Whole Foods is a really fun little sandbox that Amazon's experiment thinking today, and it gets a lot of new lot of press a lot of people talk about it the Whole Foods is not a very big retailer right that's the fact of the matter, and when you look at scale when you look across the country right it's the Kroger's and the Walmarts were people are shopping and which have the ability to do, curbside pickup right at a much broader scale so let's change topics a little bit from. Jason: [25:01] Thinking about the retail side to. Samir: [25:03] Decide to evolution of bran. Jason: [25:07] Nights are you you are now sitting at. Samir: [25:08] Sitting at top of the dream well-established brand is trying to figure out. Jason: [25:13] It feels like increasingly your competition are these new startup brands that don't have near you. Samir: [25:15] Play your competition are these new startup brands that don't have near your scale but they also don't have any of. Jason: [25:25] Impediments are infested, they have to carry three ways, circassian like shelf-stable cpg are you are you seeing that in in food as well. Tim: [25:36] Yeah you know I'm reminded of when I was down on the Walmart team with Procter & Gamble we were looking at our shave business and it started to decline pretty quickly, and we couldn't see where it was going typically are, reports would say while we're seeing some Camel shift it's going to Dollar General or you know it's moving over to Target and then, the but we didn't see we just saw the category declining and we saw our brand declining, I couldn't understand why we look around the office and we saw some scruffy looking guys and so maybe they just not shaving is much in this mode ever November thing is really, well know we were listening every morning on our ESPN Drive in hearing about this company called Dollar Shave Club and how funny they were great. [26:25] And all the sudden they took 300 million out of the category and out of the stores but are classic data and Analysis didn't have any way to account for that anyway to show us that shifting and so as far as we were concerned, it wasn't happening we just until we were caught very flat-footed that's my fear an obsession right now in food, there's a lot of these companies you're talking about the grass wet grass pads in the locals in the Organics that are you know they're 10:50 million dollar type companies but they're all live, and there's some of them that are scaling pretty quickly, and so the dishes we just don't have the visibility the data and to how fast or how many of them are are out there and so, absolutely an area that we've just got to get better at and it's actually we worked a little bit with Sammy and Tenten and that's one of the challenges I put forth to him is how do we understand where, these new up and comers that we just don't have on our radar where it where are they who are they and how fast do they run. Samir: [27:30] So I will turn the question like are you. Jason: [27:32] Like are you starting to see some of those like new brands Emergen captures and market share online and. Samir: [27:40] Yes and that's the that's the challenge right where everyone's been dealing with this weather your Nielsen or NPD or iri or 1010data Rakuten or never is, catching hold of of one of these companies that's all the sudden going to start hockey stick me in becoming a really big company and what what Tim brought up is a really good point is, is when you're looking at the data sometimes on an individual on one DTC, it that individuals you to see maybe maybe just too small to report on and maybe insignificance report on, but if there's 80 or 90 of them right that are that are growing very quickly all of a sudden you've got this thing and, right in the last thing you want to do is to be Dollar Shave Club again right live through it once you don't want that to happen again and so what we do from the, in the day the world is were constantly working with our data providers to ensure that we have visibility to anything new that comes forth, I'm in a great example of that is we very recently were able to split out the Walmart grocery piece from the Walmart piece once it got to a point where the scale is big enough, that we had sufficient sample to make Market estimates, that's going to become increasingly important a lot of retailers in Walmart so perfect example in in grocery is a hundred percent, I can tell you different. Jason: [29:05] They're trying to promote skus that are available in the store. Samir: [29:07] Use that are available in the store and the capability gets drones for by store so I've been talking a little bit I feel like something I should be thinking about, sales metric for online. Jason: [29:19] Because Walmart. Samir: [29:21] Walmart reporting this huge e-commerce, is there a tracking more more customers to the website and whatnot but a lot this because they just added the grocery capability to a bunch of more stores than they had the year before. Jason: [29:35] So you know in some ways you almost have to think of it like a. Samir: [29:39] Storm Atronach Forge a merchandising I might argue that Walmart has sort of the opposite merchandising strategy that they're really trying to focus on having a long day. Jason: [29:49] They put a lot of emphasis on the marketplace. Samir: [29:50] If a lot of emphasis on the marketplace and you know they're trying to get, use most of which are getting fulfilled by third-party providers or from a fulfillment center in so I do really need to think about them as, different business that's another good example so with Amazon right people look at Amazon 1 p.m. Amazon 3 p.m. sufficient data to split those in to see what's happening Amazon direct and what's happening with the marketplace, Walmart even though they're making this push towards Marketplace, candidly just doesn't have the volume in those traditional Goods to Warrant us breaking that out at this point in time it might be another couple of years before we able to see what's Walmart third-party doing compared to Walmart first party, a side note one thing that is different from the Heyday of Dollar Shave Club you you mentioned what they have would like. Jason: [30:41] You mentioned you would have had would like all those ESPN ads. Samir: [30:46] Today of course if people are driving a word. [31:01] So one of the things. Jason: [31:02] One of the thing that's interesting to me thinking of. Samir: [31:05] About the emerging Brands and did you need a brand purses. Jason: [31:08] And did you need a Brands versus a new products and Innovations in existing companies as they. Samir: [31:16] Exact opposite so if I start a new come. Jason: [31:17] Opposite problems so if I start a new company today the world is made it much easier right. Samir: [31:22] Made it much easier right I can go, Shopify side and you know I can hire you know 99designs to do my marketing and I can do all these things with my credit card on the weekend. Jason: [31:30] Things to do my marketing and I can do all these things with my credit card on the weekend. Samir: [31:35] Company pretty quickly find a group of loyal customers wants a product to them and get real-time feedback and so I can innovate and iterate really quickly in it. Jason: [31:44] Expensively which is. Samir: [31:45] Great most of this man's are really struggling to hit some peeps kale and in your organization I suspect when there's a new idea. Jason: [31:50] And in your organization I suspect when there's a new idea. Samir: [31:55] What can this idea be big enough to be financially, why I'm always curious how big companies that are the Cavs Gail think about. Jason: [32:03] Bunnies that already have scale think about Innovation and how do you sort of you know instill some of those advantages of the little company in your big company. Tim: [32:12] Yeah it's a it's a really great question and you know it as a company I think we several years ago came to that conclusion that you know Innovation gets washed if it's, you know if it feels cortical too small of an idea, yeah we just still wouldn't let it play out if you would see a trend and it might be too early, by the time you react it's also going to be little bit late so as a company what we've done is created a couple different entities internally, we have one or innovation team which we've had for a while is really focused on call 12 to 18 months out. [32:49] Fairly close in animation new flavors new forms some adjacent categories and so that there's that group focused though but we also then recently created a new products the lab, which is really kind of taking off the, Elders of this is what we do today to where are some interesting protein spaces coming from so where can we innovate in a great example that is our God, that is essentially comes in a tennis ball kind of a can and instead of being a potato chip or like a pringle chip it so it's a protein shake, so it's brand new initiative brand new idea, and we're launching it in a very sort of small pilot but scale up kind of way that would not have happened before this team. [33:42] And then the other area that we brought on is our new Ventures team, and so that is allowing us to find a new companies that are, testing kind of smaller nitty spaces and I'll give an example of going to be on me, vegetable proteins Memphis meat is another company that we've invested in which is sort of lab-grown protein, and these are early days for the four especially Memphis meat but what we're seeing is this is an opportunity space, and as a company we want to be able to be the world's best producer of protein and we're raising the world's expectation for what good food can do, and that means we're going to have to go beyond just land-based animal proteins, and so by investing early on and some of these companies we get to learn a lot and we get to see them scale, and then you know continue to think through down the line how do we integrate you know they're there Prada. Samir: [34:47] Oh so you can actually also help them scale right that's a really big deal to cuz a lot of these companies have no idea how to get on a store a store shelf, I want to follow up on that a little bit but you I had one. Jason: [35:02] Not a little bit but you I had one terrifying thought while you were saying that but I just want you to make me comfortable about. Samir: [35:06] About we're not all. Jason: [35:09] Just drinking Soylent to Prairie me. Tim: [35:11] It's pretty tasty I never have one, not you know and I think you look as we look out just eating 20 years the challenges of feeding the world they're pretty daunting, and Tyson we believe is one of the handful of entities out there that can help find a solution, and that's going to require a range of offerings so hopefully we can still have our steak dinners when you come to Vegas, yeah there's going to be new forms of protein that will have to be you know brought in in order to see the world. Jason: [35:48] Personally I'm banking on us all dying of dehydration before we run out of protein but I know it's a it's a race so well. Samir: [35:54] See how that plays out going going back to the investment side of innovation like what. Jason: [36:00] Nations like what's the out the best outcome for you there like would you ultimate. Samir: [36:06] Taken like a. Jason: [36:08] A hundred percent ownership position in some of those like his are you investing primarily with the hope of getting a financial return is it to incubate companies where you didn't have an exclusive like what it what is. Samir: [36:18] Winning. Tim: [36:20] I think it's all the above I mean the intent really right now is to learn is the weather is against some of these new product spaces at Armor, or even capabilities so companies that do things particularly well that we want to learn more about, it's an interesting way to go do that is by becoming part of, owner of that company and then hopefully ingest that learning a 10in skillet across organization. Jason: [36:53] And are you finding that it's difficult, you know at a company with Good Financial rigor that used to sort of focusing on quarter-to-quarter results to think like a longer-term investor on some of the light you know BC's think about a very different pay back her eyes and. Samir: [37:04] I think like a longer-term investor on some of the Viking BC's think about a very different pay back her eyes and then you know I would come. Jason: [37:12] Companies that are trying to keep shareholders have. Tim: [37:14] Yeah I know it's right and it's so this company this group was purpose-built to pretty much avoid that so they've been given an investment, amount and how to ring-fence that amount and so they act very much like a VC company and then we're going to go, we're going to look for this portfolio of companies that either from a product or capability Sandpoint look interesting and then you diligence up through our leadership team with the recommendation. Jason: [37:45] Very cool. Samir: [37:46] Well we're at work. Jason: [37:47] Coming up against time I want to do one last question I know we're halfway through this show and I know. Samir: [37:51] We're halfway through the show and I know we don't have. Jason: [37:54] Navigation so I don't think anyone's got a chance to sort of absorb everything going on. Samir: [37:57] Everything going on in the show but. Jason: [37:59] Do I get there any trender theme or vendor that like has emerged in that you know that was interesting to you that you either came here looking for or maybe surprised you. Tim: [38:11] It's interesting for me that the conversations that happened seem to be where for me a lot of the value starts to come out a meeting with peers were having some more challenges and brainstorming together I think one of the biggest themes though, is wow this is happening really fast 2 years ago this wasn't a thing you know and so, that speed in Pace that's happened I think even our leadership at back at home and Company, don't necessarily appreciate it it's a part of you know what I have you as my job is still going to bring that urgency back with a bit of a game plan as well for what we need to be doing. Jason: [38:51] For sure. Could you imagine trying to talk more more senior leadership into coming. Samir: [38:53] Trying to talk more more senior leadership into coming to an event like. Tim: [38:56] I think that's a great idea you know again it's it's kind of palpable you walk the floor you see some of these speakers, you really do get a sense for the Earth the pace and urgency that's out there and so I think it's a great suggestion of bringing in some more high-profile execs and not just having them send their econ guy out to this conference. Samir: [39:17] I'm sure an ant as a me and in all your conversations anyting jump out of. Jason: [39:20] Jump out at you or surprised by the new data competitors or anything like that. Samir: [39:24] Got the data competitors are great I love seeing you did it competitors right and it's just it's it's great the more the better, the one thing that I've noticed and I've noticed since the last the last shop talk show in March I'm coming into this one is, it appears to me that the companies that, are sort of weathering the storm or taking the most advantage of this shift to online grocery are actually indeed those companies that have formed or in the process of forming Innovation teams are there in Seattle near Amazon, and the ones that have not are the ones that clearly in the data show up as kind of ligers, so you know kind of the advice is if you will if you are a grocer or a traditional brand, if you don't have some kind of innovation team together that has its own budget and actually has a seat at the table you're going to be in big trouble. Jason: [40:23] Very cool that is an interesting insight and that's going to be a great place to leave it because it's. Samir: [40:26] Because it happen again weave. Jason: [40:29] Used up all our a lot of time but before we go Sammy of those aren't real. Samir: [40:31] But before we go Sammy of those are intrigued by the rise of grocery report or just want to. Jason: [40:37] I just want to get in touch with you what's where do you hang out in the intern. Samir: [40:40] You can reach me on LinkedIn or on Twitter music to find them both of those places. Jason: [40:44] Links to both of those in the show notes and Tim. Samir: [40:48] Are you an active guy on LinkedIn can I. Tim: [40:52] Yeah that's fine. Jason: [40:53] Cool again again PlayStation Network with Tim and soul. Samir: [40:54] Tim and so you know thanks to both you guys for taking time out of their busy show to come speak with our listeners as all. Jason: [40:59] Busy show to come speak with our listeners as always listeners if you have any questions or you. Samir: [41:04] Want to follow up on any of the topic. Jason: [41:06] Play some the show you can join us on our Facebook page and leave a question. Samir: [41:10] As always if this was the. Jason: [41:11] Please if this was the the show that you know was finally worth it to you do with the big favor of jumping over to iTunes and getting us. Samir: [41:16] I'm getting us at 5. Jason: [41:19] And until next time happy commercing.

Amazon plans to split HQ2 to two cities Amazon Plans to Split HQ2 Evenly Between Two Cities (WSJ) Amazon Plans to Split HQ2 Between Long Island City, N.Y., and Arlington, Va. (NY Times) GroceryShop Recap GroceryShop is the first year of a new show focused on disruptive trends, technologies and business models in grocery & CPG that includes both established and startup CPG brands, supermarkets, c-stores, drug stores, discount stores, ecommerce players, warehouse clubs, grocerants and non-traditional grocery retailers.  The show took place October 28-31 in Las Vegas, at the Aria Hotel and Convention Center. Jason's Activities Jason interviewed Sanjiv Mehra, co-founder and CEO EOS products for a keynote fireside chat Jason moderated a panel "Evolving CPG Retailer relationships" with Constellation Brands, e.l.f. Beauty, and Fairway Market Jason moderated a panel "Using product content to build brands" with Boston Beer Company, Chobani, and The Wonderful Company Keynotes Yael Cosset, Chief Digital Officer, The Kroger Co. Andy Katz-Mayfield, Co-Founder & CEO, Harry's Sanjiv Mehra, Co-Founder & Co-CEO, eos Products Apoorva Mehta, Founder & CEO, Instacart Chieh Huang, CEO, Boxed Nina Barton, President, Global Growth, Kraft Heinz Luke Jensen, CEO, Ocado Solutions Narayan Iyengar, SVP, Digital & eCommerce, Albertsons Companies Nick Green, Co-Founder & CEO, Thrive Market Key Themes Digital Disruption of Grocery Store picking vs. Dedicated Fulfillment Center   Startup Brands vs. New products from established Companies Private Label/Owned Brands Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 150 of the Jason & Scot show was recorded on Monday, November 5th, 2018. http://jasonandscot.com Join your hosts Jason "retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Transcript Jason: [0:25] Welcome to the Jason and Scott show this is episode 150 being recorded on Monday November 5th 2018 I'm your host Jason retailgeek host Scott Wingo. Scot: [0:41] Jason welcome back Jason Scott show listeners. Jason you just recently got back from sunny and blazing hot Las Vegas Nevada for the first annual grocery store. And that's what really to see what today show is going to be is a grocery shop recap but before we jump into that we did want to cover some breaking. [1:03] Amazon news your margin is there a opportunity alright well we've been talking about this on the chauffeur about a year ago Amazon announced that they are going to look for a second headquarters that would has 50000 employees. I am if it was kind of this huge process and we're coming down to the end of it and there's two I'm confirmed reports out today, one from the Washington Post one from your times and it looks like Amazon is first of all going to split this is also not confirmed us the Wall Street Journal says Amazon's actually going to do two cities instead of one so it's kind of like HQ one and a half and hq2 and they're splitting the jobs pretty even Lisa 25,000 jobs in to eat City. The two cities that seem to be most rumored are Crystal City which is a suburb of the DC area and Northern Virginia. The other one is a suburb of New York City called Long Island City Jason what do you think about this result if it's true and how true do you think it is. Jason: [2:17] Yeah well it does sound pretty true there's a lot of rumors earlier in the week and it seem like Amazon was actively. In some cases refuting them and or scolding the leakers and they they seem completely silent about this which makes me feel like. It is on the markings pretty credible news organizations that are setting multiple sources so seems pretty credible and if it's true it. It reaffirms a lot of people's hypothesis that this was, sort of largely a marketing stunt in it it makes me feel like Seattle is actually the big winner because. Like these this would definitely would not be co-equal headquarters now that they're dividing up the jobs and I'm going to assume that that the center of gravity and most of the senior leadership are going to continue to put on in Italy live in the, in the Seattle area in this scenario. Scot: [3:18] Yeah yeah it's my Logic on this was. It never made sense to me that they could hire 50,000 people cuz to my logic is the retail part of Amazon is pretty stacked up in packs you know robots replacing humans a lot of times in the, Commerce part of Amazon so this feels like largely AWS engineers and you know it's very hard to go find 5000 much less 2000 50,000 folks that can work on AWS so so I think they started kind of come to that same conclusion the dust splitting them up and I imagine those 25,000 10 years or something. You could possibly hired that mud many AWS qualified people even in those dense text cities to to work on stuff so it'll be interesting to see how this lands. So we just wanted to cover that really quickly because it's been the source of so much speculation but we want to spend the bulk of our time tonight on grocery shop so it's Jason. I was not able to go but you went on for so how was House Las Vegas did you end up making money losing money. Jason: [4:31] I go to Las Vegas too often so I am no longer much of a wager or so I I did lose some money but I lost it spending a week in Las Vegas not at the table. Scot: [4:43] Visit your favorite Starbucks. Jason: [4:46] I did not so dedicated listeners or remember I spent like 18 days in a row in Las Vegas at the Venetian earlier this year which I wouldn't wish on my worst enemy this show was at the Aria so I did not make it to the Venetian Starbucks but I I did get to reacquaint myself with a several Starbucks in the vicinity of the Aria. Scot: [5:10] Awesome so so for the the grocery shop show maybe Orient for listeners you know how this show came to be who puts it on and how did this compare to kind of shot Talk Money 20/20. Jason: [5:25] So that the show did the first year of the show is put on by the same folks. It started shoptalk and money 20/20 as you mention money 20/20 was their first show and it started at the Aria as well. And then it eventually it it felt like the show doubled in size every year and it eventually outgrew the Aria Convention Center and then had to move to the Venetian. I'm in after 3 years of growth. They actually sold the show to another event company and they started simultaneously they started the second show shop talk and Shop talk also started. At the Aria and it also doubled every year last year it outgrew the Aria and moved to the Venetian. And they this year they started to new shows or show I don't know a lot about this in the healthcare ligori and they started this show grocery shop which is all about digital grocery. [6:19] And the show started the Aria it. It felt very similar to the first year of money 20/20 or shoptalk and I mean that in a good way I feel like these guys have. Have built a pretty good template for an event so they they do a really good job of recruiting. Interesting speakers that people want to hear from and they're great digital marketers and they Market the heck out of their speakers which causes other people to want to go in network with those folks. And you know at this point kind of three or four shows into their their progression. I feel like they have a a really solid template eyes execution, did they run and you know they invite me to speak at all of them because they use caricatures of you and I feel like I'm just cost-effective because they already paid to have my character children. Scot: [7:10] I'm sure that's what it is. Jason: [7:12] Yeah I think that's my main value-add a fun fact for speakers is that they. Send you a coffee mugs with your charger on it so I have a complete collection of shop talk, money 20/20 and now grocery shop mugs that my mother-in-law has claimed so if you ever get coffee at my mother-in-law's house be prepared for the jarring image of my face and this year they upped the ante they sent us a cookie with my my characterture on the front of the cookie in frosting. Scot: [7:48] I remember I had jokingly asked one of the folks at shoptalk who does the character in the show that's her that's her most closely held Secret. Jason: [7:58] Yeah so you know what's funny about that I I believe they did say that to you if you went to an early money2020 that guy was working in a a shop a money 20/20 booth and you could stand in line to get your own character children. And eventually apparently he became so so popular and beneficial to them that they they hit him behind the scenes but like there were attendees from those first money2020 is that actually got there, their characters are drawn while they were attending the show but the big controversy among the speakers on Twitter earlier this year when the cookies went out was. Can you infect eat your own face like is that is that weird. And you know there was a lot of talk about that and I defended we solve the The Dilemma when I tweeted out a picture of my three-year-old gleefully. Diving into my face to eat it. Scot: [8:48] Eaton Trinidad face. Jason: [8:53] So more than listeners want to know about the logistics from the show but I feel like at a high level they picked a really good topic for a show I think they were hoping like a thousand people would attend in the show and they sold out the show at 2200 people which is the capacity for the the convention center they had so already. Don't be surprised if you see the show move from the Aria to the Venetian next year or I guess there is a rumor that the Aria is expanding their. Their facility so maybe maybe I'll stay in this expanded facility but it definitely felt like there there was unmet demand for folks in this industry to be able to get together and share some ideas and best practices and I feel like, a lot of people were we're excited to come people are super engaged and all the feedback I got from people on the way out of town or from from my own team after we got back was was super favorable that it was a good event and everyone wants to have a, a bigger participation next year so congratulations to the the folks at grocery shop on on doing a great job for the first year. Scot: [10:02] Awesome. Let's dig into some content first of all as mentioned you were quite busy so that I kind of thought they should have called it Jason talk so you gave the keynote and you led to panel so it was kind of go through those and sequencing and not good to some highlights of what you learned there I'll start with a keynote I saw on Twitter that a lot of people took this one picture where it looks like you were putting some lipstick on tell us about that one. Jason: [10:29] Yeah I'm a very Metropolitan dude what can I say so I feel like you're being slightly generous and calling into keynote so that it it it it was a keynote but I'm not sure I gave it so what this was a fireside chat format so I was interviewing, gentleman named Sanjeev who was one of the founders, I have this cool company that that listeners are probably familiar with that may not know called EOS products and it cos it actually is a acronym for the evolution of smooth. [11:04] And, little over 10 years ago they invented a new lip balm for women that was in this sort of round egg-shaped format in there now ubiquitous in super popular, but anyways go sort of, invented or was an early Pioneer in influencer marketing they they started out with her than affiliate program where you could earn credit and free product by getting your friends, to share EOS products on social media and back then sponsored social media was not a thing, and a bunch of celebrities sort of got in on the ACT in organically started promoting this product and so you know today the the the sort of early eye doctors of this product it was like Miley Cyrus and Kim Kardashian and and all these these people that would today would cost millions of dollars that they got to sort of endorse the product early which caused this product to, completely take off in Skyrocket so one of the the very first sort of. [12:15] Influencer viral product out there so it's interesting to talk to sanjiv about his. His experiences with that and you know I just got a chance to interview him and I I did in fact apply some some EOS lip balm during during the talk so I think that's maybe the tweet that you saw. Scot: [12:33] I can't right now in Las Vegas I never really need like chapstick type stuff but in Vegas I do the kisses so during dry out there. Jason: [12:41] I'm 100% with you I normally would not use lip balm but I do always bring ChapStick and like to Saint jeans credit like. Part of the genius of this product is whip-whip Bomb is predominately bought by women and all of the products were not very women-centric right and so they're all convenient form factors for you and I to put in our pocket but a lot of women's apparel doesn't have pockets and so these things go in purses and so they designed a product that was very well intentioned to live in a woman's purse which ironically makes it super inconvenient for guys until I had to smuggle it onto the stage because it would have look silly in my pocket. Scot: [13:20] Now that's kind of a healthcare item not something you'd find in a grocery store symbol surprise that's so am I done for this kind of had also kind of the drug stores in the whole thing and the healthcare are the the beauty category as well. Jason: [13:37] Yes I think they would characterize this is more Beauty than then Healthcare and it's it's sort of. Affordable impulse Beauty and so it is so like actually at the cash wrap and a lot of grocery stores and also drug stores and convenience stores and I do think there was some overlap I think that the show is primarily targeted at grocery which meant, a lot of the retailers that attended where Grocers but then equal or more attendees were brands that View Grocery as a super important Channel, and it just so happens that a lot of those brands also sell in, mass and and the convenience and Drug so you had a lot of the the Wakulla food and non-food cpgs and so yeah I definitely think that that many of the conversations and takeaways expanded Beyond pure grocery but grocery was sort of the epicenter. Scot: [14:42] Cool and then you're so you let that keynote you Fireside chatted that up and then you had a panel called a balding cpg retailer relationships that sounds pretty intense. Jason: [14:53] And so that panel was we had three panelists and they're talking all about the Dynamics of retailers and Brands and how they work together in a lot of the challenges in in the new world of digital marketing. You know how there's there's a lot of frustration on both sides retailers generally feel like. The brands are behind and aren't really ready to partner with the retailers digitally and retailers are asking for like a lot of support for e-commerce initiatives that Brands aren't always. Well prepared to meet so there was a lot of talk from the retail side about Heather they expire for the brands to sort of catch up. And on the brand side there's a lot of talk about like the lack of. Of data and transparency and and you know it it not feeling like an equal partnership on the part of retailers to this panel was a lot about best practices and started making that relationship work and so we had. Wingo on who's the VP of e-commerce at constellation Brands which is a well-known alcohol. [16:00] Manufacturer with a bunch of popular brands. The Wayne also had formerly been on the e-commerce team at Walgreens so he kind of talked about his experience at both places. We had that the VP of brand from Elf Cosmetics which is another affordable Beauty brand that kind of represented the brands perspective in this. In this a dynamic and elf 10 years ago started out as a direct-to-consumer brand then they they sort of got really popular and became like 90%. Wholesale and now they're starting to shift the balance again and then we had a retailer whose. A well-known Market in New York City called Fairway Market. Well known local chain with a bunch of like really high-end Gourmet products as well as a full. Call grocery store and so Jason is work there long time and talk about their overall perspective but today the portfolio he mainly owns is. Private brands for Fairway and so he talked about some of the unique Dynamics with partnering with brands on on exclusive products so that was. A good set of conversation in the audience that seem engaged and we got some nice feedback about that panel. Scot: [17:18] Did you get to the so we talked up private label then you started using the term owned products have to have you as a cut on what's what's what's the difference between the two. Jason: [17:31] Yeah they question if it's definitely one one of the themes at the show maybe we'll talk a little bit more about later but. [17:38] In general I call private label sort of this hundred-year-old practice of a retailer offering a a, more value oriented version of a national Brand Products what has the exact same product attributes as the national brand it just sold at a lower price point without the brand name on it, generally a hundred percent of the marketing for the product is simply the fact that it's on the Shelf next to the National brand so you get a headache you go to Walgreens to get Advil and on the Shelf next to Advil as well bupropion. [18:11] And it says right on the package compared to the active ingredient in Advil and it's a little cheaper right so to me that's private label and there's this show there's a lot of talk about private label and it's an important part of the mix for retailers in it obviously has an impact on profitability and there's there's a bunch of good reasons why private label is important but to me, the thing is getting more traction is this evolution of that idea, where retailers actually wants their own unique products that are different from the national brands in most cases the retailers using their intimacy with the customer to design a product that's in a gap that's not well met by the national Brands and in most cases retailers, have to learn all of the skills that the brands have in terms of building a brand and marketing and advertising it and so to me owned brands are these, all brands that just happened to be owned by a retailer versus private label are these sort of value-oriented alternatives to the National brand and there's a lot of talk about both of those at the show. Scot: [19:13] And then your last panel was called using product content to build brands. Jason: [19:20] Inside, what you're not getting a lot of practitioners at the show so there a lot of like directors and VPS that are trying to learn best practices and I'm both sides of the fence like one of the primary areas were Brands and retailers really have to work together is on this digital Shelf. [19:37] And so you know one of the ways this comes up most often is oh my god Amazon didn't used to be relevant in this category and now it's super relevant and. You know increasingly searches are shifting from Google the Amazon and so how are we going to get our products to show up in the Amazon search engine like they used to show up in the Google search engine. And once people find our products how are we going to get them to learn enough to decide to buy a product and send it alternative instead of the the that what we in e-commerce called that product detail page. You know brands are thinking of is the digital equivalent of their retail shelf and so there's a lot of conversation amongst friends about what the best practices are in content. For that digital shelf in the overwhelming majority of cases Brands create that content and then they syndicated to the retailer. To show up on all these various e-commerce sites and so there's. [20:32] Different retailers have different request and criterias and preferences about how to execute that content different brands have different philosophies about how much to invest in and what the best practices are so we had a really good rub us conversation about. Like what what some of the the best practices are and what some of the new ideas are and what some of the pros and cons are tough. The various approaches in investing in. This content to you notes or to build a brand in a in a world in which a lot of purchase decisions are are substantially digitally influence. Scot: [21:09] Are these guys struggle with just basic digital assets cuz you know in the traditional grocery store model them really had to provide much chaga tea or short long title or, all that kind of stuff. Jason: [21:24] Almost all of them have followed this way great like slow progression of maturity so when you're selling Oreos to Walmart like you you if it at the base level needed to provide about six attributes about the about the Oreos bike how many cookies were in the bag with the net weight of the bag was like what you know a basic description that could show up in ER P&B printing on the on the Shelf label in the store, it's always super simple and every brand new how to provide the six attributes that Walmart wanted as e-commerce really took off. You know Amazon Walmart ask for for 60 and increasingly more attributes about the product is a gluten-free is it you know does it have any allergens in it. You know what's all the nutrition information in the in the old world they just provided a picture of Ninja trition label to the store, now they have to provide all this data and is you alluded to a super important attribute is images and how many to take and what should they be pictures of, and is there any rich media going with that and you know any any comparison copy and they're off all of these. [22:29] Evolutions of best practices and so you know his you kind of alluded to, early on you know that's a Walmart sales guy like you know filling out an Excel spreadsheet and emailing it to his buyer at Walmart. And frankly in the early days not caring very much because. 99.9% of sales were happening through the the Walmart by owner in Bentonville and only you know .1% of the sales were happening on walmart.com and so you know. It's in the walmart.com guy with what he needs to go away. You know that rapidly evolved and you became a very meaningful part of sales very quickly and eventually retailers you know sort of used the, their store volume is leverage and said hey we're going to give you a shelf face in the store if you're not complying with all the the new digital content requirements we have and we want you to send the Kate ratings and reviews and want you to do all these other things inside of the kind of like. Sales guy hiring some company to fill out a spreadsheet turned into. These internal teams and centers of expertise creating all that content and and you know, buying or building the kind of tools that they would use for product information management in content syndication in all that and if I'm not mistaken I think Channel advisor plays this pretty significant role in in parts of that echo system for a lot of Brands as well. Scot: [23:51] Yep yep you know we talked about the capability to take your eCommerce products and, push me around and under the hood it's very similar to a set of capabilities 2 so those were the things you got to speak about and then did you tell if you were super busy between Starbucks runs applying lip balm and in all the stuff did you get a chance to go to any other talks or can you summarize some other things that we should know about. Jason: [24:26] I did I think I made it to all the Keynotes and I made it to as many of the other breakout sessions as I could and then of course there we're a couple of friends of the show former guess that were also with the show by tweeting a lot of the sessions and so is pretty funny a lot of times I was in one session you know trying to consume the content myself and I'm following like Michelle who's been on the show from euromonitor who is doing a fabulous job of what I've tweeting the. The session she was at and so so I feel like I got a pretty good feel for the overall show despite the fact that that. There and she'll like this there is a fair amount of fear of missing out that you're going to go to one session and it's going to. Not be what you hoped and and you'll miss some really good content in another. Scot: [25:14] Yeah, so what were the highlights. Jason: [25:17] So high level I kind of broke the show up into these for big themes and the biggest Theme by far is this overall digital disruption of grocery. That essentially you know grocery ad in pretty stagnant for. For a long time and that now digital shopping for groceries digital influencer sales in grocery and increasingly. Delivery and curbside pickup of grocery is gaining huge traction it's going to be a meaningful part of grocery I think emarketer publishing data that it's like. 1.3% of grocery sales right now or digital the grocery same stories e-commerce groceries growing at like 2%. But digital grocery is growing at like a 20% K Garceau. You in the next five years that 1.3% is going to be more like 3 or 4% of all Grocery and it's the overwhelming majority about growth in the grocery category so you know all the other themes and most of the content in the show is all about how Brands and retailers and consumers are responding to this, this digital disruption of the traditional grocery model. [26:34] So then the three sub themes under that that I felt like came up a lot is there's a lot of conversation and opinion and evolution of, the idea of how you get all the groceries into the grocery bag right so there's a lot of traditional grocers that own a bunch of stores. That you know feel like. [26:59] Sending professional employees to pick groceries off the shelf and put them in the bag is the most cost-effective model because it leverages all this fixed assets that the retail already have it leverages all their existing inventory it shares the inventory between, in-store customers and digital customers you know it's it's the Leverage is all these fixed assets that that that retailer already has and so you think about like what Walmart curbside pickup and Kroger curbside pickup are both. [27:30] Are both sort of in store picking models and you know most notably instacart which is now past like 3 billion dollars in sales is all sort of in-store picking in so a lot of traditional grocery all feel like that's the preferred model but then there's a lot of digital startups that have said actually that's super inefficient in the unit economics are really challenging there because in a traditional general merchandise e-commerce site you know an average you're lucky if you sell two or three items per order and so the amount of picking her order is pretty small but a typical grocery order might have 30 to 60 items in it and so the cost per item to pick is is a much bigger part of the overall cost. [28:19] Of an e-commerce order and paying people to walk around stores that are not efficiently assorted for Pickers but instead are designed for Discovery and browsing is really inefficient and so you you have dedicated digital Grocers like Fresh Direct or Peapod or a super successful digital Grocer in the UK called or Colorado that all have this model where they use dedicated automated. Grocery up fulfillment centers that are much more optimized for picking costs and in one interesting case ocado which is based in the UK is partnered with Kroger and they're there. [29:03] Opening fulfillment center using okada's technology and software in the US so Kroger is both doing store picking and there now piloting these microfilaments centers Albertsons which is like the second largest. Dedicated Grocer in the u.s. made a big announcement that they were launching micro fulfillment centers and they felt that that was a superior more cost-effective model in the long run so they're like, it's still early days but there's a lot of pros and cons on both sides in this whole whole conundrum of what's the efficient supply chain. You know when you're dealing with perishables and fresh and and you know cold chain and all these these products that have to be kept at. A particular temperature so that it was an interesting pros and cons from various practitioners around those picking models. So that was kind of something one sub theme to is this whole debate about. [30:02] New start-up Brands versus new products from existing brands in so you think about like a Harrys Razor which would be appear startup brand. Or a new product being launched by Kraft. And you know a lot of the buzz in the industry is all about these new digital native startup Brands we talked about a lot of them in general but there are also a lot of them that are in the grocery space. And get a lot of buzz but also in the grocery space are more products. That our new products that are either launched by big companies or. New products that are launched by companies that are intended to be sold through wholesale versus. Direct-to-consumer so you think about like Chobani yogurt for example like that emerged in quickly disrupted the industry and took a huge chunk of Dan and sales because, Dan and didn't you know jump on the Greek yogurt trans quick enough in Chobani like became a very big company. Shivani doesn't really focus on selling yogurt direct they sell it through all these grocery wholesalers. It's a lot of interesting discussions about the pros and cons there and like my big takeaway is. [31:16] All of these dedicated startups that are focused on direct to Consumer are making more Innovative products and they're iterating them faster and they're getting them out in the market and getting initial customer adoption much quicker. Then that the big brands are or than the wholesale distributed products are but all of them seem to hit this plateau and really struggled the scale. So I'm calling the the direct to Consumer startups really good at Innovation and product development and early launches, but the really challenging to scale in on the big side the products that they get to Market are doing much better and scaling and becoming much more significant in the marketplace, but in general are there's far fewer of them in there they're much slower to come to Market and there's in general that's innovation in them and so there's kind of this interesting thing that you had these two models that he. Each have their pros and cons and you know how do you kind of get the best of both worlds and is is that. Harry's launching is a direct-to-consumer brand and once they hit that plateau. You know they they shifted to today the majority of their sales are now wholesale then and so you know there's kind of some of those those conversations. Internet the third big trend is this whole private label owned Brands thing that we discussed earlier. [32:40] But I would say both of those Trends are becoming increasingly prominent in so you think about like all the Keynotes at the show and like Kroger, I have a huge private label it's the most successful, organic food brand in the US called Simple Truth and Kroger's grocery store in the US but in China Kroger's a brand because they're selling simple truth on Alibaba, in China we've talked a lot about boxed on this show which is an Innovative a retailer that started out selling wholesale Goods today a big chunk of all their sales are own products that they're developing. One of the founders of Thrive Market which is sort of a online version of Whole Foods in a way talked about. The overwhelming success of their own products and how you know they were differentiated in the marketplace so that that was a big Trend in those. You know I think of you up there all the key notes in a lot of the breakouts you did see them like pretty neatly fall into those three big trim. Scot: [33:43] How how do you nod out on jobs pick one so we talked a lot about delivery versus curbside was there any conclusive evidence on either of those. Jason: [33:55] No I think the jury is still out I will say like I have in a pretty flippantly run around saying hey the big winner is going to be curbside that the unit economics really don't work. For for home delivery for grocery in perishable and kind of the Reader's Digest on my Logic for that is. [34:16] General merchandise e-commerce is generally what we call a route based delivery like you get 300 orders you put them all in the UPS truck the guy drives to 300 addresses, and deliver them all and so you know each one of those delivery is paying for one 300 that trip. And the UPS driver could show up at your house or work any place within kind of a 10 hour window and deliver the goods and it would be no problem. And fresh and perishable if you order milk or you order ice cream. You need to be home exactly when that delivery arrive so that you can put those products in a refrigerator or freezer. And generally the way that that retailers have to do that for most of the country is that to do a point-based delivery which means a guy drive straight from the store or fulfillment center to your house, and now that delivery has to pay for 100% of that trip instead of one 300th and so, in general because of that the unit economics are much more favorable to curbside pickup. And curbside pickup is good enough from a convenient standpoint like a lot of families fine, super convenient to order their groceries digitally pick them up at their convenience maybe on the way home from soccer practice and they're stored in a climate controlled storage facility and they they get put in your trunk really efficiently. And that's a really high customer satisfaction experience for most consumers so. [35:40] Put all that together and curbside pickup is the big win and I still believe that's true but I got to express that point of you do some really smart operators that a bunch of these grocery stores, and and they're kind of feedback which I do take the heart is hey Jason you're probably mostly right, but you're actually under estimating the fact that the picking is way more expensive than the delivery and so you know that the unit economic problem is more around, if you if you have a really expensive pic of 30 or 60 items you then can't afford to do a point delivery, but that if you have a really efficient fulfillment center and you can get the picking cost down a low enough. You can put those deliveries on a refrigerated truck and you may not be able to do the the 300 deliveries that a UPS driver can make in a day but you still can make multiple deliveries, guarantee tight delivery windows in a climate control truck from a dedicated fulfillment center and so they were arguing that that you know maybe there's more. [36:47] Communities that have enough density to support delivery than I was originally thinking so I'm I'm starting to amend my thought process I think the clear answer is, that the world is going to have all of these delivery modalities sometimes you're going to want to go to the store and pick the stuff out yourself and that's going to be your preference sometimes you're going to want to leverage curbside pickup and other times you were going to want delivery and so you know good good retailers are going to have to figure out a way to support all those modality. Scot: [37:16] And then in the whole kind of digitally native vertical brand startup versus brands from existing companies where where did Jeanette Allen. Jason: [37:27] Yep that that is interesting so the it feels like then the. Digitally native brands have more Tools in their their tool belt to overcome, their deficiencies than the big brands do right now right like so you you go talk to the big cpgs and you talk about what their strategy is to infuse Innovation and have a you know a faster pace of new products and have product that are better suited to the consumer and you frankly get a lot of blank stares and you get a lot of. [38:03] Kind of the same unfulfilling answers that oh we're going to set up an innovation team or we're going to act as a venture capitalist in and go unifund a bunch of projects, but you know these big brands have just not demonstrated the ability to get much faster and get much more Innovative and these big brands that are exclusively selling through wholesale are fundamentally disintermediated from the customer so they do not have the customer preference data to use to design and execute new products very well and I I just haven't seen any of them you know really like, clearly articulated solution to some of those deficiencies whereas the the the native direct to Consumer products have the ability to take advantage of all of the strengths of the direct to Consumer space and when they get to the point where they kind of max out on the scale they can reach direct-to-consumer they they have the option to them in pivot to a a wholesale distribution model or a blended model or they're in a position to establish a reasonable valuation and get acquired by one of these big companies and so it, like you know why there are challenges on both sides it appears there's more ways to overcome the hurdles if you start out as a new digital native brand then there are if you start out inside of one of these these big brands at least least for now that's that's how it seems to me. Scot: [39:33] If I come pull the thread on that so we talked about so some of these grocery stores like Kroger creating their own private label or our own Brands but then if I'm a cpg it it seems like. That's another reason to go direct other than the channels kind of being complicated to navigate without a team so cpgs going director or is that just not happening in grocery. Jason: [39:57] No no no it so it's often discuss there's not a ton of success stories right and so usually when a cpg tells you about their direct-to-consumer 6s they're going to be telling you about a direct-to-consumer brand. [40:10] But they're all talking about it and frankly like I strongly advocated and I think you and I have talked. In general I feel like developing a direct-to-consumer capability and strategy needs to be an important part of every one of these Brands because if yeah. You you sort of look at this at the moment and you've got a bunch of brands, dinner depending on on wholesale retailers and you look at the retailers and they're they're super distressed and have them bunch of head winds their number one tactic for overcoming their head wins is in differentiating themselves from our our friends in Seattle or when I'm soon going to have to say our friends in, Seattle New York Virginia. Is to have exclusive products and have owned Brands and said the retailers and brands that used to be you know super synergistic have are increasingly becoming Frenemies or direct competitors and it and the retailers are frankly having a lot more success with that at the moment then the brands are so a bunch of retailers are becoming super successful at building Brands we talked about a couple in the groceries Facebook like. Yeah oh my God I target has one strike three brands that sold over a billion dollars in their first year none of the digital native brands that we talked about on the show have and have done that right and so retailers are getting successful at making. [41:39] The transition to build products, and in that world there is a left there's less shelf space for the brands in a world that's increasingly becoming have a winner-take-all you kind of imagine some future when. When you know we're all going to get the bulk of our purchases from. In Amazon Monopoly in North America or maybe a Amazon Walmart duopoly there's a lot less points of presents to carry that brand product and so. [42:07] That brand is going to lose all the leverage to the unit few set of aggregators at the top of the echo system on the less. They're also able to sell the wrecked unless they can build a relationship direct with the consumer even if it's not high volume and profitable in the short run. I feel like they need to develop the skills just so that they get some customer intimacy so they can start building more relevant faster, more agile products and I feel like they they need a lab to test and learn all this digital shelf content and all these digital best practices that we. Been talking about on Today Show so when they execute at Walmart, they're not just you know sending an image that they have no way to test and hoping it sells well in Walmart like far better to be able to test all that content on your own direct-to-consumer channel Gatorade it really quickly and then take a hero image that you know work since indicated to Walmart so for a variety of reasons I think that's an important a scale for cpgs to evolve and I would say they are they are doing that cautiously and slowly. Scot: [43:09] We haven't done it wouldn't be a Jason in the sky show that will Amazon and we recovered at the top of the show but I didn't see anyone from Amazon speaking on I may have missed that but sometimes these conferences it's funny people are avoiding talking about it and stay 800-pound gorilla in the room was was there a lot of Amazon talk to at least find the scenes. Jason: [43:31] Yeah so to my knowledge Amazon really didn't have a presence at the show which on the one hand isn't surprising but on the other hand I would say the founders of this show have actually been pretty decent at getting Amazon speakers to their other shows now admittedly the speaker's they get are the ones that you don't have the most vested interest in. In selling their products to the industry so not shocking that pay by Amazon is happy to go to money2020 and talk about their digital wallet right and not shocking that that the Amazon Marketplace when that used to be a separate and into the you know was was happy to go to shop talk and kind of Recruit new Sellers and things like that. [44:18] The but they did have the prime now folks I have spoke at several of the shop talk shows and so you might have thought they would be there, it would have been fascinating to hear from some of the Amazon Fresh people are now that you know that the folks responsible for the Amazon Whole Foods in a graichen in and none of them were publicly there I'm sure Amazon secretly had some people there but. Almost every conversation when you say digital disruption of grocery, everybody points to the same event that like there was a lot of talk about digital disrupting grocery but nobody nobody was personally experiencing it or nobody was very worried about it until the day that Amazon announced today, they purchased Whole Foods and that that really sort of Kick this whole. Disrupt digital disruption of grocery in a high gear and caused by you know almost all the people we saw speaking were people that got hired as a direct result of that acquisition. [45:19] Mom said they were definitely on everyone's mind even if they weren't there in 4 in in person. Scot: [45:26] Put in the other high like showing it. Jason: [45:29] I think those were the big ones it is interesting that this is one of the spaces that I like doesn't feel like Amazon has one yet and they actually, probably have some intrinsic disadvantages versus some of the other players so. I'm by no means prepared to say oh my gosh they're not going to win Amazon on the Rhone you know dabbled in in fresh fresh, for I want to say amazonfresh is like 10 years old right and never really got a ton of traction and then after they bought Whole Foods I've been really impressed by how fast. Amazon's been able to integrate a lot of their digital chops in a Whole Foods and then some test markets like the one I live in they have some really compelling Whole Foods delivery options and Whole Foods curbside pickup options which are great but the reality is Whole Foods is a tiny percentage of the whole grocery market and they've you know implemented these tests in a tiny percentage of the whole food so you know you look at the the folks that Walmart or Kroger is touching with digital grocery versus the amount of customers Amazon's touching and right now. Walmart and Kroger have a head start now I would argue Amazon the way faster more agile company than Walmart or Kroger and so you know I think we can expect to see Amazon continue to make up ground but it is always interesting to see see a market where Amazon probably has to try harder than some other folks if they want to win. [46:58] I don't know. What do you think. Scot: [47:00] It's going to be interesting so you know they are pushing the Whole Foods pretty hard I've noticed in my Prime now recently there they're kind of integrated Whole Foods delivery right in the prime now in her face which is used to separate set of inventory and yeah I think it's too early to call account Amazon out of any fight. Jason: [47:20] No no I I totally agree I'm so in and it's going to be fun to have a ringside seat to watch it all play out I will throw one other teas are out there we did get to talk to several of the friends of the show that have been on the show a number of times before and so shortly after this episodes available will have a couple episodes live from the grocery shop show and we will get some other folks perspectives on the show in the industry and so you know if you're if you're trying to figure out the the digital grocery space I would encourage you to look for those upcoming episodes as well and with that this is going to be a great place to rap because we have used up our allotted time so as always love to continue the conversation on Facebook if you have any questions or feel like we got something wrong we love to hear from you and as always if you love this show we sure would appreciate if you jump on the iTunes and give us that five star review that's the the biggest favor you can do for the show. Scot: [48:24] Awesome thanks everyone for joining us and thanks Jason for being our Jason Scott representative in the field in Las Vegas. Jason: [48:32] It's it's never as fun without you but you were that you were certainly there in spirit so hopefully next year we'll get to do it together and in total next time happy commercing.

Happy Birthday, to Jason's wife, Leila! Scot Wingo is contributing the Forbes Digital Council, and writing about his new Vehicle 2.0 Framework.  Introducing Vehicle 2.0.  Jason Goldberg is also contributing to a regular retail column on Forbes, starting with his first article: What Competitors Are Missing About Amazon's New 4-Star Retail Concept. Scot is appearing in a national TV spot promoting his alma mater, North Carolina State, "Think and Do!" Jason is leading several sessions at GroceryShop October 28-31 in Las Vegas, including a keynote interview with Sam's Club Chief Merchant Ashley Buchanan. Amazon Earnings: Amazon's third-quarter earnings beat Street estimates, but its revenue and fourth-quarter outlook fell short of expectations. Revenue: Revenue increased +29% Y/Y (+30% ex-FX) to $56.58B, 1% below the Street's $57.11B. 29% Revenue growth was below consensus expectations as Int’l revenue disappointed with a ~$1B shortfall. North America revenue (ex-AWS and ex-WF) of $30.10B was up 25%, in line with 2Q18 growth. International revenue of $15.55B was up 13% (+15% ex-FX), a notable deceleration from 27% growth in Q2 (+21% ex-FX). AWS revenue of $6.68B was up 46%, down from +49% growth in Q2 but in line with expectations. Physical Stores revenue of $4.25B was slightly ahead of consensus expectations. Amazon's "other" category, aka advertising, jumped 123% to $2.5 billion in revenue AWS revenue: $6.68 billion vs. $6.71 billion estimated, according to FactSet Net income, meanwhile, grew more than 10-times from the year-ago period, to a record-high $2.8 billion, marking the fourth straight quarter of topping $1 billion in profits. The $3.7 billion in operating income far-exceeded Street estimates of $2.1 billion GAAP Operating Income of $3.72B was higher than the Street's $2.12B. Gross margin of 41.7% came in above the Street's 40.5%. GAAP Operating Income margin of 6.6% was higher than the Street's 3.7%. Profitability, once again, was a positive surprise with Op Inc ~$1.5B ahead of consensus expectations, Other News: Implications of the US pulling out of UPU Treaty Implications of Sears bankruptcy Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 149 of the Jason & Scot show was recorded on Thursday, October 25th, 2018. http://jasonandscot.com Join your hosts Jason "retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Transcript Transcript Jason: [0:25] Welcome to the Jason and Scott show this is episode 149 being recorded on Monday October 25th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host and television spokesmodel Scott Wingo. Scot: [0:46] Hey Jason welcome back Jason Scott show us nurse yeah yeah yeah. So if you're at the front should I guess we'll will preface it's been a couple weeks but a show out so apologies to everybody we have been just crazy busy and what Jason's referencing there is I did a small video for this NC State thing and then end up being in a promotion that they are nationally a lot of people have seen it so that's been fun we'll put a link to it in the show notes so NC state has the motto which is thinking do, I am and I'm featured in there talking about they can do. Jason: [1:26] And they are airing at like on ESPN during the games. Scot: [1:30] Yeah when the when the college's nobody watch college football UIC usually during halftime they get two spots that they can kind of do a promotional video about University each University gifts and this is one they've been running for. Jason: [1:45] That's it's totally awesome I'm just saying it's my animated screensaver now so just so you know. Scot: [1:50] It's a little creepy but whatever floats your boat Jason. Jason: [1:56] Not even the weirdest thing about me. Scot: [1:58] Another fun fact is we are both contribute to Forbes you had a really good article where you you went through your Amazon go store the force Star Story. Jason: [2:13] Yeah and you are like some fancier CIO contributor if I'm not mistaken. Scot: [2:21] Yeah if you have the tech Advisory board or some such and I am writing about vehicle 2.0 which is a framework we've developed its if he for thinking about the future of cars which seems like it wouldn't have anything to do about e-commerce but it's kind of interesting. The first of all you have a. Perspective on how fast or how slow this vehicle stops going to go in and then second of all there are overlaps there so for example imagine autonomous vehicles delivering packages. Jason: [2:54] Yep for sure and I suspect in the not-too-distant future will be ordering a lot of packages from our vehicles and in many cases getting delivered to our vehicles. Scot: [3:05] Yes sir that's good and then the in exciting car news so Tesla's new operating system came out so that that has been fun to play with and a lot of the folks that are in the same demographic issue and I the most exciting part about the parade this is the Tesla West Nine is they have an Atari simulator in there as one of the new Easter eggs so that you can't do this while you're driving so full disclosure there. Sadly but I guess safely but it is a lot of fun to play on the touch-screen the various old Atari games, most fun one probably is Missile Command because he was always super frustrating to have to deal with that track ball and you can never get faster left right it in your little basis would get destroyed so now you can kind of do a two-finger thing and it makes it a lot easier to save your bases file. Jason: [3:57] I am always jealous when you get a new upgrade because I just think that's the coolest thing that you're you go to bed and wake up in your car has been upgraded it makes me want to like go out and get a fancy new cup holder or something for my car. Scot: [4:10] Yes you could. You could get a Tesla you should. Jason: [4:14] Yep despite the fact that my wife and I have no commute in the car is almost exclusively used by a three-year-old shirt. Scot: [4:21] Call Anna Jason you got a lot of stuff you can be doing here either this week or next week. Jason: [4:31] Yeah the the these next two weeks are super busy for me on the personal front this is the busiest week of the year for me tonight is my wife's birthday, inside of a side-note shout out to you honey happy birthday she most wanted to celebrate it by having me catch up. With the podcast cuz she knew the listeners were frustrated with the, the Gap we've had and her main request for her birthday is she wants to go to the Star Wars experience in Orlando on a joint vacation with the windows so we're going to have to. I think we're gonna have to find a way to make that happen. Scot: [5:13] Absolutely that is one birthday gift I'll be happy to help make happen. Jason: [5:17] Exactly and then it's a crazy fertility week apparently in my family because in addition to my wife's birthday. Tomorrow is like my mother's birthday my mother-in-law's birthday and my father-in-law's birthday. So so we're doing a lot of birthday celebrations this week and then Sunday I shoot out to grocery shop which is this new trade show in Las Vegas this will be the first year. Mainly focused on digital disruption of the grocery category. It's put on by the same folks that started money 20/20 and Shop talk. And I think they were hoping to get like a thousand attendees in this first year and they actually sold out capacity of the venue at 2200 people. So it's it's shaping up to be a really good event and I'm dramatically Overexposed at the event so Sunday night I'll actually be doing the keynote interview with Ashley Buchanan who's the chief Merchant at Sam's Club. So I get to talk to him about digital at Sam's and we'll talk about scan and go and some of their partnership with instacart and some of the other things they're doing hopefully I'll have some. Samara tough questions I'm doing a piano on. [6:36] Brands using product content help build a brand since we got. Folks from the Boston beer company which is like Sam's Sam Adams we've got Chobani what unit or disrupted the the yogurt space and we've got the wonderful company with the almonds and pom wonderful Fiji Water and all that stuff. And then I'm doing a panel on the evolution of the cpg retail relationship we've got constellation Brands which is. A big house of brands in alcohol space I think has Corona amongst others you have a elf Beauty and then a Fairway Market which is a great bespoke grocery retailer in the New York City area so. Some topics that are near and dear to my house heart and I'm looking forward to seeing everyone at grocery shop and the. I do have plan I know you're not going to go to join us so that always makes me sad but I do think we're going to get the opportunity to record a couple shows from there with some of the the grocery industry makers. Scot: [7:38] Next year they're going to Rebrand the sink to Jason talk or something like that cuz it seems like you're just doing everything there. Jason: [7:45] Yeah I think that was actually there original premise and then they found out like that the only for family members I could possibly get to attend we're all celebrating their birthday and so they decided to scrap. Scot: [7:56] Expanded to smother people in the loss of that that looks good I look forward to seeing all the social media that comes out of that and and he ran to the interviews any trip reports. Jason: [8:11] I do so, we've talked about Amazon go on the store on the show we did talk after they open the first go store in Chicago they have open to other go stores in Chicago so now we have a. A fleet of ghost tours and then this week or last Thursday Google opened a pop-up shop shop here in in Chicago for the holidays. So Google has done pop ups for several years but they've always been in New York this is their first year in Chicago so I was eager to see. What that look like and I I went and visited it this week so I'll talk about that in just a minute and then. They have announced their first permanent retail store in the US and that is going to be in Chicago there's no official date on when that's opening yet so we're continuing. To watch for updates on that but I'll be interesting to see what a permanent Google Store looks like but the pop-up is really sort of. [9:12] Very similar to pass Google pop-ups it's it's focused on the Google Hardware products so the pixel 3 phone their new home hub which is there a voice assistant that has a screen built-in so it sort of. Competing with Amazon Alexa show. [9:32] They you don't have a a couple cool accessories I've never really smart a wireless charger for the pixel phone. So you know you go to the pop-up they have all the products they had them on launch day. Which would which is kind of cool as the first place outside of Verizon you can get the pixel 3 phone. And they set up a couple of fun vignettes to sort of demo the capability so they have sort of a. A fake record store you can go into and play music using the the Alexa assistance in there that their new high-end audio Fidelity speaker. You can go into a tree house and do a bunch of home automation stuff so you can you know give commands to Google and you know see the shades in the tree house go up and down or change the lighting in a few different things. And they have a kitchen vignette and in the kitchen vignette you can have a bunch of Easter eggs you can give commands and it'll like pop open a drawer with candy in it and some stuff like that so. Some some fun little vignettes to kind of get you experimenting with a Google product but sorta in typical. [10:44] Pop-up shop fashion you know it it really felt more like some sort of Museum exhibits where you could go in and try products rather than a working retail store. [10:57] And you know the it was very sales assisted experience you know there more Google employees in the store then there were customers. [11:06] You know if if you are specifically looking to get Hands-On a Google product it was great opportunity to do that but I'm not sure as a pure retail store. [11:15] It was all that that interesting or or Works particularly well and in my mind the big change from previous Google pop-ups was just sort of the. The visual treatment so in the past they've done he's really kind of techno treatments with a lot of like. Animated light things and fiber optics and you kind of got a very sort of Tron feel from the the Google pop-ups in this Google pop-up was a much more. Sort of the Vintage organic feel so you know instead of a house they had a tree house and they they don't sell these other they should they they're like merchandising all of the. The the phones and he's cool Google tool boxes that they made for the store and so is very white. Sort of organic store with a fake tree in the middle of it and it was two stories and so if you live in Chicago you're interested in some Google products totally worth we're checking it out there are a couple features in the pixel 3 that I'm super jealous up as a. IPhone user they have dramatically improve new spam telephone spam filters which. I feel like I'm getting a lot more telephone spam so that seem cool and they have a great new visual search built into the the camera and incredible new will light features for the camera that seem to be class weaving. Scot: [12:40] Awesome I don't want to. Get you an agitated but I am ambidextrous and my pixel 3 actually just arrived today and I'm going to crack it open after this podcast so I'll do it boxing next week and tell you about all the awesome teacher missing. Jason: [12:57] Exciting I I probably will add one of the beat to I think it is going to be fun and if you have already gotten one spot I do suggest you get the the Google pixel. Wireless charger. It's really smart and clever like unlike traditional wireless chargers it recognizes each individual phone and you can have different settings for each phone it basically turns the phone into a mini Google home hub when you put the phone on the charger it has a bunch of unique features that I feel like everyone else should have thought of but give always the first ones to implement. Scot: [13:31] Awesome I didn't know about that so I appreciate that cool wall decals caught up on outside and it wouldn't be a Jason and Scott show without. Amazon news your margin is there a opportunity. [13:59] Yes Jason said at the top of the show it's Thursday October 25th and. After the market closes today Amazon announced their third quarter earnings and just kind of position awareness if you listen to podcast setting up for Holiday 18 and I like good stuff going on in a little while kind of shaky here in the last couple weeks the stock market's gyrating a bit tariff kind of stuff is accelerating were to talk about some things there later than the show around China impacts so for me this is a really important set up cuz this is kind of the one the last data points work it going into holiday 18. Add a reminder for everybody we tend to think of e-commerce as Baseline going about 15% 1/5 overall retail tubilee grows low-single-digit so 4% so with that being said Amazon did announce their ornax and it's kind of a mixed bag so he was a little light and and I'll go into why but then profitability exceeded expectations so as of the recording of that show the stock is down a tad and a smoke so. [15:20] When you peel the onion on on the top line revenue came in at. 30% year-over-year growth is 56 billion and that was about 1% will at the street was looking for so that one person. Turns out to be about a billion dollars so what's a billion dollars between friends who was largely on the international side Amazon doesn't really give any details about things but reading the tea leaves their you know it feels like there's there's some stuff going on they did annualize some things like suck exertion of some changes they made in India but then also you know I think a lot of the Wall Street analysts are or feeling like this is Felix of tariffs and packed so when item is sold from China and us that counts as it's where the seller is that that counts is international Judy and Skip Bayless so so that could be Amazon on the little bit of that passes Air Force they're going on Ding and revenue little bit more when you look at North America and you take out just when you just get the retail North America that snow cloud computing. [16:33] Whole Foods is a 25% begin to put this in perspective Amazon overall grew about 30% even that it's amazing you know huge 800 lb scale North America grew at 25% and then International only grew about 15% which is a pretty steep deceleration from last quarter is 27% of us continue to do really well that 46% and a physical stores came in right at expectations one of the stupidest things we like to talk about on the show is the advertising that continues to grow triple digits that grew a hundred 23% and is now 2.5 billion dollars and yeah that that just kind of looking at the trend overtime book with this the show notes so you'll get you one of 18 at 132% U2 under 29% you 323% so little bit of a slow down but really just continues to be white hot that eternity Jason for some other highlights. Jason: [17:42] Yep it's always hard to talk about a Slowdown in growth when it's still over 100%. That's a first world problem for sure but it's it was sort of a bifurcated story you I got the, the revenue was a slight Miss for the quarter but earnings for the quarter were really strong so they were. 2.8 billion for the quarter which is the their highest earnings ever that means that's four straight quarters that they've earned over a billion dollars in profit hopefully that. Scot: [18:18] Jason. Jason: [18:20] I was just going to say I hope I hope that finally puts to bed the the silly myths that they're not profitable. That is wildin more profitable than they were just a short time ago so that is like 10 x their profit from a year ago and that earnings was a pretty solid beat on the market expectation so on the one hand you go man they say we miss Revenue but they blew away earnings that should be a great story but then you know they gave their guidance for Q4 which was a little soft and disappointing to the market and the ramifications of that is this after hours trading their stock took a meaningful dipso their stock was down 9% tonight, if that holds tomorrow it is conceivable that Microsoft which had a good earnings report yesterday well at least briefly pass Amazon is the second most valuable company so I'm not sure that says anything particular negative about Amazon but that's a pretty impressive run for Microsoft will get themselves on the mixer. Scot: [19:31] There's a little bit of overlap so one of the reasons Microsoft doing well is azure which is their competitor to AWS it seems to be really doing well and and kind of sticking out of a definite second position and nudging out IBM in Google that were trying to get that that second position by the Amazon seems like seems like it's pretty quickly becoming a two-horse race between Microsoft and Amazon. Jason: [19:56] An in general Microsoft is still way behind in Cloud but. As a result able to grow much more quickly and of course in our category of retail what are the one category where you know Amazon faces some headwinds and their major retailers that obviously don't want to use AWS and there's some big powerful retailers like Wal-Mart they really discourage their vendors from using AWS so retail is one one particularly lucrative category for Microsoft azure. Scot: [20:26] Yeah on the. On the marketplace side one of the metrics than Amazon does discloses 2% of orders are units that came from Marketplace sellers last quarter it was 53% and it held steady at 53% again. Don't spend picking up about 1% every quarter so stabilize here at 53%. Jason: [20:53] Yeah and then there you know there after their names there's always the Q&A with a couple of the Business Leaders and, I'm always looking for tidbits there and one question that that Amazon got asked is about ads on the Alexa platform and I was. Happy to see there the guy that weaves investor relations for Amazon say that that they have no plans to, put in the ads on the Alexa platform in the day exclusively want to focus on it being a good customer experience so. Not shocking but but good to affirm that that they're not going there. [21:40] The and then you know kind of following up on the analysis of of the quarter I think you know people are definitely looking at that International softness and you called out like that they laugh their suit. Acquisition so that that probably had a material impact on International growth and then there's this big. Indian holiday it's right on the cusp of a shopping holiday that's right on the cusp of Q3 and Q4 so. Last year it was in Q4 this year it's in Q3 and so they're cute their comps. Mirror over a year are challenge cuz the holiday was in in one year and not the other. One piece of speculation is another report out there estimating the size of the Prime Membership. And that they are reporting that that growth in frying is dramatically slowing down which is, not a huge surprise you know the Amazon themselves they said they have over a hundred million Prime households and that's a global number but in North America there's only like 120 or 240 million households depend on how you count so it and it has to be getting harder for Amazon acquire more. Prime households and if it is in fact true that they're requiring us households than that certainly would have an effect on on future quarters growth so that's going to be an interesting thing to what. Scot: [23:09] Yeah yeah once you've kind of have every household on Prime then it becomes a saturation game to see the one thing on the fourth-quarter guides that you mentioned is it was a little soft on Revenue but but about 8% off on the prophet side and Amazon's not being specific about it but one thing they did announce that we haven't heard on the stove is there increasing everyone's wage for warehouse workers to $50 there's a lot of controversy around this so so this was a reaction to a lot of politics going on Bernie Sanders has been kind of lighting them up these ladies kind of but I think as an ox we're kind of silly things where they'll take Jeff bezos's net worth in / 365 and don't say that that's how much he makes a day or so. [24:05] Forgets the 20 years where he you know took tons of building Amazon but whatever I do dress and there is a point there that there is a large disparity between his of the top echelons of Amazon warehouse workers to Amazon straighten that out by $50 an hour doing so they get rid of stock options and some other things that they don't like that I can't win so that in the lot of people trash come over getting rid of those things so that being said it is a prematurely and talk to literally hundreds of thousands of employees so a lot of speculation that. Big head wind on the bottom line going in the fourth quarter is going to be that that wage increase Warehouse her. Jason: [24:52] Yep and I I think they were specifically asked if that it was going to have a material impact and Amazon didn't comment on the exact impact of the wage increase but that that wasn't pretty like from my view a pretty Savvy move you know there's been this trend in retail for a while you don't return a really competing for talent you know unemployment is low so it it's hard to get people and we've seen both Target and Walmart you like dramatically increase there starting wages in an effort to improve the quality of the workforce and then you know Amazon came in and LeapFrog them in and Amazon is competing for four people at this point to fill those Protomen centers in so that like I'm sure there was some political advantage in doing that like that you know I do think in a lot of ways it's the right thing to do I was here for the employees. [25:48] But it also just is a capitalistic thing to do in terms of making sure that you get the input the workforce that you need in this competitive environment so be interesting to see even what economic impact it has but the other question that they got about the financial impact in this going to happen thank you for is the u.s. postal rate increase that is coming and am I was pretty clear that they did not feel that the postal increase was going to materially affect them into me this is another one of these sort of funny ironies where. [26:28] You know that the president that appears to have some animosity towards Jeff Bezos adopts an issue and then some some which situation gets past like the sales tax Supreme Court ruling or now this postal rate and you know that you like him superficially is tweeting that this is going to have some negative impact on Amazon Amazon. [26:52] Has more ways to deliver packages than everyone else they have more of their own package delivery and so the operations folks and Amazon or like no we're just going to be smarter about which of our delivery vehicles we use only think we're going to be able to absorb that rate increase and of course no other retailer has those levers to pull in so like the postal rates going up actually is a competitive Advantage for Amazon versus the rest of the market that doesn't deliver 15% of their own packages like Amazon does. Scot: [27:24] Yeah to that vein couple of tidbits so there's a lot of video surfacing of Amazon order to something like 20 to 40,000 Prime delivery dance these are really nice there these Mercedes sprinters and I don't know about you in Chicago but in the Research Triangle the Raleigh-Durham area I probably see four or five of those a day right now and it started where they were going to large corporations so where were there a lot with my stuffy and your folks are reporting to Neo at Cisco and Citrix and MetLife. All these large employers there seeing the Amazon big ants go there a couple times a day and then now it seems, large Prime neighborhoods deserve this kind of replicating the FedEx Ground model to FedEx ground not realize this but the next error is W-2 employees FedEx Ground as a 1099 network of local stores that are given license to FedEx brand and they operate ground on behalf of their local businesses so, Amazon your kind of started. [28:35] This mix of some fulfillment center employees are driving these things and I talked to several of them and the ones I've talked to her are full on Amazon employees but a lot of them also are these 1099s ramazan will set you up in your own little 1099 delivery to you certain number of packages and effectively a dollar per package so your point pretty fast meeting at Amazon that really wrapping that up. Jason: [29:05] Yep. A couple of other pieces of Amazon news not necessary related to earnings but Amazon did launch a new credit card in partnership with Amex this I think maybe you last week that was targeted at small businesses and it has some interesting features it's a no fee Amex or if the first time you can get a free MX and. They sort of have variable terms for each purchase that you can select at the time of purchase in Amazon so that so there's a unique user interface in Amazon for purchases better. Completed with this credit card and so you can say for example that I want to use my Amazon reward points to pay for this purchase or you can say I'm going to, pay back this credit card charge in the next 30 days and you get 5% back for doing that or you can select these 90-day terms. You know take 90 days to pay for the purchase so kind of an interesting tighter integration between Amazon and Amex. You know what I'm always interested in those kinds of tie-ins because you know payment is such a. A potential competitive advantage in the e-commerce pay so it's interesting to see Amazon doing that. [30:26] I mentioned earlier that we now have 3 ghost tours in Chicago we also had the the first go store open in San Francisco this week so these things are rapidly opening. Side note kudos to the Amazon real estate team they've actually done a phenomenal job of hiding a lot of these stores from the media which is you know. Carefully carefully watching property managers to figure out where all these stores are and I I know it's Amazon's been a pretty good job of surprising us all with some of these openings. I had an interesting little debate with some folks on Twitter this week. [31:01] You know as as it seems clear that they're opening a network of these stores and there is that Bloomberg report that they're going to have it three thousand of these go stores buy. 2022. Doug Stevens a retail author and and subject matter expert me to tweet saying. You know that 7-Eleven is now on the clock. They're going to get dramatically disrupted by Amazon and they're really not ready for it and I sort of made a smart alec or reply. You know while I've never would tell anyone not to worry about Amazon I'm not sure that first and foremost Amazon go is likely to affect 7-Eleven I said that. You know probably print amazed year or hobo pie. Are at much more risk from the Amazon go store then 7-Eleven is and my contention is the ghost or is really a restaurant. You know whose main mission is to get you lunch when you only have a half hour lunch break and that it's it's not really a competitor to a traditional convenience store in so some folks on Twitter jumped in and we had a we had a good healthy debate about that then. Obviously the Ender Wintergreen I'm right. Scot: [32:11] Or they got blocked. Jason: [32:14] Yeah alright I just scream them exactly a side-note top three categories at 7-Eleven. 7-Eleven sells a ton of gas which Amazon go stores don't sell yet 7-Eleven sells a lot of tobacco which Amazon doesn't sell at all and then they sell a lot of alcohol which Amazon go only sells in one store in Seattle so you know where food is in a growing part of 7-Elevens business it's not even a top 3 category and it's it's like 95% of the skews in this this ghost or so that's why I think Joe is much more of a restaurant than a traditional convenience store. Scot: [32:53] When one last reminder is it's been a little over a year since it was on announce their hunt for hq2 so Alaska chelation is that we should be hearing about that here in the fourth quarter. Amazon said it would take about a year now it's firm you this involves a lot of details and local governments and stuff so I. Adders reversing a ramp up of speculation around hq2 stuff I'm kind of interested. You know there's a lot going on in Chicago not pick on Chicago's great City. For all the other stuff they've done the kind of event Seattle York and Chicago but now they're just really pouring it on in Chicago I wonder if that so I could slide indication that maybe Chicago's kind of pulling into one of the top. Possible locations for hq2. Jason: [33:50] Yeah it would be interesting with my wife and I were driving around town today and there's a ton of trains building conda commented like do the the condo developers know something about Amazon that we don't know. That. Why do you think Chicago is a interesting market for Amazon and you know it's a good test Market because it is it does. I have a broad representative demographic I personally would be a little surprised if it's here but that being said I suspect we're all going to know pretty soon. Scot: [34:28] And then you use it surfaced at nursing little spot between Amazon and eBay. Jason: [34:34] Oh yeah so you may actually filed a lawsuit against Amazon and it related to Amazon potentially trying to steal top Marketplace Sellers from eBay and the reason I was a lawsuit is the allegation is that the way Amazon was doing this is they very systematically infiltrated a private chat board for these eBay sellers and created a bunch of fake personas and you know what we're reaching out in Contin privately contacting sellers, through like a pretty sophisticated alleged hacking of this this site eBay communication platform and you like it it seems like they have a fair amount of evidence it is true it's a little surprising to me that there's someone in Amazon's position would do, you know I would certainly presume that wasn't a corporate directed to do this but that you know someone had enough autonomy to do this and can put off of that scale it would be interesting so I don't know what the real story is there but it's going to be fun to watch the lawsuit play out as a an interested Observer. Scot: [35:55] Cool so that that kind of wraps up our Amazon part of the show and then we had a lot of listeners that were sad that we we took a little break there so apologies for that and then two other topics that it looks really wanting this hit on IR Sears and then this really big change to the u p u which is squarely in your. [36:18] Your wheelhouse Jason saw the Sears side there was kind of two buckets of questions we got from listeners one was really you know some folks selling on the Sears Marketplace or are you in this would apply a guest to vendors yo what what should I do to Sears in her chapter 11 bankruptcy what percentage of the time companies come out of bankruptcy other times they don't and when they don't they're they leave creditors sitting there kind of holding the bag and a lot of times adders even a Marketplace seller would be considered under their left holding the bag and then the other thing so I'll tackle that one in the other one Jason was over all kind of Redan what's this really mean for retail my guidance would be you know it's all a risk tolerance question and Anna scale question so if you're you know if if you did have a speed bump and you lost you know usually is inside of trailing 30-day payment type cycle skiers of material enough that you did lose 30 days of that cash because of a bankruptcy if that is you know pretty. [37:32] Material to your business to be getting packs it out of 10 percentage I would start trimming my sales for selling on Sears and reduced to a tryst September set yes it was I think that's the prudent thing from a risk management perspective when a company goes into bankruptcy to start limiting your risk, now if you're someone that that is super risk intolerant and it is going to bother you make me time to phase out that Marketplace because and and see what happens with the chapter 11 you can always come back and it when the risk is diminished so I would kind of you know. Figure out your risk tolerance a spectrum of hey I go bungee jumping off Bridges as a super sweet. Each risk for breakfast all the way to I don't own stocks I keep cash under my mattress and level and then apply that to to your. Your strategy for selling on Sears and also put it through a filter of materiality is is this more than 10% of your business or not. Jason: [38:38] Yeah that seems like totally Sound Advice I can't believe you you gave out my mattress strategy online though. Scot: [38:47] Yeah they will talk about inflation some other time. Jason: [38:51] Okay. Scot: [38:53] It's actually. Jason: [38:55] You know every time one of these is a significant retailer goes under there's always this question like who's going to benefit from them going under or what what's the impact going to be on the rest of retail you know Sears is still like a 10 billion dollar a year retailer in so that you know it today. Assuming they don't emerge from the realreal organization and and retain a significant portion of their. There are 10 million dollar Revenue run rate a bunch of other retailers are going to benefit. [39:31] The thing I like to point out is Sears has already donated most of its market share to the rest of the market so you know. There there was a time when they were 40 billion dollar retailer and they've been slowly a roading since 2006 and they probably have donated. Over a hundred million a billion dollars in in share to other retailers. Over these last 12 years or so and so you know the the bulk of. [40:03] The benefit of them going out of business like has already paid off two other retailers. And you know there's a lot of analysis that goes in a who's going to benefit most from these stores closing and you know who has favorable, merchandising categories that are similar to Sears who has similar geography to Sears to benefit from the. The specific store closures. But in general I think if you look at the macro Trends I I sort of have this premise that were really seeing a bifurcation of retail and where were essentially seeing. A few huge aggregators that focus on selling every product that's available in doing so at a really low price and super efficiently. And if that sounds familiar to you in North America and that's because I just described Amazon. There would be a good argument that Walmart is also one of those aggregators that that's going to continue to do well and in the future we might have a duopoly if he's too big. Big aggregators and then everyone else is in a really focused on selling curated assortments to specific. Target audiences and really selling exclusive products that you can't get from the big aggregators in so those big aggregators are. In the best position to benefit when. [41:24] You know someone else that used to win based on assortment and scale goes away so like obviously Amazon Walmart or. Going to take a significant percent of that share that Sears losses in Sears specific case because of a big portion of the revenue is soft goods at a low price point poles is particularly well positioned to. To get a nice benefit from the Sears stores going away and because appliances what a big chunk. Of Sears Revenue Best Buy is also in a position to get. A nice lift from the the the Sears market share lost so I think those are the retailers. Will see benefit the most but you know. At this point we're not losing the big one of the biggest retailers in America we're losing eyeshadow up there once was one of the biggest retards in North America so I don't think this is going to be a title change in the Retail Landscape by any means I think you know it's more sad because of. The history of Sears and what a dominant position they want had and how important they were to the evolution of retail in North America and frankly in many ways how important they were to the actual development of North America. Scot: [42:41] Anderson so you can take off the mattress all the money from of your mattress and put it. It sounds like. Jason: [42:48] That probably would be far from the worst investment I ever made. Scot: [42:53] What will save that story for a future ship so that's that's good perspective now tell us about this whole Universal Postal Union treaty and what's going on. Jason: [43:07] So this is a very little known thing that suddenly is getting a lot of ink so you know back in 1874 at the treaties burn the world establish this thing called the universal Postal Union later got rolled into the to be sort of a subsidiary of the United Nations and then the idea of this poster 3D was that every country you would agree to uniform rates for postal delivery so when you're in France and you want to mail something to Germany you could know in advance what the cost would be to mail that and the cost ought to be, the same for mailing between every country and each because that mail requires the, cooperation of at least two Postal Services the one that picked up the package from you and hands it to that that foreign country and then that terminal country that the country that gets it and has to deliver it. [44:11] They ate their handling of that package the treaty agreed on how those two postal entities would share the the rates for that shipment and they agreed that that the international shipments would get equal trip treatment with domestic shipment so if the. Is the terminating country you know couldn't for example deliver International Post much slower or less reliably or with West tracking are these kinds of things. [44:44] And so it sort of made it very easy and possible for 4 people all over the world to mail things to each other and know in advance how how much it was going to cost and have pretty good confidence that it was going to get delivered and then overtime this treaty added some other useful things they added some standards like a big stamp should be they added electronic data interchange so that the the Post Oak interchanges could be more efficient and they added some you know things to catch fraud and crime and and share databases and things like that so so we've all had benefited for a long time from the Disposable 3D it's got a hundred and ninety-three member countries in it now. [45:26] So if I feel like that's that's good for the world it's super important in a lot of e-commerce. Pretty good cross-border e-commerce still gets delivered via the post office so there's a lot of artists that make beautiful art here in the US and they sell it to people in Europe in the primary way they deliver that is. They mail it via post a post so the one sort of real challenge is, did there was a clause built into this postal treaty that essentially said developing nations, would get charged less terminal fees. And so what that essentially said is more developing poor or countries would not have to pay as much to have their their post delivered by richer countries and so if you're in one of these more developed countries you are obliged to accept packages at a lower cost from a developing country and if you lost money delivering that the way you would have to make up that money is by charging the people in your home Market. More for postage and like there's probably a good argument that that. [46:43] That mechanism for developing countries was probably fair and had some benefits and made it easier for more countries to participate in the treaty, one of those countries that was flagged as a developing country was China. And the treaty is super slow and it takes a long time to change like I think there's not a good argument that China should still be considered a developing economy for purposes of this treaty but but they were and so what that essentially meant is that a seller in China could sell something on Amazon to it to a buyer in the US and they could very cost-effectively, male that that good via post and frankly it was much cheaper to send something from Shanghai to San Francisco then it was to send something from Chicago to San Francisco and ironically that that seller in Chicago selling the San Francisco was having to pay a higher postal rate to subsidize that cheap delivery from that Chinese seller so treated this really unfair situation where Chinese sellers had a much lower cost of postal delivery for cross-border trade then did for example American companies and so a lot of people felt that was unfair and so now the Trump Administration is threatening to pull out of the treaty, because of that that fundamental unfairness which frankly totally agree is unfair the problem is. [48:13] If we do in fact pull out of the treaty. What that also means is that all those sellers in the US that want to ship via post anywhere else in the world can only do it if the United States negotiates a individual treaty with a country you want to ship your goods to sew. [48:30] That that potentially would mean we need a hundred and ninety-three postal trees that we have to negotiate one and one with each of these countries, many of those countries we don't have an ambassador with right now so I guess it would be a big Challenge and so while I think pulling out of the upu fixes this this. Fairness imbalance with China it's going to create a bunch of new headaches for people in the US that do cross-border trade and so what you know frankly the best out come here and what what I think a lot of his hope is the case is Milli by threatening to pull out of the upu we could put. Pressure on the the governing bodies of the upu to sort of fix this this China Gap to keep us in the treaty and so hopefully this is just some sabre-rattling it causes them to rethink the developing nation clause and we stay in the treaty but if we do pull out that'll be you no good news for some people that are competing with China but it'll be bad news for a bunch of other US base sellers. Scot: [49:32] One of the companies that seems potentially most impacted is wish so Bocas wishes Marketplace are Chinese sellers Supervalu oriented so they're not using FedEx or anything like that they are using the postal system and the wish founder was actually kind of saying to you earlier point about it is kind of ironic that. By raising the postal rates it actually kind of helps Amazon versus other retailers that this is another interesting kind of example actually oddly benefit Amazon because you know now there won't be the goods from wish that you're competing with Amazon isn't the middle sister where they bring products are from China on boats called Dragon Boat so it'll have to get a lot of their goods they skirt this this this just don't understand how that works correctly. Jason: [50:25] Yeah. You're exactly right and this is again the biggest sellers I actually have more options right and so even and I don't know how true this actually is Betty wish claims that hey this isn't going to be you know to join material to us because we are selling enough stuff from China to the US that we can be a cost-effective freight forwarder so we can put all those small packages on our on boats bring containers over here and then dump them in the US Postal System to be delivered domestically and not have international right and because we're a big seller we have enough volume to aggregate to do that where as you know smaller sellers wouldn't wouldn't have that option so remains to be seen whether which will be able to follow through on that if we pull out of the upu treaty but like certainly it's your point Amazon. [51:16] Already doing that and there was a I think Jason Delray did an interview with the CEO of wish and he had a funny comment like when the the Diplomat talk about pulling out of the UVU one of the reasons they say it is it's totally unfair the US Post Office is losing three hundred million dollars on. On postage as a result of this deal and the wish CEO offered to pay it and obviously like that's not the the total cost that's lost from from this this imbalance but it I thought it was a funny snide remark. Scot: [51:57] Hearing you describe it almost could be an eBay proxy on eBay benefits from a lot of this stuff too so it'll be interesting to watch that and then in the world that talk a lot about ePacket do you know what that is and if it's a fact about us. Jason: [52:12] Yep like so that is a specific postal product and it if I'm remembering right it's indexed to the upu rates but it's not actually governed by the upu rate so it would be possible for us to change the ePacket rates without pulling out of upu but it would require the US Post Office to change some of their their pricing policies and I think that might require a vote of Congress if I'm if I'm not mistaken so it's a a slightly special case but it basically is indexed to the rest of this problem. I'm so it's all it's all going to be interesting to watch like I never thought I would get a chance to talk so much about the nuances of international postage systems. I think my my father-in-law the stamp collector would really enjoy it. [53:09] And that's going to be a great place to wrap it because it's happen again we've used up all our a lot of time as always if we got anything wrong or are you have further questions or want to discuss anything from Today Show would love it if you jump on Facebook and leave us a comment will try to reply right away as always if you benefited from the show now would be a great time to jump over to iTunes and give us that 5-star review if you hate it today show Scott's a personal cell phone number will be in the show note so you can give him a call and let him know. Scot: [53:44] Absolutely look forward to hearing from everybody thanks for joining us everyone have a great week. Jason: [53:49] And until next time happy commercing.

EP148- Amazon 4-Star Retail Concept Store  Amazon 4-Star, Amazon’s latest brick and mortar retail concept, opened in the SOHO neighborhood of New York City on Thursday, September 27th. The premise that its assortment of merchandise available in the store is rated 4-star or higher, curated by customers, a top seller or is new and trending on Amazon.  Jason was on-hand for the grand opening and gives a first-hand account.   "What Competitors Are Missing About Amazon's New 4-Star Retail Concept" from Forbes. Overview of Amazons brick and mortar formats to date Description of the Amazon 4-Star Store Digital Fact Tags SoluM is the hardware provider  Checkout Experience Implications for other retailers Upcoming: Groceryshop October 28-31, Las Vegas Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 148 of the Jason & Scot show was recorded on Monday, October 1st, 2018. http://jasonandscot.com Join your hosts Jason "retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Transcript Jason: [0:25] Welcome to the Jason and Scott show this is episode 148 being recorded on Monday October 1st 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host, Scot Wingo. Scot: [0:41] Hey Jason welcome back Jason Scott shirtless nurse well it says you have a special treat for you this week we. Jeff Bezos says you know is one of our top listeners and he knew Jason was in New York last week and he thought that would be a good time to open an exciting new store the four-star store in Jason Our Lives always in a city on a new Amazon thing opens a reporter is going to give us a trip report today. Jason: [1:10] Yeah I know it's super excited to talk about a 4-star I'm sad because the last show we were together so now I'm having to get used to the the separation and doing it remotely against God. Scot: [1:23] I know I know well I'm sure we'll see each other next couple years. Jason: [1:27] I'm looking forward to it already. Scot: [1:29] Cool let's kick it off by so you know you and I fall asleep closely maybe not everyone else's is obsessed with the Amazon physical stores let's kick it off once you give us an overview of the different store formats that are out there. Jason: [1:49] Well so I think the first brick-and-mortar store than Amazon ever opened was probably the Amazon bookstore the original one in the University Center in in a suburb of Seattle. Now I want to say there are 17 or 18 of the book stores open. Instead of this is like the. They do Intex sell books they also sell Amazon Hardware in the store some of the key unique concepts of the store. [2:21] Amazon has Dynamic pricing their pricing on a line changes all the time they want to offer the same price in the store that they do online so the store has no price tag so you have to use the Amazon app and scan everything in the school or store. To learn what the price is when you make your purchases you get in line at a traditional cash wrap but instead of paying with a credit card you're highly encouraged to use, the Amazon mobile app to check out using your Amazon digital wallet so they have kind of a. To my way of thinking convoluted High friction. Checkout experience and I expect we'll talk about that more and there's a lot of speculation about the purpose of those book stores. It it seems unlikely to me personally that that Amazon has identified the dead tree book category is a category where they desperately have to get more market share than they were getting online and so they open. Book stores because they thought that that was the category the world needed more of my my promise has always been, that Amazon has these really successful Hardware products like the Echo and the fire and the day recognizes that they needed a demo environment in a customer service environment for those and that the the books were kind of. The decoration around the Amazon Echo Store if you will. Scot: [3:50] And then what other formats are there out there. Jason: [3:55] So a couple formats cropped up after that. Amazon head-to-head Amazon Fresh for a while and today you want a couple of these Amazon Fresh pick up locations in Seattle so these were, places where you can order your groceries from Amazon Fresh and instead having them delivered you could drive through almost like a bank teller. I drive through bank to our kind of situation and they would put your groceries right in your trunk, they're very fast service level so you can get your groceries delivered like 30 minutes after you place the order these two stores. Open shortly before Amazon bought Whole Foods so this at one point was there. That you know what like the tip of their Spear of their brick-and-mortar grocery strategy and then of course they, they are upset the industry by actually buying a brick-and-mortar grocer. So they they have of course they have the Whole Food stores is another Amazon format and they, they made a lot of progress in digitalizing I think I just joined a new version of that were there. [5:03] The grocery store so prior to the acquisition you could not find out what Whole Food carried in the individual store you cannot see inventory now you can shop the whole inventory of all the Whole Food store, they've added a ton of omni-channel feature so you know Whole Foods delivers. In many markets they have curbside pickup I would very fast service levels in in mini markets they've integrated Amazon Prime into the Whole Foods experience so you you get discounts on product of your Prime member and you are now using, your mobile app in your barcode to get that Prime discount when you checkout at the front Whole Food store so Whole Foods is there only one of those Concepts and then. [5:47] Inside of many of the Whole Foods Amazon has a hardware pop-up shop and so there now 37 or 38 of these Amazon pop-up switch is a, format you know. Dedicated to the Amazon Hardware so that's mainly Echo fire ring, antonym of amazonbasics products and as we know that those are all expanding lines they're adding new skis used some of these pop-ups are not in Whole Food stores, and then not included in that count Amazon has also done a shop and shop inside of a bunch of Best Buy stores that has a lot of these physical things, so those are is far as I can remember where the main, Amazon brick-and-mortar formats leading up to this this new Amazon 4-star store that just opened in the Soho neighborhood in in Manhattan. Scot: [6:43] Cool so it's good over you so give us an idea of what. What it's like when you walk in this thing one thing I saw online a lot of people are not questioning the name for Star it's almost kind of like why not just have five-star stuff so I would love to hear your thoughts on that and then you walk in and give us a lay of the land is a categorical or some people say it's a bunch of random stuff I would never buy just kind of all jostle together I love to hear your kind of like a little tour of what you saw there. Jason: [7:16] Yeah they got some merchandising is currently in the eye of the beholder we haven't explained it to her listeners the concept behind the four star store is that everything in the store has earned four stars or more on the Amazon platform, or is a hot seller or is a new and trending products, so it's essentially it's their taking these products that are doing really well on the Amazon e-commerce platform and putting them in a physical store format and so yeah you know. Haven't given a lot of thought to the name the. You know you're right like it's open a misinterpretation that it's tough that's rated for not five-star it if it really is meant to be four star and above. In many of the products in their likely aren't 4-star because they're their new new trending products as well so so the. The merchandise in the store is a little broader than the name might imply it's a 4000 square foot store which of the similar footprint to the book stores, and the physical fixturing in the store in the signage in the graphic elements are all very similar to the bookstore so if you shopped a bookstore the. The visual merchandising in the the four-star store with feel very similar to you. [8:42] There there's One Merchandising element that's dramatically different and we'll get to that in just a minute but the main thing that would feel different about the four star store from the book stores is. [8:54] Quite simply the merchandising assortment that is in the stores and in fact you actually can see some of the. [9:03] The Fingerprints of this store in the earlier book stores so in the book stores. At some of the unique gondolas they had four books is they would have a gondola just for books that were rated 4.8 stars or above, at the time that was a novel concept that that you know that they had a merchandising display unit dedicated to well-reviewed products and then they also had a gondola for stuff that was rated 4.6 stars and above, my New Yorkers for the store in New York so they had Us store that had you know that was very sensitive to. Well reviewed products from other people in the same Market is you and so in a way you can almost think of this door as taking those couple of innovative displays out of the book stores and turning them into a, a whole brick and mortar store there is very very clear wayfinding so the. You like that the signs for the categories of products are pretty clear and in so you both have sort of tables that have things like, new and trending products you would we have a category for like, products at 10 to get purchased together you have a table for things that are hot in Manhattan you have those kinds of. Of curated assortments based on on on ratings and reviews and user-generated content. [10:30] On tables in the middle of the store in the most of the walls of the store are little micro categories so pet products or travel products or kids products, and then there's a couple big category so they're their there are tables that are dedicated and labeled as Amazon product separately there's a home automation section, there's a fire section, there's a big section in the middle of the store that I'm pretty sure is a vendor funded display that's for the the the iRobot. [11:10] Artificial intelligence vacuum cleaners. And so you have a bunch of these categories and I think it's toy fair to the unit people that walk in and say hey it feels a little hodge-podge G disorienting. To me what that is is you got a. A category of pet products sitting next to a category of travel products right and you you know there's there's not necessarily. In an obvious association between those two categories and yet they're their merchandise adjacent lie in the store. I'm not sure if I mentioned it earlier but they're even tables for things like amazonbasics cookware for exam. So that the assortment can feel a little. [11:58] Random the or or you know there's some objects of positions of the assortment but in a way that's one of the things that's interesting to me about the store, you know ink increasingly we talk about stores like Amazon's website as being the. [12:15] You know the absolute winner at things like a sort mint and convenience and priced and so we talk a lot about you know the best play for a lot of other retailers is to be at the other end of that spectrum mbn that sort of. Accuration in Discovery into the Spectrum where you you know you you could be surprised and delighted to discover some new product that you didn't even know you wanted, did the retailer help you find and none of the previous Amazon Concepts were really very good at Discovery and certainly Amazon's website you know has not been successful at Discovery, yeah they've done the number of Pilots including one we talked about last week the the Amazon Scout experience to try to get better Discovery but that's always, been sort of a a gap for Amazon and it's it's been one of the. The plays you seen a lot of other retailers do to try to compete against Amazon and so now you have this new store format that I do think, has a strong element of surprise and Delight but if you went in there to shop for Amazon products if you went in there to see the new echo or to see the the the microwave oven which side note it's not in the store yet. [13:28] You you would discover some other products that are highly rated that a bunch of people are buying on Amazon that you probably didn't know existed and said there is that kind of fun element of surprise and because it's a broad assortment a lot of people point it out like you know it's a pretty it's a particularly good assortment if for example your shopping for a gift for someone because there's a wide variety of different things for people with different tastes. Scot: [13:54] Coop's what, we'll see where this was the biggest swell a lot of people in New York love that store called story that you know, Angels kind of every quarter that has a theme of the tend to be seasonal like around. X day it'll be love and home Macy's acquired that I believe and then that's a store that's like really just focused on Discovery and then we've had beta on the show where is really around device Discovery at what time is the Apple Store you can have that time. How would you kind of rate this and that Spectre mode stores oriented towards discovery. Jason: [14:37] So it is much closer to the, the sort of beta end of the Spectrum in in fact I would in some ways that share some common strengths and challenges with the beta format right so you know like Bay that you're your apps to discover some new stuff when you walk in that store that you didn't know existed and that's great but will I get beta, there probably aren't a lot of customers that have a particular product in mind. And then are going to go to the beta store to fulfill that particular product right so you know to me one of the challenges with the beta format is it's very strong if you just want to discover something you didn't know existed but it's it doesn't you know, do particularly well as a destination for products I already know I need. [15:25] Into what's interesting about this Amazon 4-star is it does have a little bit of both like a view new that you're all your friends were talking about Echo and you finally want to jump in and buy an echo or do you already have an echo and you want to learn about more home automation products that you can integrate with your Echo, this store is going to be your destination they have the broadest assortment they have in staff Nina in-store people that are trained to teach you they're doing in-store demos and things like that and so it is your demo for Amazon products and then you're going to have that beta style Discovery experience, around the Amazon products so in that way it's a little bit better of a blend you did you mention story Into Me story also is a very much a discovery experience but it's a much more, carefully curated Discovery experience so. [16:20] Everything in story is going to fit into a single theme in that theme is going to change every couple of months or every story is they call it right so you know if it's a, a local food base theme all the products in the store are going to be related to local food and how to prepare it and shop for it and buy it, until there is a cohesive theme and you know the the cohesive team in beta is sort of tech gadgets if you will, then you know that there really isn't as much of a cohesive theme in this Amazon store it's more of the decoration bye bye rating, plus all the Amazon products but I do think. [17:03] This is going to end up being a destination store that's a mission for people that decide they want to buy Amazon products if you want to see that microwave oven before you buy one, I think this door is clearly going to be your destination if you if you live in the New York area and then it is going to be. Another store in a popular shopping district in SoHo that people just want to go into brass and see what's new in hip and they're going to expect to see fun new stuff every time they walk in the store and compare that for example to the, the world's most successful retail concept Apple, like I would argue that there's very little fun surprise when you walk into an Apple Store I mean you know when they first want to take care of a lot of third-party product but as they have launched more of their own products they really. Apple is really narrow the assortment to just stuff they sell and when they you know bought beats they said they didn't want to sell other people's headphones very much and so, in general all the products in that Apple Store are Apple products and they change at best once a year and so you're really surprised when you walk into an Apple store that you're going to be able to walk into this Amazon store you know it certainly every couple of weeks and in discover some new stuff so that's an interesting play for Amazon. Scot: [18:18] Go see you're getting you got the vibe they're going to be changing this products pretty frequently like where they like running around like oh my God this is now below for stars and here's the new thing in this is hot and turned in her. Jason: [18:29] Yeah I definitely don't get the sense that is going to be real time but I think they are committed to two very frequent product refreshes and that certainly is one of the things wall, will want to watch. [18:41] The I hinted up front that there's that the merchandising mostly feels exactly like the Amazon bookstore but there is one dramatic difference between, the book stores in this door and that is that this door. Uses digital displays are what we call Electronic shelf labels or sometimes they're called electronic fact tags. In front of every product in the store so there's a little e ink display in front of every product and what that lets the the Amazon 4-star, store do is it let that store show that Dynamic price in at that price changes throughout the day, the prices updated on that on that ticket in real time and of course in addition to having a price on that ticket they also show the average star rating and the number of reviews that every product has got it has and so since all of those things are kind of real time and can be changing on the website all the time, it makes sense that they went to a digital display in the store so that you get that updated information so it's not so much, but they're changing products out every single day but at the very least they're updating all that information about the products every single you know our, and then interchanging out the products fairly frequently. Scot: [20:02] Is it you know when you say this I imagine like a little candle kind of cut to fit on the Shelf is like is it an Amazon product they've made for this or is it a third party. Jason: [20:14] It is not it's a third-party product so there's a. Vibrant competition out there for these fat tags some other retailers use them Whole Foods interesting enough was an early adopter they use them in some categories like the beer category. Kohl's has deployed them pretty much everywhere in New York City there's a very popular photography store. That's a e-commerce site to the rest of the country which is called B&H Photo and they use all these fact tags the in many states, if the price of the cash register is different than the price on the Shelf the Retard gets fined and so one of the reasons that a retailer might want these electronic fact tags is to guarantee that the cash register price is always. To the shelves into a lot of retailers particular in Europe have deployed this technology just to protect themselves from that kind of Regulation, I'm in consumer protection laws but increasingly we're seeing that you can also use these digital fact tags to give customers a better experience and if you're someone that's going to change prices frequently. Frank Zappa Warren Buffett owns a store in Nebraska called that are in Omaha, Nebraska Furniture Mart. [21:27] They they sell a it's a huge Furniture campus but they have a 50000 square foot consumer electronics store that's kind of like a Best Buy in it, and that store spreads all their competitors prices every morning and they update the price on everything in the store to be lower than any competitor and they do that using these digital fact tag, so we're trying to see him, yeah it is a display technology that's very similar to the Kindle and I did do a little spelunking when I was in the store and and their particular solution comes from this this Bender called, so um I'll put a link to to their products in the in the show notes but it's s o l u - m.com. And you know typically all these vendors make a wide variety of sizes they have some color capabilities so you can add Getty ink in like three colors, but mostly what Amazon's using our bar kind of the least expensive products in the in the line so they're the two smallest format tags than Amazon's using and they're just black and white. These things are run on a battery they clip to a shelf just like a paper sign would. [22:38] Store updates prices on a server that talks to all of them you use a mobile phone with Wi-Fi to update pricing, and then there's a zigbee server which is a flavor Bluetooth that used to actually update all the all the individuals back tags in the store. Scot: [22:58] White so I have been in an Amazon bookstore and their you kind of used app why do you think they're using this instead of the app based approach. Jason: [23:07] Two reasons number one like I would if you actually go back to our bookstore first first show I suggested back then that I was surprised Amazon wasn't using electronic fat tags in the bookstore because I felt like forcing customers to use the app is a. High friction experienced some customers will do it some won't but it's slower and you know customers shot the store they don't have the app and so, I was kind of surprised they didn't have fat tag Justice all the pricing problem but now in this poor starving store they've doubled the problem because they had that they have the dynamic pricing problem but now they have the problem of showing you what the ratings and reviews are like that's the whole premise of the store and so they can't get that social proof available for every product than that's you know, it's hard to deliver on the on the promise of the store and so I think they needed the fact tag to have the real time updates of the of the the star rating, and the dynamic pricing and so you know I think that that's kind of cool I'll bet you we don't see any new book stores open that don't have these, these these tags in them and I'll bet you if if Amazon does deploy this this format a little more broadly that it's another nudge to a lot of other retailers because once you, have the ability to see the star rating in the store for a product. [24:31] You really want that everywhere and you you certainly want that at Target and Walmart and you know once once the expectations are raised that you can easily get that like I think a lot of other retailers are going to have to. Have to match that capability and are least I certainly hope so. Scot: [24:46] Cold out how often do these things update like when you're in the store did you see them updating or you think it's like that once a day thing or. Jason: [24:52] So I didn't I didn't see any updating I didn't have the patience to stay the same United change a review and see it see a change I pray I should have done that in hindsight in my mind I I know if I'm working with these tags that it's totally viable to change the price multiple times a day so I just imagine that they're probably refreshing the tags every hour or every, couple hours in the stores you don't want to constantly refresh him cuz they are running on a battery and so for example if you. If you updated every 10 minutes or something that you know that the batteries would would last considerably last time. These tags actually don't use any power when they're not being updated so one of the benefits of the E tank is it needs electricity to change but once it changes. It doesn't take any power to two. Keep its display State and so then when there's igby goes to sleep you basically have a tag that's that's electric but isn't isn't drying any power from the battery which is pretty clever. Scot: [25:54] I kind of believe V Amazon 6S for mandevilla themselves cuz they've got all the underlying technology and. Jason: [25:59] I'll be totally honest. Yeah I'm familiar with the number of these tag manufacturers I was not familiar with this particular manufacturer and I was somewhat surprised when I you know climbed underneath that is playing was looking at the back of these things to see the day they were a third-party product I tend to agree with you I can feels like something, you think Amazon would have engineered and then maybe potentially sold the other people. Scot: [26:26] Did you get arrested. Jason: [26:28] I did not get arrested. Scot: [26:31] Did you get caution to the work of the lake sir sir get down from that ladder. Jason: [26:36] I feel like I have this whole skillset about being really slick and smooth and retail stores and and you ain't getting a little another Eyes Photography and stuff and it's mostly wasted skill now because in the old days, they tried to catch you and they really frown on that like now like every single person in the store is taking pictures for Instagram and what not and so. If you like being stealthy is a is a valued skill in the stores I will say One Missed opportunity I was really happy to see the digital fact tags he missed opportunity is what you can also do on those digital fat tags is you can throw an NFC chip, inside of the fact tag. In effect this manufacturer even offers that as an option and so is we we covered last week the newest Apple products can now read NFC chips with in the background and so what that would mean is. [27:33] You shop this door you see the price you see the number of ratings and reviews and you could take any Android or any brand new Apple phone and just wave it in front of the price tag and it could open the Amazon for the detail page and let you actually read the reviews for example and so to me that would have been a nice link, to the customers mobile device for the people that want to do a deeper dive or at the very least Amazon owns their own 2D barcode technology called smile codes you would have expected, there to be a smile code you can scan for each of these products in at least so far they they have not gone that way so maybe that will be there next door concept is though, the lad smile codes in the NFC chips to the to the digital Factory. Scot: [28:17] Someone told me on the tag anyone can shop in there but it will actually highlight if there's a prime discount so there's certain things that were either Prime exclusives our heads exclusive Prime discounts did you see that. Jason: [28:29] Yeah I did not notice any Prime exclusive but I did notice product that had a prime discount and so then the tag use this kind of is was format and said they say like with price. You know 1999 Prime price 1599 or whatever. So you could see that that you know and they they this store like I got you know I didn't count how many skus are in the store but like it it, it would not Shock me if 40 or 50% of all the shoes in the store are Amazon products between Echoes Kindles fires. Amazonbasics you could easily imagine that have two products in the store Amazon Prada. Scot: [29:15] Sagittarius fortune.com. Jason: [29:17] You you may yeah usually I have a muted for podcast but because we did a special episode tonight I decided to leave her on and she's punishing me for it. Scot: [29:25] What else can you highlight about about the storks prankster. Jason: [29:34] So the instapot was prominently featured I know that's a super product Everyone likes to talk about the. They did have some digital displays for some of the Amazon product so. Particularly for like the the ring doorbell displays they they had a button you can push that was built into the table and they are like a 20-inch monitor built into the table and they played a video sort of. A demonstrating the the the ring value proposition to customers and said that you know these were these richer interactive tables most of the Amazon products. Out and available for customers to try and use and then tried to set up good demo environment for all these products. This is all live merchandise so all the Amazon or non Amazon products if you wanted to buy something you you grabbed it on the Shelf there's an inventory on the shelf and you will you walk to the cash register and and buy it yourself. The. [30:37] You know so in general I walked in that store and I might go out you know this is a more fun store to shop then any of the previous Amazon Concepts I've been in pain so I thought that was really favorable and I actually think. The idea of merchandising the store based on customer social proof is really smart and I think it's very smart for two reasons. Does ratings and reviews it become like the most persuasive attribute in selling stuff online and and you know there's a lot of studies that each other like 2nd or 3rd behind price as the, the primary attribute to customers care about Amanda cases they're more important attribute than the brand name. Anythink gosh all those ratings reviews are ubiquitous available online they're not available in any brick-and-mortar format right and so who's the first retailer to figure out how to leverage ratings and reviews in a brick-and-mortar store. [31:30] What a surprise it's Amazon I think that's really smart I think a bunch of other retailers are going to. Have to move in that direction and we've also talked on the show a lot about this trend of moving away from. Sort of intuition bass merchandising to data-driven merchandising right in historically, you know if you were opening a store that was going to cater to gift-buying you'd hire some Merchant and they would you know be responsible before deciding what Pool Products They Carried and they would use their own intuition, and if they did go to, new product trade shows and they look at stuff and they say I want that bad in that and I don't want that bad in that and it would be entirely based on their own previous experience and intuition, I'm increasingly we see some of the really successful online retailers like Amazon and Stitch fix. [32:20] Replacing those merchants and their intuition with data scientists and their evidence and so you know now you got an example of a brick-and-mortar store that's largely curated. Based on data in this case review data rather than the intuition of a merchant and so you know again, traditional retailers probably look at that and look down their nose at it but I think it's the direction that retail is going in and it's not not wholly surprising that that Amazon is. Pushing pushing the world in that direction more so than then you know we need traditional retailers currently. Scot: [32:58] Calypso summarized by give us like a couple things you loved in a couple things you hated and then what do you think this means for the future of retail. Jason: [33:08] Favorite things like I think the overall concept of of merchandising based on social proof, I really loved I loved some of the the clever cross merchandising categories like you know things that are frequently bought to be together like that's that's not a. Merchandising approach you I've ever seen in a in a physical store before so I I liked some of those obviously I really like. The electronic bag tags in and letting customer see you live ratings and reviews in the store, and I I love the the surprise and does Dwight element in the fact that you don't know in advance everything that's going to be in that store and you might might discover something new so to me those were all the, the big wins the thing I hated is, that the checkout experience as far as I'm concerned totally sucks and I think I think they totally missed it it it is the same checkout experience at the bookstore but I didn't like it in the bookstore and now I think it's even more acute, in the store where they have a higher velocity of purchases and more skus so. You get to the front of that line and the clerk wants you to open up your Amazon app. And go to a bar code reader in the Amazon app and scan a barcode that the clerk has at the point-of-sale counter so the first problem is. [34:29] You may not have the Amazon app installed. If you do have it installed you didn't need Wi-Fi or cellular connectivity which they were actually having problems with cellular connectivity in this store. If you're both of those then you have to be smart enough to know that the way you check out is by clicking the camera icon in the app which is totally unintuitive. That's arguably the most stupid thing I've seen since Amazon since Windows put shutdown on the start button. [34:57] So I got to click the camera I get the barcode reader I scan the barcode that Amazon provides me and then that generates a new barcode on my phone that then the cork has to scan so it's a handshake the barcodes. Which is. There's some potential security arguments in favor of it but it's really convoluted in high-friction and it just watching people check out it felt like I was sitting in line in The Genius Bar watching, watching the Apple Genius you know folks trying to help people with problems on their smartphone and they were having to do like tech support for every customer to help them check out. And you know I found myself just saying like geez can't you guys just use the. The barcode reader in and swipes on credit cards here cuz it would be much faster and more pain less than this was an. You know that the huge huge irony of course is that the Amazons store format that gets all the buzz, is Amazon go in the whole value prop the whole premise of Amazon go is, we make it really easy to check out and so then they had this other really interesting format and Amazon for star and the one thing that they get wildly wrong as it's the world's hardest or to pan so I guess that's. That's a room for improvement for Amazon. Scot: [36:12] And what so you luck the checkout what's this mean for the future of retail. Jason: [36:21] Yeah so remains to be seen whether you know this is something that Amazon's experimenting with where it's you know there's a way to look at this and say, this actually is just an evolution of the bookstore that you know I opened up by saying that my own personal theory is that the book stores are really about selling in Deming demonstrating Amazon devices and in the same way Apple had to open their own store stat to increase their, their market share with their products and you know we see bows and a lot of other people have their own stores to tell their own product stories. Amazon need their own stories to tell their product stories and this is just a. AA higher-margin more interesting version of of what they launched with the bookstore and so that's true it wouldn't be surprising at all to see if we of a few hundred of these. The stores you know in in in some. Of time and if that happens then I think a lot of the best practices with his from the store are going to become consumer expectations that a lot of other stores are going to have to match, if it just stays as a novelty in New York you know I think it's it's something that the. The retail Talking Heads like you and I will talk about but you know it won't necessarily. By itself Drive new customer expectations and therefore Force other retailers to evolve. Scot: [37:45] I am, I forgot twinsies did you get any vibe that it's I've been down to Soho there's a lot of popups like down there and that it's pop-up or did it feel permanent did anyone talk about that. Jason: [38:00] Nope not today very explicitly said that this is a permanent store and not going to be a papa but you are right like there's a lot of similar stores. In that neighborhood that are sort of medium ish turn pop-ups that might be there for 3 or 4 months. Google opens a store over Holiday Inn in a very similar space. But this this feels like a permanent one in again like there's a few bucks or they're under construction so they may may be very similar to the ones were familiar with better that you know the next book store do they plan it open. Yeah I won't be surprised if they're four star stores instead of bookstores or or you know a closer blend between the two like this just feels like Amazon evolving their own format for merchandising their own products and I think there's a, a lot of logic in in Amazon doing that. Scot: [38:52] Yeah and you know relentlessly analytical so I'm sure they're taking those you know that 4000 square foot is split up into sections and they know the revenue per square foot per day, etcetera and I bet they'll have that as an input into your comparing this format versus all the other ones and and their it feels like they're iterating towards something that you know is an optimal store. Jason: [39:18] Oh for sure and I'm sure part of the reason they're so adamant about getting you to check out with the App instead of a credit card is for that analytics right when you check out with that app they're they're able to associate you and all the shopping you did in that store and what you bought and what you didn't buy with your Amazon account and all your history and so you know I expected the did they're taking it very hard look at that data and that's part of the reason that you're highly discouraged from from using an anonymous credit card when you check out there. Scot: [39:49] Did you see any instrumentation like her cameras or anything that could be you know kind of go like technology at least kind of seeing which part of the store you went to or anything like that. Jason: [39:59] Nope they have some and I wish I would have needed a ladder to find out the vendor but they have traditional, retail traffic monitors in the store and not just in the front of the store so to your point like they're probably able to do heat map to the whole store but these are like. Mortified webcams in a in a security case and so they are great for understanding traffic and dwell times and things like that, but they weren't near dense enough to resemble the sort of Amazon go Style, attract everyone's face you know perfectly throughout the store and the store doesn't fact have a public bathroom which is one of the things we talked about you you can't do in a ghost or if you're trying to track the customer perfectly at all. Scot: [40:43] Last question did you find anything exciting that you bought. Jason: [40:47] Well so I did I was traveling and I too I try to travel light and so I couldn't buy anything big but in all these new store formats in the go store and then again in His Four Star format they had some branded merchandise and so I've been buying the permanent shopping bags from all the different store formats and they have. This sucks steel water bottle with Amazon graphics on it and the name of the store and so you know now I have one from. Go and and four star so I feel like I'm starting an Amazon brick and mortar retail collection. Scot: [41:24] Rick will have to put those in the show knots loves you. Jason: [41:27] Got it I wasn't happily upload some pictures. But Scott that's probably going to be a good place to end this Amazon 4-star special edition of the Jason and Scott show as always if people have questions we didn't cover or you finally disagree with anything that we said on the show we'd love to hear from you on Facebook if this is the show that that finally pushed you over the edge take the extra 30 seconds to jump on the iTunes give us that four star review or five star review either way it would get us in the Amazon store so, we would certainly appreciate that in a special shout-out to all our new Spotify listeners this is the first episode going live, on to Spotify along with all the other podcast formats that we've always supported so happy to have the team Spotify in the the Jason and Scott show Family. [42:23] Until next time happy commercing.

EP147- Industry News, Amazon, Apple, Recode, Shop.org, and holiday forecasts  It's a news-a-palooza this week including including Amazon, Apple, Recode, Shop.org, and holiday forecasts and more.  Scot and I get together in person in Chicago to discuss all the news an implications. Amazon News Amazon Go opens in Chicago and Jason has a trip report Bloomberg reports Amazon may have plans to open 3000 Amazon-Go stores Amazon Storefronts is a new feature for small businesses to curate collections Amazon has launched a new AI based visual discovery tool, Amazon Scout SnapChat and Amazon have partnered on a new social shopping experience, using visual search Amazon launched 14 new Echo devices Amazon and Good Housekeeping partner on Mall of America Pop-Up Apple News Iphones ship with new commerce features Background NFC Scanning Native QR Scanning Augmented Reality in web-browser via ARKit 2.0 Other News Holiday forecasts are beginning to come in Deloitte: 17-22% ($128b-$134b) (19.5% midpoint) Internet Retailer 15.5% ($120b) Forrester (preliminary) forecast 14-16% Adobe acquires Marketo Farfetch (luxury e-commerce marketplace) has successful IPO Event Recaps Code Commerce in New York.  All the interviews are available on YouTube (thanks to @DelRey) Shop.org in Las Vegas. Interesting new vendors: Seek - Augmented Reality in Mobile Browser hosted solution for retailers/brands. Hero - Connecting online shoppers live with associates in the physical store. Upcoming: Groceryshop October 28-31, Las Vegas Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 147 of the Jason & Scot show was recorded on Monday, September 24th, 2018. http://jasonandscot.com Join your hosts Jason "retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Transcript Jason: [0:25] Welcome to the Jason and Scott show this is episode 147 being recorded on Monday September 24th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scot Wingo. Scot: [0:41] Hey Jason welcome back Jason Scott show listeners for long-time blisters you may detect something different in the audio today. Jason and I are actually physically in the same room together this only happens about, maybe one in 10 episodes maybe one in 20 but I am in Chicago for the B2B show called B2B next that started this evening and then is ramping up tomorrow and I'm giving a talk about, winning the away game for B2B companies and Jason lives in Chicago even though he rarely is here so it was fortunate we were in the same city at the same time. Jason: [1:15] It's super fortunate I'm just finding out now that you didn't exclusively come to Chicago to see me so I'm a little hurt but I am thrilled for your company and companionship none the less. Scot: [1:27] Yeah I can Chicago to see you... And do a quick cake. Jason: [1:31] Yeah I mean I feel like if I knew Scott wing it was coming to Chicago I would throw a trade show just to get you to do it. Scot: [1:37] That's thank you I appreciate it we should do a Jason Scottrade shift I'll be our next one of our 2020 goals. Jason: [1:45] Yeah if you're any of our friends in the trade show industry don't worry Scott's just joking. Scot: [1:49] Will have peanut butter and jelly sandwiches it'll be within the range of 6 Starbucks. Jason: [1:58] I like that last part a lot. Scot: [2:00] Call somebody excited to be here because there's an Amazon go store and I am going to stop by tomorrow morning if it's not raining but I heard you have already been. Jason: [2:10] I have indeed I've been super excited to touch you because I feel like this, week is just busting with exciting e-commerce news that Amazon go store actually opened last week, and I was out of town so some of that Amazon go stores are in locations that are open 7 days a week this particular one, is in a busy downtown area during the week that's kind of dead on the weekend so the store wasn't open over the weekend so today was my first chance. To go shopping and compare and contrast it to the Seattle locations. Scot: [2:47] Brickell what were the the pros the cons the differences the similarities. Jason: [2:52] So I have a feeling most Shoppers would feel that they were very similar to the Seattle one is a reminder just walked out technology you have to use an app. Scot: [3:04] JJ Watt hashtag JJ Watt. Jason: [3:05] #Jay Watts you have to use an app to get in the store you cameras watch you throughout the store you grab all your purchases at this convenience store format, and then you just walk out and Amazon automatically charges your account for your purchase at so that's the original promised the first store in Seattle had a very visible, kitchen until like the majority of items they sold we're actually not National brand food products they were. [3:34] Sandwiches and in meal kits that were made on site on the premise. And they also in that original store later got a liquor license and started selling alcohol, they open the second location in Seattle that did not have a kitchen and I and many others assume they use the one kitchen as sort of a hub-and-spoke and deliver food to, go shuttle locations from that kitchen so I was really curious to see what they do in Chicago when they open their first store and once again there is not a public kitchen so either they have. A private kitchen somewhere else in Chicago and they're delivering the meals in or, and I did seem slightly farfetch but they're delivering the meals from out of town, and restocking on the I was kind of curious if they had the date that they were made on the sandwiches and they they have the date their best consumed by. Which most of the sandwiches that were available when I was in the store where best consumed today so. Scot: [4:36] You could fly them in on that Fleet of Amazon Prime planes. Jason: [4:40] It's always remotely possible and since the store just hoping you can imagine there's a kitchen coming somewhere else that isn't live yet or maybe it already is why there's no there's no I could have been his one way or another store has more. Gondolas in the original store so there's more aisles in the store which since they're watching you with a bunch of cameras in the roof I imagine the aisles are a little harder to do because they potentially block lines of sight. It has two entrances. [5:12] So that adds a little bit of complication you walk through kind of a Subway style turnstile and scan a QR code on your Amazon Go app, to get into the store in the very first or when you were running the app and you grabbed purchases you could kind of see on the app I running, shopping cart you could see what Amazon thought you had it when you put something back you could see it disappear in real time from your cart. In this store and I did two shopping trips you don't get any real time does ability to what you're taking you walk out of the store and frankly the second you walk out it's not clear. If you been charged at all and then a minute later this receipt pops up that says pending and then about 3 or 4 minutes later, you get an itemized receipt that shows you what you charged and I don't know why the difference but I bet the. The scenario here seems a little problematic you could potentially being a cab on your way away from the store and find out you were. You are Miss charge for something. Scot: [6:14] Sounds like human intervention in there this is one reason I can think of you to have a pause like that you know of some kind of Mechanical Turk like check that's going on somewhere. Jason: [6:24] Potentially it the original store, they actually have Windows and you can see a video observation area where a bunch of guys in red shirts are watching video and this was like, even when I was an employee only mode none of that is visible in the store now that doesn't mean it's not there it just means they they didn't choose to build a. A window in that first or is in an Amazon owned building so you imagine, it's cheaper and easier for them to do exterior things where they're just a tenant in a in an office building. In the Chicago store so unclear they have an army of people watching I did two purchases and both were accurate, I bought a web we just walk out technology technology coffee mug for my wife some Amazon go. Scot: [7:15] You're hopeless. Jason: [7:16] I am I am Amazon go chocolate for for Stephen and I got the beam on a sandwich because, we heard that's the number one skew and I thought this would be a super exciting gourmet sandwich and Jeff if you're listening the sandwich wasn't that good I was so disappointed. Scot: [7:34] Too much Mayo not enough a Sprouts what what was off. Jason: [7:37] The bread to be my ratio I thought was way off it was way too much bread for two little feeling. Scot: [7:44] It's interesting that there's been a fair amount of traffic on Twitter around people that have gone to the store and initial reaction is oh I'm not worried about grocery stores I'm worried about 7-Eleven. At is a kind of what you think through this. Jason: [8:00] So I think there's two categories that are potentially at risk one is 7-Eleven or just hit more generically non gasoline convenience store so it turns out, that 80% of convenience stores sell gas and that's a special reason to go there that the Amazon go doesn't have so it is a competitor for those doors, but. Those those kind of sore tennis sell a bunch of prepackaged food in National Brands and there's a little bit of that in this store so there's National brand drinks and there's a few different varieties of chips but the assortment. Bike is probably like more Amazon made stuff it probably feels slightly fresher and more healthy than. Scot: [8:45] It sounds like an old Bon Pain or those are called or a Marks & Spencer in the UK where they're saying yeah kind of. Jason: [8:50] So I was actually going to say like a pretty amazed you or maybe sort of grab-and-go pre-made sandwiches like. Scot: [9:00] Where I'm from we call it pret a Manger you get the fancy French talk. Jason: [9:04] I work for a French company so I've learned like for French words and you just heard 3. The other ones not suitable for our general audience podcast in some ways. It feels like the primary use case for this store is, office workers grabbing lunch and not being gone from their desk that long and so you can imagine that that was the original problem that Jeff was trying to stuff for was getting Amazon employees back to work quicker, and yes I could be the Subway sandwich that this is more a threat to. Scot: [9:39] Yeah one of the writers so internet retailer is here in the city and one of the writers was saying in Chicago it is a huge problem to go out for lunch and his it's a four minute longer walk to the Amazon go store but it took him 2 minutes to get in and out and all the other places he walked by we're at the 30 minute wait so it is you know we've had arguments with some folks on Twitter that talk about, it's not really convenience and then one of the things I think long-term they're going for is there going to be less labor a better one that goes to one says it's got like three times the labor of any other store they've ever been in. How to get Amazon's just Staffing that early days to get people, trained and download the app to help kind of jump start it but I think long-term I think the labor will be very low on these. Jason: [10:27] Yeah I think you're right like the you are out customers are definitely outnumbered by Amazon employees at the moment. That's because there's some new things that customers are having to be taught and so you know we we were talking earlier it's it's someone analogous to an ATM machines first launched and Banks would staff a human to stand next to the ATM and teach you why in the short run that that didn't make sense why why. Put a person next to the machine trying to replace a person but once I want to learn how to use ATM machines they were able to get rid of those trainers in the airline's did something very similar with, electronic boarding passes where they had a lot of help initially so at the moment. They remove the friction of standing in line to pay but they had this new friction of having to download an app before you can even get in the darn store so that a lot of people standing outside the store in the rain, helping you install your your app now luckily Amazon's from Seattle so that people are familiar with standing in the rain, presumably they imagine a future when everyone already have the app install the and or it'll become more familiar and so they won't they won't need all that labor to explain everything to everybody. Scot: [11:42] Brickell and then last week you were at shop.org which unfortunate had to miss due to some hurricane issues but give us a little trip report from shop.org what was interesting there it was in Las Vegas this year your favorite City. Jason: [11:56] Sorry one other thing I forgot to mention on the Amazon go they just want to ride their super quick they did add alcohol to the Seattle store and there's been a lot of talk that's another, friction point because now you have to have another human you know you're supposed to just be able to walk out when you're done but now you have to have a human when you're walking out they can check your ID, and Zoe you know we talked about the pros and cons of that this store does not have alcohol so that that may have been some decision or maybe that it takes longer to get a liquor license. Scot: [12:28] This may seem unrelated but in my city of Raleigh we were a Goldilocks City for a lot of different things because we have just like a million million at people Ivory digital City and all that good stuff we have all of the different kind of Transportation model so we have all the lime bikes the birds and all that stuff I've tried all of them and what's interesting is they all have, if you're over 18 to use this and I'll have a driver license scanning mode where else can the front, Idaho Ciara and they scan the back and they're saving that data as you saying I am over this age I don't think that works for alcohol but, I kind of think there could be some way to do that and you have to work with the local alcohol real people but you know, Amazon really good at kind of saying alright let's take a room of people and put them somewhere in a back alley in Seattle not in front retail space and just like you know we fly all these drones out of remote locations why not have a lot of the stuff pushed to a cheaper location somewhere like maybe the people in the Amazon store they're standing around maybe they're standing somewhere in Seattle for the Chicago store if there's no reason to have to physically be there. Jason: [13:35] Telepresence for doing a d Checkers and in fact you can imagine that use that same teleprinter sentence for delivering alcohol at some point and I D Jackson. All kinds of boys like that I have zero doubt that Amazon can solve the technical problem of doing, inaccurate age verification at your point it will probably take slightly longer and be slightly harder to get the, the Bureau of Alcohol to agree that that's a suitable approach. So you would ask me about shop.org we had surgery on last week and we did talk a little bit about some of the content with sucharita so she gave, a presentation about marketplaces that was super interesting I know that's a topic that you sometimes have a personal interest in. I did some stuff on on the areas where artificial intelligence is actually getting Traction in retail in Commerce and got some decent feedback, but one of the things that jump. Org has added in the last couple years is an innovation section so this is a, less expensive portion of the trade show floor that's cheaper to exhibit that's enticing, newer younger emerging companies and so it's one of my favorite parts of the shofar to walk because I'm generally familiar with most of the, vendors that have been exhibiting shop.org for many years but it's fun to see some new you know sometimes crazy stuff. [15:04] Answer this year two companies kind of jumped out at me there's a company called Shiro. Which is really focusing on the problem of digital. Digital Shoppers getting the equivalent, personal experience of an in-store Shopper and so along the lines of the ID check you just talked about these guys are essentially, creating a telepresence solution so that store staff when they're not helping an employee customer in the store, can I have live chats and create video content for customers that are shopping the website. I'm so it's sort of a way to have a more human interaction with web Choppers that's whatever Jean the in-store labor force and that's, part of the genre of omni-channel that I think is really smart and interesting so I like that. Approach and then there was a company called seek and and I suspect we can talk a little bit more about this in general terms later but, Sikhism, augmented reality company for mobile phones we've talked a lot about how augmented reality is probably much more important than, virtual reality for Commerce in the short run and what seek is really focused on is. [16:28] Apple in OS 12 just launched some new features that now that you do good augmented reality in the web browser no app required and so seek is. One of the first companies with a tool set that retailers can, license on the cloud to have good a our experiences in a mobile web browser without having to get an app downloaded and I think that's really smart and obviously there. Timing their company launched with the the release of this new product last week. Scot: [17:02] Brickell and then last but not least I think you were going to New York to go to recode did you were you able to make it to that to see mr. Del Rey. Jason: [17:10] So sadly so I have a ticket I had a client call me in another Direction at the last minute but I did get an opportunity to watch, a lot of Jason's interviews on YouTube and they're they're uploading all the all the speakers to YouTube so if you're interested you are, they're all available in a couple that stood out to me the founder of Shopify who seems like. He's sort of up to his his public visibility in the last few months that you used to be kind of a rekluse that didn't, do a lot of public presentations he had a good conversation with Jason Delray I had sent Jason all kinds of specific questions I wanted to ask about shopify's size and Market penetration which I notice. Jason didn't get a chance to ask but he did talk a little bit about who's probably the Marquee you know Enterprise customer using Shopify which is Kylie Jenner, interview back into some of his answers you don't think he he was saying that over the last 2 years, Kylie Jenner sold 900 million dollars worth of product on the, maybe two and a half years sold 900 million dollars on Shopify which is in a pretty good scale we normally think of Shopify as a long tail solution for very small Merchants but that's a pretty good size. Scot: [18:39] Yeah I think what makes it work is I think it's not a huge number of skews right I think there's like, two nail polishes and tendus too. So I think she just has like in a quantity of Brazilian of 50 skews which doesn't put a cart through too many of its Paces Paces you don't need a fancy content management system you just need scalability in robustness on the check outside. Jason: [19:00] Yeah I know I totally agree there are some boxes that that checks that shows that they have good elastic availability for these peak days but you're right like there's a lot of things that you would exercise in the catalog with a million skews in it that. [19:14] That particular site isn't isn't demonstrating scale on it at all, I had asked Jason if you could ask who some of the big catalog we can go there but it was interesting cuz he what he talked a lot about hey we started trying to solve for the small business customer, and a lot of companies as they grow try to move up market and he he's claiming the day over we don't want to do that they don't want to abandon. Their core market so they want this new product Shopify plus which is intended to be more upmarket but they explicitly, launch that with a new team and a new office in a new city and sort of partitioned it. From the original offering so it really Leverage is the quote the court code base and add some new capabilities and services but his promise for. [20:10] How he was going to expand their Market rather than a band in the the low end of the market to move up was, The Silo this the Shopify + offering and he talked a lot about how in his mind, front and commerce experiences are actually pretty easy and he's a coder you mentioned a lot of the original Cody Road, is still in the platform and hasn't needed to change for the front end but they're like 90% of the ongoing development effort they're doing are all the post order code in. Complex water management and integration to to Legacy Erp systems and one of the big features they just launched for Shopify plus is the ability to manage multiple Warehouse locations for exam. Scot: [20:57] There was you I saw some people kind of kind of gasp on Twitter because I don't think that those numbers were public that Kylie had that he revealed I mean she had talked about in 2017 we talked about this on episode 145, what was out there that they were dude they did 300 million in 2017 so it means they probably did for 5500 maybe even 620 18th so you know I don't think a lot of people would have guessed, what was that big so kind of added her Revenue I don't know if she was aware of that or happy or sad or she's probably more on Instagram than following what's going on too. Jason: [21:33] Exactly where she I think she left Twitter so so he was safe I don't know yeah but that was the first time I heard some confirmation from a third-party Source oh. That was interesting another talk with Jen Rubio and Jen was actually at shop.org but then she she was also interviewed by Del Rey she's one of the two co-founders of a way which is, terrific example of a digital native vertical brand in the luggage space. Scot: [22:01] Yeah and I have my birthday present was away luggage to this is my first trip using it and I have to say I'm very pleased right now. Jason: [22:06] Nice so I feel like it gets really high marks we may need a product review from you the one thing I'm always curious about is I think a lot of the way luggage has the option for a smart battery built into the luggage, and there's a lot of controversy now about the airlines not letting you certainly not letting you check that but in some cases, making you take the battery out to even carry it on which frankly doesn't make sense to me. Scot: [22:32] Yep so it's checking it you can't check it with the lithium in there and they now pops out so I think they're V1 was fixed and now it meaning it could not. Jason: [22:40] The ball so it's easy to pop out and put in your lap. Scot: [22:41] Injectable that makes a lot easier to charge to like lifting your suitcase up onto the. Jason: [22:48] Well I look forward to buying something electricity from you at Future shows that we travel together. Scot: [22:52] Absolutely just at yeah I've got a milliamp hours of plenty. Jason: [22:57] So we've heard a little bit about a way one of her investors what was on Earth from Comcast best Adventures was on her show earlier, this year but one of the interesting comments that she made the Jason that I thought was really clever so they have a few stores at the moment one in SoHo in New York, in one of the kpi that they have for the store is. How many times people upload Instagram pictures from the store. In a way that sounds cheesy and sort of superficial but as we're in this world where, sort of Assortment and low friction shopping is moving out of brick and mortar and onto the you know these big online marketplaces one of the main roles for brick-and-mortar is around experiential environments, and one of the ways you know you've accomplished a exponential environment is when people shopping in the store, want to memorialize their trip to the store so I actually thought that was a kind of clever and smart metric to be looking at, maybe we'll do a deeper dive in some other show but there's this big trend of these instagrammable spaces the for example the Ice Cream Factory in San Francisco there's a couple temporary ones you just opened here. Scot: [24:19] Yeah I have a I have two teenage kids and every time we go on a trip we have to include their the things they want to do or these instagrammable places that they've seen on Instagram so. What time it was this bubbly ice cream thing and then it was raw cookie dough then it was let's see it's rolling ice cream is big now. Jason: [24:40] No answer I mean on the way. Scot: [24:42] The food is very instabul in which is a huge part of the experience. Jason: [24:46] And that sounds somewhat silly on one hand but it it makes a lot of sense and you know it someone reminded me in the old days like to differentiate yourself you just had to be unique amongst your 200 code students, in your high school class or ever did your high school class was, but these days you have to be unique amongst your ten thousand friends on Instagram and so you know it is harder to differentiate yourself and so these these opportunities for, more digitally native Shoppers to have a differentiated experience and share it you know makes a lot of sense so that's a smart thing for for retail designers to be thinking about. Scot: [25:25] Packaging for a way was really interesting that comes in a cardboard box what you expect, but then the bag is in a really nice kind of a cloth bag and then when you open it there's a whole experience around there's a little booklet there global travel pack that comes with it, and then they train you on how to use it and then there's a little book about, it is very much pitch is a Lifestyle brand of you know the things you can do with your way and then they promote hashtags that you should, do while you're going and you know it's almost kind of like the beginning of an adventure around travel and and going to see things so it's pretty well done your versus you're just like you know. Popping open a Samsonite or something and you know it'll be just fall out in this kind of experience. Jason: [26:10] The premise of her shop.org talk was. They build the brand less about talking about the features and benefits of luggage and trying to sell luggage and then said they are, they start from the perspective of selling travel experiences so the store, is less about here's how to demonstrate all the things in the luggage you can of course do that but the luggage is in vignettes of aspirational trips to Bora Bora in Amsterdam, and it's it's really about reading to me in for you having this fabulous vacation and oh by the way, you need this luggage to get there as more so than it is features and benefits of the Prada. Scot: [26:51] Absolutely cool thanks for the trip reports I think that was some good stuff like I got trips happening and it wouldn't be a Jason Scott show without. [27:16] So a lot to cover in Amazon news we talked to Jason give us his live report from the Chicago Amazon go store and then a friend of the show we going to get him on here Spencer soap. Yeah he he broke a story where there have been internal talks and I'll Circle back on this about. Amazon potentially opening 3000 Amazon go stores by 2023. Jason: [27:46] I think I might have been like 20/21 I thought it was a relatively short. Scot: [27:51] This is funny because we've been talking on Twitter about you. Just feels like. There are they are opening stores at a pretty good pace and it feels kind of prime now when they they decided with prime now it's go time and then suddenly there was 40 to 60, Prime storage pronounce doors to 3000 is a stretch just kind of getting that real estate I've heard a lot of skeptic say it's impossible while they do that and it figured out how the end of the alcohol sign 3000 Lisa's that fast so I think it will be. I think what could be happening here is your encourage the Amazon meetings to do a lot of brainstorming to write press releases from a future State and I think maybe there's some of that that kind of came up so I'm not sure. Yeah it feels like damn it nailed the format yet I think they're probably won't get a couple more figure it out but you know, when they do on a scale these getting to 3000 I don't think that's impossible. Jason: [28:48] Yeah I'm sort of in the same boat I'm up to mine so for sure. Part of the Amazon methodology when they first pitch new idea they write the six-page memo. Attached to that memo is they write an aspirational press release that they want to be able to issue when the things been successful so for sure there is a press release for Amazon go stores that talks about a mask deployment so. Scot: [29:12] We just open the 3000 store. Jason: [29:15] So that would that would be the exact Spencer one possibility is someone just saw that press release and misunderstood its purpose. The the other side of my brain says Amazon actually is pretty good at keeping secrets and they don't tend to have a lot of unintentional weeks so the fact that this was weed. Partly I believe that probably wasn't completely unauthorized and so, is that because they really are preparing for scale and if so you know I was surprised cuz I wouldn't have thought they nailed the format. [29:53] But you know or is it potentially I had fake I don't know but what I will tell you is, it's absolutely possible possible to open that many stores and Retail in that time. And retailers have done it, in the nineties I work for Blockbuster entertainment we opened a store every 12 hours for my entire 10 year so once you get to a certain scale, like these things are really Temple dies then the the advanced teams are you know just 6 weeks out in front cutting deals on leases and everything Cascades from that and so it. Absolutely possible if they decided to just penciled out and that they needed a big footprint of stores they could run 3000 stores by 2021 now. 3000 stores if this is really can me competing with a convenience store 3000 stores actually probably isn't enough to have a real meaningful business and now that Amazon's a trillion-dollar company. [30:52] You know if there's a million-dollar p&l for each of these 3000 stores like. Arguably isn't a big enough business to get in to be really material to Amazon so we'll have to see. Scot: [31:04] Do you think he'd stores doing a million dollars but what is convenient store to get to take gas out. Jason: [31:09] Yeah I'm trying to and I don't have specific knowledge that this is an estimate based on other types of small format stores, and I would imagine that in the those convenience stores there's a huge standard deviation cuz there's going to be some fast Runners that are easily 10 million dollar stores. If you have 3000 there's there's going to be some snow our stores in there too so to me, you know a million to a couple million per year for many kinds of restaurants would be very good. Scot: [31:41] So million at 3000 is 3 billion so each million is 3 billion so if they did five that be 15 but that's a needle mover for them to hunt. Jason: [31:53] You never like to talk about Revenue you always like to go with the big number. Scot: [31:56] Well then there's a multiple there that yeah so yeah so that that's. Jason: [32:06] That's going to be interesting to watch that would be to meet someone fascinating if that's the brick-and-mortar format that gets. Scale the fastest versus the books or the or you know some information of the grocery pick-up for some of the other things they've done. And a new store format won't will probably talk about in a minute but another piece of online news that we saw from Amazon this. Weaker last week was this new Amazon small business store fronts, and so I thought you might have a POV on that but the gist of it is it's a way for small business that's a 3-piece seller on Amazon to offer a curated collection, of products and have their own sort of landing page and in some ways you'd be where some of our listeners might not, Amazon used to have a Amazon webstore which was essentially. Competed with Yahoo web store and let us small business run their own website on their own URL that's not what this is. Scot: [33:13] Yes in a lot of people depressed confusing these things. That's the problem one of the main problems with Amazon webstore was it had the initials a w s s cousin to the cloud computing AWS, PSO2 Amazon used to have a thing where they would go out and run a store for people it was the downgraded kind of technology that. Your Target and all those guys ran this to me is just really giving a little bit of content to the store owners desk and be types so they can tell them or their story, and they're highlighting some of them and, part of the press release was really starting to thump their chest and say over 50% of the items or the units sold on Amazon or from third parties and there's an integrated TV commercial as well I haven't seen it running. So it feels like a didn't get like a huge I haven't seen on NFL games are in that kind of stuff which of the big spots I'm so don't know where they're running it but I did see the online version so but it is you if your 3-piece seller it is pretty cool to have an Amazon you know out there used to be kind of this dirty secret that some of the stuff you bought from Amazon list of these third parties now Amazon's kind of put you more front center so it felt like a big. If something is change they're pretty dramatically and how they're thinking. Jason: [34:32] And so I I think you sort of app we described it but I have heard people, sort of think of it as a Etsy competitor which is not really right Amazon does sort of have another offering that's more competitive with that seat and then the Jason Delray did Ash Shopify, if they considered it competitive and he had the the sort of typical competitor answer it feels like a little bit of a trap to me. Scot: [34:59] It's a trap. Jason: [35:02] Pictures of Admiral Ackbar. Scot: [35:05] Black bar on it yeah yeah I don't know if it's true or not I mean it is very hard for. Jason: [35:13] Going on Amazon I would use it likely wouldn't make that my only destination on the web like me Amazon has one channel for most people shouldn't be there exclusive Channel. Scot: [35:24] When your Kylie Jenner you can have your own store and not worry about Amazon and you know also comes to you and I'm sure she had a lot of power in their relationship. Promosi small business out there and you start on Amazon and then you're lucky if you get anyone to your website so so yeah yeah I think it makes a lot of sense for four people to embrace it and and, rapper on it a lot of people that's because some of the ones that are highlighting do you have more of car that Homespun handmade kind of provide to him like there's this handmade Candle company that was both on the front page of the store fronts and on the TV commercial I hope those people have a lot of inventory because it felt like they're going to sell out of those handmade candles pretty darn fast. Jason: [36:04] Yeah I was always a problem when you highlight the small businesses right. Scot: [36:08] Couple of quick things Amazon has been obsessed with visual shopping and they've done several kind of things around that so, the the first one is they've had they had something called visual shopping where you can kind of like pick some colors and stuff then they deprecated that, then they have active on the homepage if you look at the top bar I'm always logged in this Prime and I think this is available and non-prime to it'll say new and interesting finds and that's kind of like a Pinterest so you could put together a little you know of Jason's Board of interesting finds of cool gadgets I'm so Scott a Pinterest board, feel to it that I've always thought of new and interesting is kind like their Pinterest competitor have a new one called Scout if you go to amazon.com Scout and it's more of a Instagram meets machine morning to see thumbs up thumb down some stuff and then it's supposedly going to learn about what you like and don't like and and. Pretty quickly after 5 to 10 ups and downs you'll get to some interesting new products that that it learns that you may want so then so that kind of feels like Pinterest Army sorry Instagram so they've got. [37:15] Pinterest and Instagram covered the other big visual thing out there is Snapchat and actually just today announced integration with SNAP, where are you can go and take a snap of the picture and then Snapple use I assume they're using the machine learning a library that Amazon has for Parker Mission so you see a cool celebrity you see Kylie on your way home tonight you take a picture of her sneakers and it will identify them and then show them to you over on Amazon which feels kind of like an affiliate type model so I'm sure there's a rough share there but it is pretty interesting that snap is the front end of an Amazon kind of the backend which is Young so now they have an integration on the snap sides the good kind of, the three visual shopping Technologies covered in a way to different business models which is pretty pretty. Jason: [38:02] No I I would agree the Scout thing was kind of interesting to me I've heard some people describe it as Tinder for shopping. Scot: [38:10] Apple swipe right. Jason: [38:11] Yeah you go get products and go hot or not and they're broken at in the category so you know you you decide you're looking for, home furnishings and then you can say lighting and you get 5 chandeliers and you say like don't like don't like in as you're doing that, the assortments getting curated to visually 2/5 chandeliers that match your taste in so it's it's pretty fun and fast and immediate and they're promising, more categories to come it's slightly reminded me of you go old school on Amazon when they used to mainly sell this, stack of books and video. [38:52] The recommendation logarithm was based on what you bought but of course you could buy a book arm or watch a video that you didn't like and so they act they used to have an interface where you could look at all the stuff you bought and go back and say you liked it or didn't like it, and sort of refine your own recommendations and so if you want to invest some time you can improve it in my mind this felt like, how much more evolved visual version of that so that it's interesting to invent new ways to shop and, Amazon's always been great for the spearfishing but like you know browsing and Discovery has been the Gap so it's it's interesting to see them try new things and it seemed interesting the snap one to me. [39:36] Is a very interesting because a lot of social networks have tried to integrate Commerce and they generally try to do it in a bran friendly way, and like it's not particular brand friendly to say and we're going to sell everything on. Amazon right like when when you want that feature so this is like the Pinterest wins feature which is a visual search capability but then connecting all of those visual searches to Amazon, no other retailers ever going to buy an ad on your platform and so part of me wonders if snap was only able to do this because they sort of are in the Challenger position, Instagram feels like it's getting more of the momentum and so this was, a a big move snap could make but potentially the risk of alienating a lot of other advertiser's. Scot: [40:27] Yes snaps been under pressure and there. Their head of Partnerships left recently and he is a big yeah she was an internet analyst I've known for a while and, I imagine they may have been building some stuff out they realize how hard the backend is and they kind of got the front end working and they just decided to marry them together instead of having to go to all that. One thing that occurred to me as you're talking about they are stuff earlier is Amazon does have an AR functionality and it used to be buried in that so you'd have to go kind of down the sub menu at the hamburger menu down three levels in the camera app now and then update, you have, you have your normal scan barcodes but now you can search with photos is is kind of promoted to a very high level up inside the camera and then also you can do smile codes and then last but not least you could do if you had room so it's right in the camera now so they've they've upgraded the AR View and in the Amazon that up into the camera, which is pretty nursing another part of this visual search is Dave and Kurt are going to take out your Amazon app hit the camera button there's a lot of cool new stuff inside of there to play with now. Jason: [41:32] Yeah I know it's very cool, another big an Amazon announcement as if they didn't have enough is they had a president last week and they launched I want to say 14 new products with Echo embedded in them. Scot: [41:47] Yeah and I was really excited for you cuz I know you are really big on the Amazon button e things and they had an amazonbasics microwave and it has a button on there where you can order more popcorn. And I just envisioned you and having that installed by now have you bought and installed one of them. Jason: [42:05] So the challenges I have a 3 year old son that's where and how to talk to all the Echoes and. Would constantly be running the microwave if it was too in closer to the ground so I feel like it's probably a bad combination of might like Echo cook popcorn with nothing in the microwave will be happening a lot in my house. Scot: [42:26] I saw a lot of people scoff at this but you know the the microwave is a challenging thing so every every microwave you come across is different, and yeah sure if you're going to do a minute heat up or something it's not a big deal but for my microwave whenever I want to defrost something or whatever I have to take out the little guy and there's this complex you know, non-intuitive side of things you have to do where is it be really cool to say you know Alexa you know heat up this pizza and it just kind of knows that okay you need the heat at 50% and so it's I think there's actually something there that that actually is a time-saver to be able to say that for the microwave and have it kind of decode oh you know I need to go 50% power so the cheese doesn't get all rubbery or whatever it is that did microwaves do, so I don't think a lot of people realize that that it's doing that behind the scenes there's there's a fair amount of complexity as I read more about it, in there about what it's going to do with the voice that. I think it's pretty interesting. Jason: [43:21] No I I think there is some very real world use cases a lot of the space saver microwaves don't have a numeric keypad anymore and so you know now you have this. Awkward, dial that you know is sort of variable speed that you have to use to set microwave for 3 and 1/2 minutes and so like voice is the perfect way to have a minimal space footprint but still have no easy low-friction access to, you know all of those features that often don't get used in the microwave because they're too hard to find. Scot: [43:53] When when I was excited about is in my car I can I can put an echo dot in there and. It takes a little works at to connect it to the Bluetooth every time is it's not like Auto connected to the Bluetooth, but it's a really cool Auto interface but you know I don't think my OEM is ever going to have Alexa and the dash certainly they'll be some people that do that some people are brought into the Apple ecosystem some people are building their own so one of the projects I was excited about was called Echo Auto so it's kind of like an echo. But I think the Bluetooth going to be more persistent and smart and connect better but also has it kind of lays flat and I think you can velcro it to your dash and it also has eight little microphones on top so you know they're saying that it'll be able to hear inside of a car better, sex can be a pretty interesting auto experience that's why the one I was most excited about, but sadly I know you can't pre-order it unless you have an invitation so all the Amazon people listening I know I would love an invitation I don't know about Jason, Jason Jason would probably love an invitation to. Jason: [44:56] For sure without doubting you for your fancy Fleet of automobiles I'm just going to say that your OEM probably wouldn't add an Alexa interface unless and until Jeff Bezos divested blue origin. Scot: [45:10] Yes. Jason: [45:11] But there were a bunch of other products they improve the core products so they did another iteration of like the view in the. The View has a is a smaller footprint, overall but a bigger screen so I have a couple of the 7-inch devices and use them in my house and so now the, 10 feels more appealing they have a clock which it's an analog clock and I. I don't have a place to put this but I really want this, so it is a traditional analog clock that looks like a standard kind of office wall clock, when you set timers which is one of the things I'm most frequently do with the echoes in my house they have sort of stealthy LEDs around the rim of the clock, that show you the progress of the timer so you can see him visually how much, time you have left in a timer but the feature that I think is most cool which is super lame is when daylight savings happen, the hands on the analog clock actually moved to automatically change your analog clock for daylight savings. Scot: [46:17] You give me staying up you're going to get this or you have to stay up till 3 a.m. my time does it still 3 a.m. in Chicago or is it to him. Jason: [46:23] I couldn't tell you because I have no analog clocks and all the digital lens automatically adjust. Scot: [46:27] You can stay up all night watching and waiting to see what it does like this it just doesn't stand still for an hour and our plastic depends on if we're going forward or backward this is this is we're going to do a live report. The world's best book still nothing happening. Jason: [46:45] Rest of it we have some grass growing. My big thing I felt was interesting about all these releases is you know we talked about it CES this year that Alexa was embedded in like five thousand devices are 4,000 devices into, there was a school thought that they made these initial products to see the market and they're happy to sell these core products but that, they were you know trying to be very appealing to oems to get embedded in a lot of other products and so it's somewhat surprising to see them. Expanding the line of first-party products that they in bed in themselves and arguably. That could make it less appealing for other microwave ovens to license the tech or. They could make that the must have desirable feature that then entices other opm's to take the future. Scot: [47:37] Yeah I got a fire watching the video that they were. There's been a couple microwaves actually integrated with with Alexa and I get the feeling they're underwhelmed and I think they wanted to say here's where the bar needs to be you no have it, be able to talk about different recipes and talk about you know defrost my vegetables and have it understand that stuff. I think they're frustrated that allow that Williams to do that kind of thing. No some of the commands for like Alexa run the oven at 50% power which is I think they were trying to make more of an intuitively than than though instead. Jason: [48:10] No I think I think you could have hit the nail on the head with that I did feel to mention one other interesting product they have them or audiophile. Alexa now so you can I get an Alexa with a. Remote subwoofer which more directly causes us to compete with like the Sonos is of the world. Scot: [48:31] Recode pregnancy. Jason: [48:33] I teased earlier in our Amazon segment that we were going to talk about another new retail format from Amazon and that format is a pop-up shop that Amazon and Good Housekeeping, just opened at Mall of America. So this a curated assortment of products from Good Housekeeping and they all have smile codes which you mention which is Amazon's proprietary 3D barcode and you scan any of those smile codes, to be able to order those products from Amazon. Scot: [49:08] Cold sores a kind of touch and feel and then you can't really buy from there you have to buy them online. Jason: [49:12] Yeah my sense I have not visited yet Mall of America for a long time with the largest mall in the US it's so realize that status but it's this huge huge destination Mall in Minneapolis. Scot: [49:25] I've been there Camp Snoopy as big giant thing in the middle. Jason: [49:28] Yeah that's an amusement park in the middle of the mall I I've spent weeks Sweeping in that mall we don't we don't need to rehash those. Scot: [49:35] So we'll save that for another podcast. Jason: [49:36] Those stories but so an interesting new new partnership as Amazon you know partners with more these curators create you know novel newcomers experiences. Scot: [49:50] Okay that was Amazon news and looking at 9 Amazon news I like to keep track of everyone's holiday forecast cuz we're sitting here knocking on the door of October and so we Deloitte was out our good friend Casey and they are at 17 to 22% incest pretty robust with a 19 and a half midpoint internet retailer came out this week at 15 and a half and then sucharita was on and she talked about how they haven't formalize our forecast but she was thinking kind of 14 to 16% and she kind of highlighted that the the Grinch this year could be these tariffs and there is, creasing noise even since we had to treat on like literally 3 or 4 days ago you know Walmart is really kind of banging the drama and there's a lot of people out there saying, hey this this could be a pretty big head when coming in the holiday so we'll have to see how that plays out. Jason: [50:42] There's a part of this could be a scare tactic but they're saying in some categories that does terrorist could drive 10 to 25% pricing keep creases in some category. Scot: [50:52] And it's all the dollar store but what are they going to do. Jason: [50:56] Yeah that would that would obviously. Scot: [50:56] Scot a dollar 15 store doesn't have the same ringtone. Jason: [51:00] It doesn't but if you shop at our store you'll find a lot of not. I don't already sorry spoiler work yeah. There was another big acquisition in my world, on Friday I want to say and that was that a Dobby has been very active lately and Acquisitions we talked about their acquisition of Magento the e-commerce platform on Friday they acquired martello. Which is a big marketing automation platform that particularly excels in the B2B space. Scot: [51:38] That was a was a big deal in it how do you think that's going to is that kind of tying into Magento one report I saw so now that adobe owns Magento there's a lot more Wall Street people talking about it, I'm in every report I read is not very favorable towards Magento and it talks about them as a share loser to Shopify Bigcommerce, now a lot of that's anecdotal so do these Channel checks and there is kind of hearing you know if they'll be at these still be at the shop. To hear Rumblings Aid you agree with the B is this some kind of a very trying to stitch together a cloud in an interesting way because sales horses gut you know Cloud for everything they've got you Noah house Cloud car Cloud marketing Cloud sales Cloud 9 Stein cloud. Is Adobe playing catch up what's going on. Jason: [52:27] Infernus to Adobe I'm not even sure I would say they're playing catch-up they me depending on how you look at it, Head Start of lead sales for Salesforce from day one was Cloud oriented with a single product right so they they, yeah unquestionably dominated the cloud CRM model in eventually put a world of hurt on the, the traditional on-prem CRM folks and they've expanded to have what they now call is a marketing Cloud right so their marketing cloud, then they added exacttarget which was their sort of direct marketing thing and they since added a bunch of pieces to the the Salesforce marketing cloud. So they printed to me and where that actually is at sorry to be complicated a second Cloud for sales. Scot: [53:18] Is Commerce club. Jason: [53:19] It's a Commerce cloud and said they've Salesforce about to Commerce put Solutions, demandware and Cloud trays which is more B2B so that's in the Commerce Cloud Suites you got a bunch of these marketing activation tools in the the marketing cloud, Adobe has probably had a marketing Cloud longer than Salesforce and also through acquisition they acquired a bunch of, they would put their analytics Solutions in their CMS solution their campaign management solution and they have a bunch of customer data product, so I would actually argue adobe's had a more comprehensive. Suite of capabilities and what they call the marketing Cloud then Salesforce. [54:09] One of the tools in that sweet is called campaign manager and that probably is not the absolute strongest product in the sweet and it's primarily focused on b2c, outbound Communications and so Marketo bolsters that capability and sort of experience and in the B2B. I would agree that that in general Magento is a share loser to some of the cloud-based Solutions most notably Shopify but I would say, an area of strength for Magento has probably been on the B side of Commerce in so you could look at that from Adobe and say, hey the marketing cloud has been pretty successful and well penetrated in the The Big Brand b2c space. Between Marketo and Magento. Probably bolsters their treads in the B2B space and you know potentially on the longer tail a little bit more. Scot: [55:07] That was way deeper than I was. Jason: [55:09] Yeah I'll see a lot of my Adobe friends in my travels this week so that I'm sure they're going to tell me if I got that wrong. Scot: [55:15] Quotes of this was also a big week because we're both Apple Fanboys and lot of new stuff out there's new watches and phones and you had a fun Journey on your phone's I'm sure listeners would love to hear about. I had one where I I did the whole get up at 3 and was disappointed cuz launch day was the 21st and then I got to like 28th October 5th ship date, but being good under-promise over-deliver I got my Apple my new phone today. Came in 5 days earlier which was exciting and I was frantically installing and upgrading and so I got the x-maxx and I'm really happy with it it's got a longer battery doesn't feel ginormous I feel like I'm back to that plus format. I also have a. Pixel 2 and it feels like it's almost the exact same format as up until 2 so it's been good and then I also got the new generation 4 watch sadly it does not have the ECG yet it's coming soon, but the thing they did those genius there is they got rid of the bubbles and it just feels like the data display is, in a 50% larger so there's a lot more information on the watch which is which is kind of neat and it seems like the battery life there is dramatically improved tell us about your your phone experience. Jason: [56:31] Well first let me just paint a word picture for our listeners during this entire podcast on our face-to-face and Scott has mainly been playing with the Amazon VR feature on his giant Max phone and flashing his humongous Apple watching me. So I have some serious Apple Envy as we sit here I'm sad to say I had to replace my Apple watch 3 months ago so I did not pull the trigger on a Gen 4, I knew after I. Scot: [57:00] Is your screen cracked. Jason: [57:01] No not yet but it may be by the time I get home tonight. Scot: [57:05] Girl accident. Jason: [57:07] After I saw it I was going to have some screen envy and I I certainly just watching you and having some screen Envy, luckily there's a 24-hour Flagship Apple Store about 300 yards from where we're sitting right now so I can fix it on the way home and I don't think they're in a constrained Supply situation I think you can walk in and buy a watch. Scot: [57:28] Sounds like a fun trip that we can report on next week. Jason: [57:31] So I got up in the middle of the night in the middle of shop.org to place my. IPhone upgrade order at the earliest possible moment and I also pay a little bit of extra money in this Amazon upgrade program because you generally have. Preference for the new stuff. Scot: [57:50] The Apple subscription program. Jason: [57:52] Apple subscription program includes AppleCare so if you're going to buy AppleCare anyway it actually and you were for sure going to replace your phone every year, it actually does a pencil out to be a decent economic deal but the main reason I do what I don't want to get anyone is because, I want to make sure I get that new phone day one because frankly all my clients on day two are going to be disappointed if I show up without the new Apple product. Scot: [58:20] You have a secret it says retailgeek right on your laptop you have to I mean you at the bar very high. Jason: [58:25] Yeah so I got up early, finish my pre order was promised a launch-day phone I was traveling on launch day I sent that and it signature required so, I sent a signature required form to be put out in my house while I was gone somewhere justix went awry on that and the the phone didn't get there so I came home Friday night to a sorry we missed you. Scot: [58:52] Sad. Jason: [58:53] The saddest worst customer experience although it's my fault it still is the most disappointing customer experience you can possibly have your want your phone was here but now it's not. Scot: [59:05] Wow wow wow. Jason: [59:07] So jump on the UPS website change the delivery address to some UPS lockers very close to my house, and get it rescheduled for Saturday delivery so now I don't need a signature or sometime Saturday UPS is going to drop this at a walker that's half a mile from my house so I'll get it into the day Saturday still in time for my trip this week. Saturday 6 I get the exciting note that is in the locker walk over to the locker the locker opens and is empty. Want Walmart so that was very disconcerting turns out the driver made a mistake. They delivered it to the locker wait tonight and so I I did in fact like my phone, moments before we started this podcast but unlike you did not have time to activate it yet so I also got a big capacity Max and then and I'm excited for that as well. Scot: [1:00:08] So you know we ordered about the same time and you pay all that extra for the subscription I got my phone earlier. Jason: [1:00:13] Yes I mean the main takeaway from this whole story is Scott is better than Jay. Scot: [1:00:17] It just luck of the draw. Jason: [1:00:21] But I will say there were a couple things they were either surprises in this more the OS X launch and the hardware or that I just don't have missed during announcements but there's two kind of, relevant features to Commerce, so we did mention when the OS 12 operating system was iOS 12 was launched that there's a new improved AR library in it called AR Kit 2.0 what I missed, is AR Kit 2.0 that you do AR in the web browser no app required and so I'm that's the capability that are friends at Sea car using, to watch that so in general I don't recommend retailer spend a bunch of money on an app, because there's a lot of friction to getting users to download the app I do IKR experiences for a lot of in-store retailers and so now I get the best of both worlds my retail clients can implement, the in-store AR shopping features without requiring an app so that that's actually very exciting, and then the Easter egg in the hardware is the phones that you're holding the access model so that excess in the excess Max which is not how Apple want you to say it by the way they want you to say 10s. Yes in 10s maxed and coming soon 10 r. [1:01:46] All have an improved NFC chip over the previous generation, and what's exciting about this new NFC chip is a, it has a passive reader in it so the original phones with NFC chips they can really only be used for Apple pay and you couldn't use them for other experiences, now we have a complete implementation of NFC, and one of the things that means is for example a store could put an NFC tag in every fact tag in the store, and if you just wave your phone you don't have to launch an app or do anything you just have to have the phone unlocked if you just wave your phone over that tag. You will go to a web page that can have supplemental product information for all those pages so now we can have NFC tags that we put in our house to like, trigger scenes for virtue we can use them for shopping all sorts of capabilities in the NFC stack that we didn't used to have now with this new hardware we did so I actually bought. In NFC writer in a bunch of tags to start playing with us and they came even though I didn't get the phone so. Scot: [1:03:00] What are the most fun apps and if you look on Twitter iOS 12 I think comes with measure so you can go measure all kinds of random stuff there's always funny people pictures of people measuring like their cat's tail and all kinds of interesting thing so it's a it's a cool way to experience they are. Have a lot of fun measuring stuff. Jason: [1:03:19] I will say this some of the third-party measuring apps that use it still better than measure but it's fun to have a native Native program. Scot: [1:03:27] Call any other fan boy stuff. Jason: [1:03:31] Nope nope that was it again I think there's going to be another announcement with some iPads and then there's probably at least one model of iPad on my list for that so I'm. Scot: [1:03:43] One thing that we watch Pretty closely is the stock market to see what's going on in IPOs and there was an e-commerce IPO this week There's a European luxury Marketplace called farfetch and they went public on the New York Stock Exchange and this one was interesting date they price a little bit below the range but they end up raising 875 million which is not too shabby and the stock, October 50% on on diepio day does farfetch Marketplace lol you probably haven't heard of evaluation of 6.2 billion, be billion there revenues are about 400 million a year which we know that's a very good multi, but they're growing north of 50% year-over-year so that's why they are commanding a really good multiple there so it should be interesting to see what they do with those phones or largely European I'm in focused on luxury you can imagine more International expansion and maybe even a push into the US that's what I would do where I European luxury Marketplace. Jason: [1:04:43] The Ed suddenly found a lot of excess capital. Scot: [1:04:47] And did not this time I thought it was interesting we've talked a lot about a rvr on the show we did a deep dive you and I are kind of hobbyist on this and what did we miss in VR at least is that killer app, so I'm a big Elon Musk fan and he announced kind of surprisingly a SpaceX, project funded by a Japanese billionaire where they are going to go on a moon travel servngo launch from Earth on the bfr the big Dokken rocket and they're going to take that puppy and circle the moon and then come back and he announced on Twitter I use a mouse with air quotes because. Alive not a hundred percent sure he's serious about this but he generally is like you know what he says he's going to solve things that are not flamethrowers but they really are they did that, the boring companies real most the stuff that you think is a joke end up being real he did say they're going to live stream in 4k you were going to have series of cameras mounted on the spaceship and they're going to Live cast of er to imagine of your experience where you. [1:05:57] Be on the spaceship and looking around as it goes around the Moon bee that could be the killer app and I'm I'm curious to see what headsets he's going to work with and know you'll on, probably would decide the ones out there aren't up to spec so maybe they'll have to be a boring headset or a SpaceX headset or something that comes along with it so they'll be fun to watch and kind of out there, pretty super geeky. Jason: [1:06:21] You and I could be at the geekiest launch party ever for that product as weak sit in a dark room with her. Scot: [1:06:27] If you see the only sold two of them and it's the same guys that bought the Fire Phone. Jason: [1:06:35] Exactly there is a retail tie in there that the Japanese billionaire you know I think he sold like, 8 seats for this first flight in the Japanese billionaire bought all 8 he's a retail billionaire and he runs a

Jeremy Lockhorn is VP, Experience Strategy, Mobile + Emerging Technology at SapientRazorfish and has served a wide variety of roles during his 20-year tenure. The common thread is on a focus of what’s next. In this podcast, Jeremy and Brian Ardinger discuss technology changes over the past 10 years and the implications for the future. They know each other from their days in the digital signage space.  When the iPhone was launched more than 11 years ago, it was immediately breakthrough technology. What people didn’t know, was how big and disruptive it would be. We never imagined how seamless the phone would become in our lives today. Jeremy believes the Fourth Industrial Revolution is coming. He defines it as an Intersection of emerging tech such as smart home, self-driving vehicles, wearable tech, AI, VR/AR, and smart speakers, etc. Of course, the phone has a role to play in everything.  The next 10 years will move faster and be more disruptive. In the past there was one disruptive tech at a time, now all this new tech is hitting at the same time, with interconnectivity. Consumers are going to expect companies to be where they are. Creating magical experiences for customers. When you make things so simple, the interface fades into the background. Jeremy provides other examples from Whirlpool Appliances and Hertz.  Are companies that will win, the ones that can customize and predict what customers want? Jeremy believes companies must use “Clairvoyance Marketing.” That is removing friction, predicting need, and then completing the task. Anything that does not do that in the future will jar the customer. It’s hard to keep up with that pace of change. Creating collaboration opportunities to drive innovation and bring in outside thinking is crucial. Look at companies like Mercedes Benz and Patron Tequila as early leaders in the space. Note: Since this recording, Jeremy Lockhorn has left SapientRazorfish and is consulting and public speaking while finding his next full-time gig. Connect with Jeremy on Twitter at @newmediageek for more information. For more interviews like this one, check out Brian's interview with David Mattin at TrendWatching - https://insideoutside.io/podcast/ep-60-david-mattin-w-trendwatching/ GET THE LATEST RESOURCES Get the latest episodes of the Inside Outside Innovation podcast, in addition to thought leadership in the form of blogs, innovation resources, videos, and invitations to exclusive events. SUBSCRIBE GLIDR This episode is sponsored by GLIDR. GLIDR software helps you validate that you’re going to market with products and business models that drive real value. Check them out at https://www.glidr.io/iopodcast For information regarding your data privacy, visit acast.com/privacy

Jeremy Lockhorn is VP, Experience Strategy, Mobile + Emerging Technology at SapientRazorfish and has served a wide variety of roles during his 20-year tenure. The common thread is on a focus of what’s next. In this podcast, Jeremy and Brian Ardinger discuss technology changes over the past 10 years and the implications for the future. They know each other from their days in the digital signage space.  When the iPhone was launched more than 11 years ago, it was immediately breakthrough technology. What people didn’t know, was how big and disruptive it would be. We never imagined how seamless the phone would become in our lives today. Jeremy believes the Fourth Industrial Revolution is coming. He defines it as an Intersection of emerging tech such as smart home, self-driving vehicles, wearable tech, AI, VR/AR, and smart speakers, etc. Of course, the phone has a role to play in everything.  The next 10 years will move faster and be more disruptive. In the past there was one disruptive tech at a time, now all this new tech is hitting at the same time, with interconnectivity. Consumers are going to expect companies to be where they are. Creating magical experiences for customers. When you make things so simple, the interface fades into the background. Jeremy provides other examples from Whirlpool Appliances and Hertz.  Are companies that will win, the ones that can customize and predict what customers want? Jeremy believes companies must use “Clairvoyance Marketing.” That is removing friction, predicting need, and then completing the task. Anything that does not do that in the future will jar the customer. It’s hard to keep up with that pace of change. Creating collaboration opportunities to drive innovation and bring in outside thinking is crucial. Look at companies like Mercedes Benz and Patron Tequila as early leaders in the space. Note: Since this recording, Jeremy Lockhorn has left SapientRazorfish and is consulting and public speaking while finding his next full-time gig. Connect with Jeremy on Twitter at @newmediageek for more information. For more interviews like this one, check out Brian's interview with David Mattin at TrendWatching - https://insideoutside.io/podcast/ep-60-david-mattin-w-trendwatching/ GET THE LATEST RESOURCES Get the latest episodes of the Inside Outside Innovation podcast, in addition to thought leadership in the form of blogs, innovation resources, videos, and invitations to exclusive events. SUBSCRIBE GLIDR This episode is sponsored by GLIDR. GLIDR software helps you validate that you’re going to market with products and business models that drive real value. Check them out at https://www.glidr.io/iopodcast For information regarding your data privacy, visit acast.com/privacy

Sucharita (Mulpuru) Kodali @smulpuru is the Vice President and Principal Analyst at Forrester Research covering retail and e-commerce.  She has previously worked at Saks Fifth Ave, Toys R Us, and Walt Disney Company. In this interview, we cover a wide range of topics including shop.org 2018, Amazon, marketplaces, holiday 2018 predictions, personalization, and the future of e-commerce. Upcoming: Groceryshop October 28-31, Las Vegas Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 146 of The Jason & Scot Show was recorded on Thursday, September 20th, 2018. http://jasonandscot.com Join your hosts Jason "retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Transcript Jason: [0:25] Welcome to the Jason and Scott show this is episode 146 being recorded on Thursday September 20th 2018 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 and Scott show listeners Jason were sitting here at episode warning 146 knocking on 150 and there's someone we've been trying to get on the show for a long time but she is so busy it's taken almost a hundred fifty episodes for the stars and the moon and the planets to align so we are really really excited to finally have on the Jason and Scott show the Infamous and famous sucharita kodaly welcome to the show sucharita. Sucharita: [1:11] Oh thank you Scott and I'd only been waiting for years to even be invited to the show so this is my moment. Scot: [1:20] Usually the inter I give like a little blurb about people and I was like near LinkedIn and there was so many things you've done the the ones I'll just throw out there you've got tons of retailers at Walt Disney and of course well known for Forester so so you're welcome to show excited to have you. Sucharita: [1:41] Thanks for having me I appreciate it finally. Jason: [1:46] Hahaha. I feel like the weight is going to be well worth it as you know from having listened to a couple shows we always like to start by a kind of orienting the listeners with a little bit of background and sort of a. A quick synopsis of of the scope of your roll now so I know you have a fancy title principal Analyst at Forrester. What does a principal analyst do. Sucharita: [2:10] Yeah I'm pumped Forrester for for for those who don't know is a technology research company it said based in Cambridge Massachusetts and we have a number of analysts to focus on different aspects of a technology research and I've focused for the 10-plus years that I've been at Forrester I'm on the retail industry so that means digital retail omni-channel issues mobile Commerce social commerce and anything and everything that really involves a bit technology or the internet and I work with retailers and a lot of the technology suppliers and Technology software providers that that support the retail industry. Jason: [2:56] Very cool and Anna Scott alluded to it but you you have a prodigious retail background before coming to Forest or can you share their listeners of the synopsis of how you got there. Sucharita: [3:08] Yeah yeah there would you pull just before I had joined Forrester I was at a department store so I worked at Saks Fifth Avenue for the saks.com team. And the four sacks I worked in Big Box retail I was at Toys R Us for for a little while and then before that I was at a startup during the first.com the late 90s and it was that it was a startup that was in the e-commerce space selling baby products Baby Style and that was actually founded by a colleague who had worked at Disney when I was when I was there so so that is that range of experiences except brands internet start-up department stores in big box. Jason: [4:00] Awesome and that you Scott and I are part of the prestigious club we have we've all served on the shop. Org board of directors and you and I were just at shop.org in Las Vegas last week. Sucharita: [4:15] Indeed indeed yeah that shopped out of work is where I think I got to know both of you. Jason: [4:22] So that alone is a good reason to be part of shop.org to get to meet fabulous people like Scott and sucharita and. I'm curious I haven't had a chance to kind of debris that you sent the show any big takeaways or or. I think thank you you saw or heard of the show that they stood up to you. Sucharita: [4:43] You know that the topics that seem to come up have been a lot of the topics I think that that don't have been pretty popular in 2018 as you know Jason I know that you had spoken on that like a Ally and machine learning which retailers I think we're just still trying to get their arms around what does it mean for their businesses and is there a flexibility and is there applicability really to amateur business that has a large sore foot print where where is there an opportunity there and in how do they even know think about leveraging it it to their advantage. Amazon is always have Perpetual topic of it's almost kind of every conversation I have with a retailer it almost seems like it I have done to that territory. There was that that you know also I think I'm an interest in in just it as an extension of the Amazon discussion around marketplaces. And that will likely be wanted the topic said that will probably talk about today is that is that a Facebook and what it's doing with it latest Commerce Commerce initiative those are definitely that that the teams that stood out to me that seem to be recurring that that came up over and over again. Jason: [6:09] Nice I actually feel bad because Scott wasn't able to make it this year due to the hurricane. Sucharita: [6:15] We miss you Scott. Jason: [6:17] I know it's not the same. Scot: [6:18] Is the first one I've missed and I think I'm going to say tennis shoes on it it was very strange not going this year but I've heard a recap so I saved. Jason: [6:28] Nice if you're doing the math at home that means Scott started going shop.org when he was a teenager. But you gave it talk there's a secret session on the giveaway that the inside scoop is it shut that or there's a secret invite only session call Executive afternoon and Shop. Org. Then all the fancy people attend and that's when they get all the big brains to present. And you were one of the presenters at that section and you actually talked a lot about marketplaces and I was as I was listening I was thinking of myself. Scot Migos toys. Sucharita: [7:02] Well this is wet that Scott's been evangelizing for for so long right is it is how much of the world is is now marketplaces how much of retail is now Marketplace is and the Forrester stats are that globally marketplaces are now. 50 more than 50% of all of e-commerce projected to be north of 60% in 5 years or so so your call at has always been right Scot Wingo. Scot: [7:29] Thanks thank you I need to bring you on on all my meeting so you can talk. I'll just put a quote then I'll just put on my slides Scot Wingo is always right situated so you know one of the things we identified early in the Chow beiser was sweet we started going to China and realizing you over there it's like 90% marketplaces to do feel like we're heading towards that kind of world or do you think you feel like that kind of balancing point in the 50 to 60% range right where do you think that goes. Sucharita: [8:03] Well I'm a large you're right I mean it's there's a large part of e-commerce that is China it is the largest e-commerce Market in the world and when most of the e-commerce in the largest market is marketplaces it's going to be skewed a little bit that figures for the US I think we have our life more like 30 to 40%. Scot: [8:23] That was a global to 50%. Sucharita: [8:25] So yeah sorry I if if that wasn't clear but that so so where is the saturation point for for marketplaces in the US and I think that that is a question that's all smelly what's there to nuances I think that are important with that question 1 is how broadly we Define marketplaces once you get into defining marketplaces with travel or potentially with food or other categories it becomes the penetration numbers change and it's actually even higher because there are certain categories that are entirely marketplaces like in a large marketplaces like ride-hailing. [9:05] So so that is why I think that there's a there's a there's a very narrow definition of e-commerce that we have now which is about 30 categories of physical goods and within those 30 categories the future I think is ultimately I intertwined with the future of Amazon in retail and I think that's the at the big that's one of my big questions is given Amazon's first-party margins which I don't I think are probably the lowest margins of all of its key category is that it does business in Risky Business says that it participates in I think it really begs the question of yet you know do they do they consider do they lean into their higher margin businesses like advertising or cloud or hardware and ultimately give up on on some of the retail on pieces and they've become more of or they become more of a service at service provider and in that in in that scenario I actually think. [10:13] We may see a cab to that market place to Unistaff. Maybe we won't get to 70 or 80% liking somebody you know some of these other markets like China or north of that but. But I did it for I think it's it's it's heavily dependent on your what sort of happens in the next five years with Amazon. Scot: [10:34] Yep so we we've already kind of jumped into it but it wouldn't be a Jason Scott show without talking about Amazon so it's a good Market Marketplace kind of approach I had a 30000 foot question for you I were Twitter buddies and you know if I kind of look at the trend your your kind of. Not anti Amazon but I get the vibe that you're kind of feeling like you know maybe they'll come under more scrutiny around some stuff with what's going on there. Sucharita: [11:01] Well I think that it there a lot of people that think that I did you know there's there's no question that there are there certain things that happened on Amazon there are CEOs of companies like Birkenstock and Swatch that have called out you know that there are fake versions of their product on on Amazon so you have counterfeit issues you have pricing issues there yet you know there are issues related to the authenticity of reviews on the other number of products that I bought an Amazon that I'll have like 500 positive reviews and then you get the product and the packaging contact this URL for support and it's it's a URL for some heat for a non-existent website. [11:55] There is all kinds of there all kinds of issues with you know it's gotten to Amazon has gotten so big and even though they have some of the most Brilliant Minds in retail working. There are there are there a lot of fraudsters in the marketplace that are one step ahead and constantly you know it's it's a whack-a-mole situation for Amazon so so my so anyway my net-net of my by my salon Soliloquy here is that I think that there are. A few different directions that Amazon could be tackled it could be you know that you have State's attorney generals. [12:38] Brett unipack reading some case with the but you no wonder that the guys of consumer protection laws we have it another artist at the DUI Mantee trust commissioner I'm just the other day who said that you know she's looking at some of the pricing issues with who or what the data that Amazon is collecting from Marketplace Sellers and does that affect the pricing of UniFirst versus third-party merchandised so so there are a lot of different I think constituents within government regulation that I think may have some some legs to stand on with respect to addressing these issues I mean that I can't think of other business that's had a first and third party Marketplace in. [13:30] Piano ever and you know kind of that also has instant transparency of information and there there just no laws around this so it's it's difficult to retrofit our existing laws on topics like predatory pricing or price-fixing. When it you know what Amazon May doing may be doing their site nuances to those to those issues. Scot: [13:58] Yes and hq2 you want to share Charlotte. Sucharita: [14:00] Might my guess what Charlotte was do was kicked out of the first round better shot. Scot: [14:13] Yep yep we're on the short list. Sucharita: [14:15] Write the short list of a my my my bets would actually be on Boston. Scot: [14:19] A lot of people are saying DC because of a lobbying thing which I don't understand at that tire lot of lobbyists 20,000 lobbyist. So Jason I got in a vigorous debate with some people about Amazon go they were they announced they were going to open a couple more people like this is crazy and stupid and then they announce they're going to open 3000 leakage that they may open what would you think about the Amazon go store in the strategy there. Sucharita: [14:50] Well I think that you know when when things like this are said with Anonymous sources it it does become more questionable that I want to see the lease it is and I'm going to wait and let you know I'm not going to speculate too too early because I feel like we've seen this movie before you know when Amazon took out the lease at the Empire State Building everyone thought that was going to transform you know grocery in retail and distribution in New York City you know after they launch the bookstore's there was speculation that it was you know they were going to have you know hundreds of them throughout the country there by think 15. You know when they even launched with Amazon Fresh you know I think that there was some speculation that they were going to be in you know hundred plus cities and you know what a very short. Of time and that roll out spend a lot a lot slower so I I don't know that I completely believe the rumors there's a part of me that that wonder is you know is it is it somebody who's trying to short grocery stocks is planning these Rivers you know so I'm not I'm not I'm not sure that I fully believe it. Also be the logic of of opening that many stores that do require such a high capital investment. [16:14] I'm usually pretty small format stores. Especially ones that are not selling high-ticket goods and you know a lot of what they're selling or these you know convenience store items are lunch for someone. You're not talking about you know business that is like 10 or 15 million dollars per location and I'd be surprised if it was even that much so. Terribly High capital investment for a business that ultimately I don't know how much of an impact is going to have on Amazon's overall business at this point I mean the kind of bet that Amazon needs to make now now that it's like a 200 billion dollar plus company it has to be really big and and I don't even know that you know kind of opening a convenience store chain is going to deliver. Those kind of numbers for them. Scot: [17:14] Yeah and we like we like to say it's a trillion-dollar company just use the bigger number. Sucharita: [17:19] Google valuation versus Revenue right. Jason: [17:24] Yeah that is a very first world problem when you get to the scale where. Buying a business is only interesting to you if it as a potential to be huge and an Amazon certainly has entered that phase. Sign on Amazon go if the rumors are true and they roll a 3,000 there's an interesting question does that disrupt convenience stores I-80 is that horrible news for 7-Eleven or is it actually worse news for like. GSR Quick Serve restaurants like Subway sandwiches and those folks because it really seems like the in the first few stores. The the purpose people have her going to the store is to get lunch more so than you know get emergency convenience items. Sucharita: [18:09] Right right yeah I think that that's that the end up an unknown I mean that whether it ends up being more of a grab-and-go restaurant dsmi restaurant semi going to pick up some Essentials I mean when I when I visited one time and they had meal kits bars in a wine all kinds of eating it seemed almost like it was an experiment on you know what are what are things that people can can carry consumed in the next few hours so so yeah it'll be it'll be interesting to see I mean I don't know that 7-Eleven and. Gas station convenience stores are going to be necessarily that disrupted the reason being that you're fundamentally it's gas or cigarettes or the other some other driver of the visit to those stores as far as as as Amazon goes ability to provide food I think yes they become essentially a new at the dispensary to come like a new quick service restaurant in in the space you know when it's I think that that's just the natural competition in the restaurant industry and it's so hyper competitive and it's so hyper competitive I don't know that any given quick service restaurant is going to feel the pain because there are their players that come and go in any Market within the restaurant industry in a year's time any. Jason: [19:37] Yeah yeah it's it's really going to be interesting to watch the one thing it was interesting to me that you know they just open the third one in Chicago first one had a big kitchen in it second one was very close to the first one in Seattle and I didn't have a kitchen because presumably. That kitchen was sort of a hub for spoke of a story but the first one in Chicago does in fact have a kitchen and so you know when you're when you think about it like that. Well a lot of the traditional convenience stores may have some food but they don't actually have fresh food they're preparing on site. And I think we did hear from one of the Amazon execs that that's so far that be my sandwiches they're number one's cute whereas like a convenience store it would be a beverage. In the old days cigarettes. It's going to get you some lunch another category that people are selling speculating Amazon is is on the cusp of disrupting is the pharmacy I know they bought till pack earlier this year any any thoughts about Amazon's true aspirations in the pharmacy space and how that might play. Sucharita: [20:42] Yeah I mean it will this is it's a it's a fascinating one because going. To the point about they need to go after really really huge markets obviously Healthcare is one of the biggest and one of the fundamental advantages of healthcare is it it's a sec actually growing unlike retail which is growing probably at the rate of inflation that Healthcare is growing. Faster than inflation and to be part of that probably one of the more scalable aspects of it in there on the prescription drug side versus on the provider side and by the way there actually let you know there was the whole announcement of Amazon with Berkshire Hathaway JP Morgan which is actually an experiment on the provider side too but on the the prescription drug side of it makes it makes a ton of sense it's an enormous mark. You know a hundred billion dollars plus there's inefficiency in that space and if Amazon is able to do to help support that. And Chad make life easier for for everyone in the Echo System whether it's. A medical provider or whether it is a patient that's that's a that's a transformational thing so so that makes actually a lot more sense to me because that's that's a market that that that is one of those markets that could be meaningful to a company that is still 200 billion dollars in Revenue. Scot: [22:10] So just tap it a little bit when when retailers asked you what to do about Amazon what what kind of what are you. Sucharita: [22:17] I think that there's a lot to learn from Amazon Amazon executes of course incredibly well they there they have they make customer so happy with with their fabulous customer experience whether it's shipping or how easy it is to return something or how easy it is to track merchandize or you find whatever it is that that you're looking for I'm so so all of that I think is is absolutely worth emulating and you know I always point out that one of our data points says that one of the things that consumers want from any website is just visibility until when you know when an item is supposed to arrive and you're Amazon's been doing that for years but yet to this day most e-commerce site still don't have it so when the question is you know what should we do about Amazon my first inclination is to take the best parts of it because you know they said some pretty good standards in. In a great customer experience and so I think that that's that's that's one of the things that you can do there I think that there are our other opportunities from the standpoint of leveraging a lot of the information of a night I think that Amazon is one of the largest open source product databases. [23:35] And I'm going to expose a lot of what's actually selling on their site when you dig into categories and subcategories and Sub sub categories and I don't know that there are a lot of companies that take advantage of that data to see if there are opportunities and trends that benefit them to now it's light from from Dad I think that's one of the biggest questions that we got about Amazon are related to well how do we how do we engage with them as a as a partner on do we sell on the Amazon Marketplace knowing that it is it could be you know deal with the devil if you know where exposing everything from emergency to. Velocity and dumb is that is that something that could come back to haunt us if they Jordan shoes Deb to private label or or basically take the best aspects owns of you know kind of merchandised universes do we go at it and try to sell something to sell our products direct-to-consumer through other channels and and that I think is those are those are tough act to existential decisions that be at the right answer is going to vary from company to company it's going to depend on everything from your culture to what it is that you actually sell to you know what kinds of barriers to competition your brand is has even set up if any. [25:00] But that but yeah it said it's a it's a complicated relationship I think the easiest answer is you take the best of what they've already established and and you know of an embrace it and harder side it's a big kind of how do you how do you spell exist in this you know in a world where online it such a dominant force and it is that it's it's it's proven to be. [25:28] Front of me to at it too many Brands and retailers you know I used to work at Toys R Us and see it you know kind of a lot of that there was a big huge lawsuit in an hour more than a decade all of that when you go back and read you know they're the ultimately wet that the judge wrote about it you're so much of of what happened then when Toys R Us was selling on Amazon platform. Still applies today in Amazon's approach toward its Partners so so that this this notion and this is concerned that their front of me is is absolutely. Jason: [26:07] Yeah one of the fun games to play on Amazon is sort of imagine what categories are going to disrupt next do you have any prognostications you care to make about about love wet wet the next big move might be. Sucharita: [26:21] Well I think that you know what I've been thinking for a while is I think they're going to make another go at mobile phones we know that they're their first attempt at the fire phone was loose a disaster but that was just a thing wrong item wrong time you not the right the right mix of value for for the customer but the Despicable phone being a space is so large and is one of again those categories that would be meaningful to a company that's already 200 billion dollars that it it almost seems that they would be foolish not to take the IP that they had development that's their playbook right is like you know nothing's a failure everything is you know learning opportunity that you build on later I mean I'm actually more surprised that. After all the failures and challenges with grocery which is such a low-margin category they keep going after that whereas phones which are you know when you look at you know Apple's number is a really high margin category why why they haven't Give Mickey why they haven't made another attempt there I think there are other categories like you know potentially you know Automotive or travel that are also substantial. That they may tackle in some way shape or form. [27:48] But and I'm actually in a frankly surprised they haven't already done something in in the automotive space but but I think that's hardware makes a lot of sense and also given. So much of the unicorn of the credibility they've now built with with Echo. As a hardware manufacturer I think that you know any attempt at a phone this time around will be more positively receive. Jason: [28:17] Yeah that's really the reason why I guess I'm hoping is wrong because. We we do these forecast at the beginning of every year Scott and I are highly competitive and I think you may have just agreed with one of his his pics in the forecast so I just for the sake of me winning I'm I'm hoping that doesn't happen but I. Scot: [28:37] Sucharita is truly a genius. Sucharita: [28:39] What we're just going to link to one another Twitter Scott. Jason: [28:46] I'm actually going to go back to an Andre at at that show and I'm going to add a prediction that Amazon is going to get into the microwave oven business. Cuz I didn't answer I see that one coming back I don't know if you guys got the news Amazon announced 14 new Alexa enabled products today and you know there's a microwave oven in a wall clock. Scot: [29:05] Yep I thought you'd be excited about the microwave it has a order more popcorn but I know you can't talk about you love the buttons being integrated so that's exciting. Jason: [29:14] So needless pivot off of Amazon for second and we could certainly talk about them all day. Most other retailers that are definitely trying to compete with Amazon have a very unique attribute they have these these physical stores that Amazon doesn't have. Any any thoughts about the best way to leverage those those stores and sort of omni-channel way as a competitive advantage or what what are you saying going on in that that's out of the fence. Sucharita: [29:43] Yeah it's so I one of those pieces at Forrester that I just finished up doing research on is retailer LED media networks and it's funny that because this Amazon actually the biggest of retailer let me in it works but there are actually a lot of meat media networks bad that are less well-known but are successful growing profitable and really interesting engines of profitability for for retail or so Best Buy has one target has one Walmart has one and you know Credit Union there other players in retail that are in the Commerce Pace like Expedia that have had these media networks as well and the most successful ones are seeing double-digit percents of their sales coming from these media networks and their. Profitable been there for retail business so I said okay so what's the implication there and I think that the takeaway is that retailers have opportunity take advantage of the assets they have and monetize them in other ways and for some of these large mass Merchants one of those ways is to see what they have as traffic you know they the biggest Merchants have more. [31:07] Captive visitors who are engaged for longer periods of time than most media prettiest out there whether it's a magazine or you know what a TV show or you know a movie I mean it's it's an incredibly powerful. I said that they have that very few have taken advantage of and some of that spin just historically. [31:30] They never knew how to take advantage of that into technology didn't exist to necessarily make it scalable there maybe like a TV that would be mounted in Walmart stores this is before Cloud these things would break down and no one would know and it may take months before somebody figured out that it needed to be fixed and you know there goes you know the media that should have been visible in that particular Store so slow but things are different now and you know I think. These online media networks are proven that there is an ability to get alternative revenue and I I see this as an opportunity. For other large mass Merchants whether they're hyper markets or. [32:17] Even drug stores convenience stores that attract broad audiences of so so that's one thing I think just the overall mix of how retailers look at inventory the idea of stores within stores and Market places within storage and being more inventory light letting the brands be more of the stewards of what's in that physical store I think those those are those are definitely things that have to to to be different I mean what I'm describing is more kind of you know play is Sean how do you monetize the store and how do you think about. Destroyed from in a different financial model not just you know having a lot of inventory and selling it but ultimately all of that also needs to be wrapped into a great visual experience and you know when you look at retail I'm especially the big National chains. [33:17] Supposedly the most experiential like Mall based apparel Merchant the really for the most part haven't changed that much and you know that the Adena from when they started too often where they are now. But the sector that I'll look at 4 visual inspiration is the ruler look at the restaurant industry I mean there are so many different restaurants out there that cater to so many different demographics and you know whether it is the highest-end booty the culture or whether it is you know kind of mass you know there's a lot of innovation in in the restaurant space and. Part of that is due to Innovation and Yuna food and ingredients and menu items a lot of it is also in. [34:06] The visual look and the inviting nature of the establishment and that's part of the reason that the restaurant industry which is. For the most part offline I mean there's now online ordering but you know it's still an experience where people go to the the venue for the most part and even in the age of seamless and all of the delivery space at the delivery company is I mean it's still the vast majority is is is still in the the physical store I mean that's a space that's grown like 30 or 40 times in the last few decades and I'm it's because there has been innovation in the experience and if retailers applied that same Innovations their businesses I think. You know me they would they would probably bring a lot more people back to the shorts. Scot: [34:55] People speaking of storage to every store I go to now is full of Halloween gear we're sitting here at September 20th Halloween will will come and go pretty quickly and there were looking at holiday 18 our friend Casey over at delete they just released their forecast and they're saying online growth 17 to 22% which is pretty robust I think last year they said that they measure 18% based on the categories and stuff where where have you guys put out your Forrester report and and where where do you think that's going to end up. Sucharita: [35:29] Yeah we're in the midst right now of figuring out those numbers were not quite as a aggressive as Casey's number is our figures are in the low-teens they've been about there for the last couple of years and you know part of part of that is it is is you just kind of that historic Trend and so much of it is is about the key holidays it's around that it's Black Friday Cyber Monday you know this person in demand that really generates so much such a high volume of the sales there's one other big unknown and for this particular holiday season and that's what effect the terrorists are going to have on on retail I mean the the latest round which takes a fact. [36:20] Any day now effects a lot of consumer goods in a lot of holiday items like apparel accessories Footwear Consumer Electronics Home Goods so it'll be it didn't even even though we're probably not going to be in a revised our forecast down for that reason you know we'll see and at the end of December and in January if there was any impact in if there wasn't yeah we can he is a great sigh of relief for the holiday season but then yet you know it. That just means that were delaying the inevitable and the impact will be seen in q1. Scot: [37:00] Got it so the tariffs are the possible Grinch this year that's going to a bummer. Sucharita: [37:05] Yeah yeah I mean what's that mean that the terrorists are 10% right on most of these goods and when you look at some of the mass merchandised particularly you know in nabbed and HomeGoods are electronics that the margins are any then stop by for some of those categories so the retailer couldn't even absorb it if they wanted to so will you absolutely will see some of those eventually show up and in what consumers have to pay. Scot: [37:37] This actually brings up a topic that that kind of we hit on the show sometimes you know we will do these news reports and everyone's reporting so I can Amazon Q2 was like 30% growth and Walmart was 40% and Targets this all the online numbers. And then Target was like in a 30%. But then e-commerce is growing 15% even even like shopify's GMB kind of an aggregate is growing at like 20 or 30%. So have you have you thought about the site I kind of end up there's there's some people in the industry that kind of say they think the number to 15% kind of off because it's Baseline to this government number and it's a survey and comes were bass lines off of that it is a question I ask myself is if the biggest slices of the wedge of the pie are growing. Twice a 15% than the ones were not talking about have to be something has to be losing Trinidad share for e-commerce going to be growing 15%. Sucharita: [38:43] Sears JCPenney yeah I think that it's there is you know there's that psychological bias called survivorship by us that that we hear about which is that yeah you know we could we talked about the 6s cases and 6s cases talk about themselves and what you end up with is kind of have an understanding or seemingly and understanding that that that everyone's doing well. But when in and I do see a lot of the the numbers from specific retailers because we. [39:22] They still out our surveys and not everyone is is doing that well I mean there are absolutely do you know kind of some of these thieves. Some of the big box stores this past year for the last couple of quarters have been doing fairly well but a lot of small ones are not and Gina there are a number of companies that are that are dying you know a lot of a lot of retailers in the big box space you know I mean Toys R Us great I'm Staples you know Office Depot you know there's so many. Companies that are included in Indy's figures that you don't you don't always think about because they're not really publicizing Derek their stats but that's that I think is an important piece to keep in mind there's also and I think they get the other prevailing pieces then. [40:18] An e-commerce the big have been getting bigger which is ironic because e-commerce was supposed to be an equalizer right it was supposed to be in a zero barriers to entry and anybody can you can come in. But you know what you are seeing as you know you're seeing company is like that like it look at you know Amazon getting more share Walmart getting more share getting disproportionate share to the growth of the industry and. Neon we definitely know that it's harder to attract customers it's harder to let you know kind of gain mindshare on the internet these days and you know that could be part of part of the issue 2 is that there are 800,000 e-commerce Merchants out there in the United States so you know this is many of them are or are not piecing double-digit growth and I think that stuff you know likely where the figures that we see are coming from. Jason: [41:12] Yeah I certainly will buy that the survivorship bias light. Affects how we do this I do still think though there's some goofiness and have and numbers are collected and reported by the the the census Department like there's actually some tangible examples that they report you can get the date of is IC Code and you know for example if you take the ssic code that Walmart sand and you look at e-commerce sales in that ssic code total sales e-commerce sales for that ssic code are way lower than Walmart's e-commerce sales so there's something's getting Miss coded or like it's even sales are getting attributed in a different bucket or you know it again. In many cases of these are self-reported numbers to the retailers just have to make a mistake in order for the data it'll be wrong so potentially. Simulation of of some of these weird data collections in this new industry and some of the survivorship bias that your your highlighting. Sucharita: [42:13] That's a fair point Jason I mean I think that the truth is and this is the dirty secret of a forecasting is that. There's no there's no one knows what the right answer is because there's nobody has every datapoint and you know as a as a result of that Unifour casts you no matter who puts them out or a combination of a little you know in a little bit of Art and Science so you know there is the date of points that you do know and do you have different types of data points that you can gather some can be in Summerside data .7 could be you know retailer. Yeah they're always questions around how accurately or how truthfully you know companies and people may be answering some of these reported numbers and they're even very few even when you're talking about the census it's not getting figures from from yeah the IRS it's getting again it's getting figures from a survey defense is definitely has the ability test unit has the government behind it so you know there is presumably a little bit. You know the sense of responsibility that people have to have reporting numbers truthfully but even they aren't going to get every single data point so there's there's absolutely extrapolation and within that extrapolation there is a lot of there's there's there's a lot of speculating and that's where the art comes in. Jason: [43:42] And we're not going to sell that on the podcast unfortunately. But I do want to Pivot. An annoyance I have and I'm just curious you you would have some sort of analogous conversations on with clients I'm sure I get asked a lot about these trends that in my mind are simultaneously like overhyped buzzwords. And really important trends. I got to talk about one of those a shop.org a I like you know I sort of my my POV was. That it's grammatically overhyped in a lot of people you know her are trying to implement a I just to say they implemented a i but in the long run it's going to have these really profound effect on on our industry and be hugely disruptive the one of those trends that comes up the most in my world is personalization. I'm curious if you have a a point of view about personalization like is anybody doing it well or are we doing enough of it are we doing too much of it what your. What's your thoughts. Sucharita: [44:42] Why yes yes it said it did yeah incredibly I probably one of the most frequently asked questions that that we get I mean my perspective and I'd love to hear your thoughts too because I know that you'll have a point of view on it is that I don't know that people know even what it means I think that a lot of people still think that personalization means the recommendation and Jen's there other people who think that personalization means getting as much data as you can collect they don't have any plan for how they're going to use the data that they collect you know I mean some of the the best examples when I pink at you know kind of the heart of it what's great personalization is you know when a sales associate or somebody that you've had a business interaction with her some, Commerce interaction with to send the thank-you note you know where they do something special for you. In a bathtub a great examples of peanut butter personalizing an experience that's incredibly welcome but that type of personalization. [45:49] Doesn't get considered in the discussions that that retailers are having about personalization. I'm so I'd I think that you know there's it's your personalization data-gathering. Big data analytics officer I think all of these terms get get co-mingled and there is not. Even a great. [46:16] Did you know there's not even I don't I haven't seen any great examples of companies that have have have truly you know kind of Taken personalization and created some unique strategy. And have made you know billions and billions of dollars from it I don't know I mean that maybe I'm mistaken have you. Jason: [46:37] No I'm desperately looking for that example cuz we get asked for it all the time and I I'm sort of a I like mine with you I am fond of reminding people personalization isn't an outcome it's attacked it right and so you know how I get annoyed when people say the goal is to have personalization because like your goal should be to use a packet your goal should be to achieve some some help come. Sucharita: [46:58] Exactly cuz then you're just checking the box right I mean you're not really you know kind of delay you're not doing anything for your business that's that's meaning for for your customers. Jason: [47:08] Yeah like so I would argue most person was it when people say personalization what they really the outcome they're hoping to achieve is relevant city right like is never more relevant experience that therefore connect better with the Shopper in in case of Commerce. Like I know I can't think of any front in experiences that are. Fabulously personalized should therefore be more relevant for the Shopper I would argue like a maybe like a stitch fix is a good example of personalization in the custom assortment they offer customers pretty personalized to them. But not so much on that on the front end shopping. Sucharita: [47:46] Right right right and I think that you know sometimes some company is make it carried away with it you know this idea of relevancy doesn't matter as much if you have a small or limited product catalog you know it's like then you're over personalizing you know you just want people to see everything in your you know 50 product catalog and it doesn't make sense to necessarily you know go more granular than than that. You don't make the tennis sounds if you have a catalog with you know 5 million products but I think. You know that that's part of the the challenge 2. Anytime within you know small product how I can get very nuanced if you know if it's a VW purchase or if it's a very complicated purchase but but but yeah I mean there's there's often this the sense that you know personalization is some silver bullets and you know it's not. Jason: [48:41] Yeah and I 10% agree like you know sometimes you don't need personalization if if your product is super relevant to a huge audience you have a great product and you can make the same offer to all of them and I would argue that that's Apple for example. And you know if you can take the best personalized e-commerce experience in the world and I'll take apple and I'll probably retire before you. Sucharita: [49:02] Exactly and I think also you know I mean maybe if some of the Holy Grail is is loyalty like how do we get you know the outcome being in this store this belief that somehow personalization is tied to loyalty or tied to more loyalty and and I think that's where so you know there is a little bit of fallacy because the best loyalty programs out there it's not necessarily about personalization it's just that they give you free stuff for her you know they just they just have amazing prices or perks. Scot: [49:40] Cool so we spent a lot of time kind of in the in the present may be stretching out the holiday but but let's going to go to 325 and maybe 10 years out what her what are some of the things that are on your radar that that you think retailers brands should be thinking about our show is talked about everything from drones 3D printing to a rvr what what are some of the things that get you excited about the future of online retail. Sucharita: [50:04] I think that within Rudy tail the the biggest changes are going to be in. Disrupting the orthodoxies of retail and what I mean by that is that retails fundamentally constrained by a few things that they've always done you know they've always owned inventory they've always you know hired store associates to do certain tasks and they don't even share those store associate with other stores in their chain they did they have real estate that they have bought you skin a 20 30 year 50 year long leases that they're they're stuck with. [50:50] And when I say the orthodoxies change I think all of that changes in the future so it may not be you know and in some cases technology will will potentially in power and change aspects of that like for instance with labor force differences in the most retailers now you know will have their store associates and they they put them on their shifts and they come in and the store associates only work with that particular store but there are companies out there there companies like shiftgig for instance that actually have a Marketplace of basically store for workers and as a store you can tap into that market place based on who's available who's worked at your store before you know who has good ratings from their managers and who's in a potentially train to unload a truck or he knows how to work the returns desk or whatever the task maybe that you need and that kind of nimbleness I think is is what will transform retail in the future it's really about rethinking how are things done now and are there ways to change that dysfunction in the future for our for the better in the future. Jason: [52:13] I do agree I think that that is a very interesting for the evolution and you know how can we leverage that that in Star labor force across a bigger pool of customers with. Telepresence is in all of those sorts of things. Sucharita: [52:27] Right absolutely absolutely yeah the new question I think that you know me we've spent so much time in the last year talking about omni-channel but for the most part it's really still only in the realm of fulfillment issues and it you know me there's any channel merchandising omni-channel customer service on. You know there's so many different places where cross-channel present exactly like what you described and why can't I FaceTime you know somebody who knows everything about being a Sony. TV's when I want to purchase a Sony TV like you know that's that just seems like that's a logical thing to do. Jason: [53:07] For sure and I hope we do see that in the in the near future I think they're actually may have even been a few vendors in that space in the Innovation Center in shop. Org. Some of those guys will make it. But that's going to be a great place to leave it because it has happened again we've used up all our a lot of time but if you have a burning question that we didn't answer on Today Show or you have a comment we encouraged you to jump on the Facebook and continue the conversation there as always if you enjoy the show the way you cannot repay us is to jump on to iTunes and give us that 5-star review it really helps us to continue to build our audience. Scot: [53:46] Sucharita we really appreciate you coming on here this evening and sorry it took a hundred 50 episodes for us to line up everything but let's let's have you back on in less than before episode 1 300 your very active online where do you Journal edirect people if they want to see your your thoughts about what's going on up. Sucharita: [54:07] Am I I am a big Twitter fan so I would say Twitter yes my Twitter handle is an decimal Peru which is which is the name before I started using my married name is s m u l t u r u. Jason: [54:22] Awesome we will put that in the show notes sucharita as always it's been a true pleasure thanks very much for coming on the show. Sucharita: [54:29] Thanks so much Jason and Scot. Jason: [54:30] And until next time happy comercing.

The retail industry loves to talk trends, but SapientRazorfish’s Jason “Retailgeek” Goldberg says that many are overhyped. So what will stick? Joining us at Shop.org 2018 in Las Vegas, Goldberg chats about the retail tech trends that will gain momentum in the coming year and why a solution is in sight for the “mobile gap” problem. Learn more at retailgetsreal.com.

EP145 - Industry News Amazon, Walmart, Apple Amazon News Amazon (briefly) passes $1 trillion market cap J-Crew selling on Amazon New Amazon Ad tracking pixel Amazon Go opens third store (with more announced openings in IL, CA, and NY) Apple News New iPhones being announced 9/12 iOS 12 Ipads/AppleWatch Other News Instagram Shopping App Kylie Cosmetics coming to Ulta Walmart Premium Outdoor Store Who will win holiday toys? Kroger Simple Truth expands to China Upcoming: Shop.org September 12-14th, Las Vegas Groceryshop October 28-31, Las Vegas Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 145 of the Jason & Scot show was recorded on Wednesday, September 5th, 2018. http://jasonandscot.com Join your hosts Jason "retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Transcript Jason: [0:25] Welcome to the jason and scot show. This is episode one hundred and forty five being recorded on wednesday, september fifth, two thousand eighteen. I'm your host, jason retailgeek" goldberg. And, as usual, i'm herewith your coast, scott wingo. Scot: [0:41] Hey, jason, welcome back, jason scott, show listeners. We're sitting here in early september and thought we would update you guys on some e commerce news in between our releases of some great guests that we had when we were in detail east on jason. I want to start off,you had a tweet, and i didn't understand really what you're talking about. So your little grumpy, you're usually happy tweeter, so i wanted to pick your brain on this one, so that the tweet says, i'm so tired of talking about the r o i of a i based personalization client, quote, what's the r o i ofpainting my house. Me, it depends, is your last paint job one day old or ten nailed. What color do you want to paint it? End, quote and seen so tell us what? What does that mean? Jason: [1:26] So first of all, i've been watching my twitter analytics. And it turns out that when i'm cranky and i just rant about something that annoys me in the moment, it gets way more engagement than the like, superthoughtful, ah, well prepared tweets that i do. So now i'm just i've just decided to try to be cranky. Jason. So that's, what that's really all about? Scot: [1:45] So it's, not a it's. Not ah, fake account. It's. Really. Jason: [1:49] It is the real me, although you did call me out. My my son did do some tweeting earlier this week, and you correctly identified that, too. Ah, which is pretty funny. Scot: [1:58] I think it was like left. Parentheses. Right brace at e. I was like, what is going on? Jason: [2:05] Yeah it was either my three year old or the president united states one of those too probably. Scot: [2:09] Yeah. Jason: [2:10] Ah but like so that i think what happened there and this comes up a lot of, people are super well intentioned but like a client will reach out and they're trying to sell some initiative internally like hey we really want to do this new aye aye personalization initiative, and we need to pitch it tio our senior executive our board of directors or whomever and so i get all these well meaning queries what's the arli of aye aye based personalization, and i get why they're asking the question but it's an unanswerable question in my mind because a, yeah based personalization is a tactic like you could do it well and it could generate a way better customer experience that had a huge improvement or you could do it super poorly, on and have a negative experience and have it you know have ah negative return. [3:03] And it's not a binary thing where you weren't doing personalization before and now you are right so you know everyone's starting state and in st, are wildly different on dso that's kind of ah i think you you slightly mis read my quote like, if you ask what the r o i painting your house is like the first thing i want to know is is your last paint job a day old there is a ten years old right because if you currently have a really crappy paint job. The are lies probably hire for repainting it. Then if, you know you have a super fresh paint job and are you going to sell your house right away? Because then there's going to be a monetize herbal value for painting it? If you're planning on living in the house for ten more years, the return is gonna have to be your personal satisfaction from that improve curb appeal, and you can have a four year old repainted or you going professionalpainters repaint it because that's goingto dramatically affect the outcome. That's goingto ah influence that return. And so, ah, i guess i'm i was just slightly ranting that people want this super simple number and, you know, if you google our ally on a base personalization, you're going to get some, like, ah, be cg report that says that you get an eleven percent left if you do a i base personalization, and so that's, you know, it obviously totally absurd, but lots of people you know, go to their board of directors and say, hey, we're implementing this new tool because bcg says, we'll get eleven percent more sales. Scot: [4:33] Maybe it would make you less cranky if you just said eleven percent. Jason: [4:36] Yes, that's, exactly what the poor account manager asked me the question. Want this for me? I just wanted that bcg study on. Instead, i gave him, ah, stupid metaphor about a house, and then i outed them on twitter. Scot: [4:52] They loved it. And hopefully they don't listen to the podcast because you get a double dose. Jason: [4:56] Exactly. Scot: [4:58] Well, i guess we should move on. Hopefully, hopefully, they weren't listening. It wouldn't be a jason scott show without. [5:12] Use your margin. [5:20] Well, it happened aah! Little bit last week and some this week. Amazon is flirting with a trillion dollar market cap. We've been kind of watching this race here on the jason scott show for a while, apple has been pretty squarely in the trillion dollar club now for about a month it's kind of flirting with one point, one trillion, and i'm sure, with some new iphones there on tap, we'll talk about the minute that that will's further cement that, um, but amazon, when their stock price gets over it's right around two thousand gets two thousand five or seven or ten something like that right in just over two thousand it gets into the trillion dollar mark. So it's been flirting with that it's closed over in a couple days as we're recording this it's underneath it. Um and, you know, i think who knows when they announce q three results? We may see it kind of stay there if they have a solid q three, so i was thinking, i have to go back and look at our holiday ah, guess is i was thinking amazon will get there first, but apple beat him, but it is interesting now that we have these two companies and, you know, kind of in the trillion dollar club. Jason: [6:28] Yeah, it's, super interesting. And i saw. I don't know that it's meaningful in any way. But i saw this pretty funny analysis today on like jeff bezos, personal net worth has increased sixty seven billion dollars. This year is a result of that. That stock climb. So that's eight million dollars an hour, that his net net worth is increased. Scot: [6:48] Yeah, and there's all these, you know, there's, a lot of politics now, kind of surrounding amazon and there's. All these folks that say, you know, jeff basis, they kind of take his net worth and divided by hours or something like that. So it's just tons there, like he makes eight million dollars a second, and he pays his workers fivedollars an hour. All that sounds kind of hooey, because, you know, jeff bezos has put all his capital at risk, and he sells very little amazon stock, so it's all paper money until he sells it. So i don't know. It's apples emerges. Jason: [7:22] Yeah, i mean mostly only sell stock for rocket fuel, right? Scot: [7:25] Yeah, absolutely, yeah, most of it. Or, if he's going to buy a newspaper like a newspaper, like the washington, like the washington post. Jason: [7:33] Yeah, a lot of newspapers, exactly. Scot: [7:34] Yes, yeah, so that that's interesting to see, you know apple and amazon there, right in that trillion dollar club. Jason: [7:42] Yeah, for sure. Be interesting to see, like when they are safely over it, and it sticks. And if anyone is able to join him? Ah, i did see that j crew is the latest kind of director consumer brand. Ah, that has announced they're going to start selling their product on amazon, in addition to selling direct to consumer. Scot: [8:07] Yeah, that'll be good, it's. Funny. You know, i've kind of over the years. I think i've pitched everyone on this, and i've heard, ah, more, quote, i'll never saw an amazon in, quote. Then i've heard, yes, i want to sell on amazon so it's, kind of gratifying to see these walls come crumbling down. Jason: [8:25] Yeah, i will say that what is interesting is at the moment, and they're the latest of a number of brands that, like at one point, would have said, will never be on amazon. And now they're selling on amazon. The majority of those brands are doing it at a point of distress. Right? And i think j crew's, like, pretty clearly a distress brand. That's, that's looking for cem for, you know, an infusion of life by potentially selling through these marketplaces. What, what we haven't seen yet are like, you know, companies that sold direct to consumer are like cooking with gas growing really fast, and then are deciding, like amazon is the next distribution point. So it'll be interesting to see, you know, when and if we get some of those examples as well. Scot: [9:10] And i think they're there. I think a lot of the d m v b s are on amazon. They just don't make a big deal about it, like these guys are doing. It clearly kind of send a message to their shareholders that's, like, we're doing something, but, you go look at the mattress category on amazon, i think could be surprised by what you see there and, ah, you know, some of them, yeah, but no boast made a conscious decision not to, but you'll find all the mattress guys were there, and, you know, other categories have, ah, lot of the direct consumer kind of guys are onamazon. Jason: [9:40] Oh, to be clear, i agree, and i think i know there's a bunch of digital native brands on amazon. And in fact, i would argue it's, the second most popular distribution channel besides direct to consumer for those young brands, it's, much more popular than selling wholesale through traditional retailers. Ah, but i guess what i was more saying is the ones that were holdouts and for what, for a good or bad reason, said initially, and we're not using amazon is part of the strategy, like a warby parker or bonobos or someonelike that. We haven't yet seen one of those go. You know what, we're drilling really fast. We're trying to reach more customers, and we were wrong about staying away from amazon. We want to add amazon. I just i don't feel like ihave a good example of that scenario yet. But if a listener thinks of one, definitely drop us a line. The big news, though, in my little corner of the advertising world, is the amazon is piloting. I think, technically, beta testing a new program where they're offering a amazon tracking pixel for for brands to put on all their own properties. So they can get a multi channel, multi touch attribution model for all their there at amazon media. And understand. Like what? What? Actual sales on amazon are are occurring as a result of their various marketing activity. Scot: [11:10] Yeah it's kind of even a broader theme and we talked about allowed in the show i think we were we've been really early on this that you know we kind of have said that this is going to get, out of another billion dollars kind of offering for these guys and if you track it out it will be his biggest facebook by i think twenty twenty two ah, the mainstream media has picked up on it leased the business press so there's been a lot of articles in the wall street journal and the new york times loved don't really add anything but this was really pretty interesting so iwould just want to throw this quote out there our listeners, they interviewed the new york times had a peaceful linked to it in the show nuts. [11:47] Talking about um you know, just amazon moving in on the market and they had a quote from monica mcgurk and she is, the chief revenue and e commerce officer that's nice title at kellogg's that's so cpg on and she said we can reach the right consumer at the right time using their wealth of data to target, other traditional digital platforms do not have the level of purchase data that amazon has on their customers, so you know that's pretty powerful in the same article had some quotes from verizon and, geico and you know so pretty interesting and even i think some car liam's that are you know amazon, with their wealth of data, is starting to get some really interesting signals from people on where they are. The purchase funnel. And i just don't think you get from other ad platforms. So it's going to be be interesting to see where amazon takes this. And, you know, i think we've predicted it's going to be really big business. I think this is what takes amazon from a trillion to the next. You know, several hundred billion dollars of market cap is, you know, this. This becomes another big pillar and a big business for them over time. Jason: [12:56] Yeah i agree and i feel like it works really well as one of multiple revenue streams i actually think that's a much healthier place to be than to be ah ah a pure advertising based business model like a google or afacebook in the long run, but it is you know i remind people like for the majority of of history the majority of marketing has had really lame kp eyes and success criteria right like, most most marketers are their success criterias how many people saw that the, the marketing that they did or at best like how many people remembered my brand or you know, unaided recall or these kind of, silly, synthetic success criteria on and then you know you've got a platform like amazon where the success criteria is, how much stuff you sold and what was the gross margin for the incremental stuff you sold right and so you can really look at the spin on that platform through much. [13:58] Clear set of green eye shades than you can you know certainly that that super bowl ad that you bought and even more so than you can like, top of funnel brand awareness advertising that you might do on a platform like facebook and so it is, it is very different and i do think marketers get kind of giddy about like having these more tangible r o i kp eyes, you know, it is to me slightly different form of advertising like i do think there is some value in some top of funnel brand awareness advertising. But i certainly think it's much more valuable on these platforms, like facebook, google, amazon, where you can, you know, way more actually targeted. And just put the content in front of an audience that's likely to want that content vs that ad. You run on the super bowl that you know, ninety nine out of a hundred people have have no interest in your your toenail funguscream. Scot: [14:54] Yeah, and if you're calling about a year ago, we had darrell juvenile on there and that's episode eighty six on one thing, that really kind of stuck in my mind from that episode was they talked about being able tomeasure downstream from amazon. So not only could they get to your point that you're omar margin of what they were selling on amazon, they were advertising their products on. Then they were seeing kind of a bump in sales at target, walmart, costco, other places like that where their products were, because, you know, as we you know, you have a little bit of, ah, disagreement on this. But, you know, there's survey date out there that shows that amazons become the product search engine. So, you know, you have an outsized impact by advertising an amazon, because not only are you gonna sell more stuff on amazon, there is downstream benefit out into the physical stores as well. Jason: [15:44] Yeah, for sure, and, you know, the site, the more mature platforms like google and facebook, they're actually spending a lot of time trying to come up with that that multi channel attribution and tell you like, howmany people are showing up in a store as a result of their advertising, and they have to use really in perfect methods to do that like that, like, upload your own point of sale sales data, and we can match it up, you know, for the small percentage of your shoppers that, that are known customers when they buy stuff at the cash register, you know, amazon has has more than four hundred grocery stores, what you could imagine them adding an attribution model where, you know, they told you how that that media you're buying on their platform drove traffic in whole food stores, for example, like theirs, lots of interesting things that you could you could see play out here. That doesn't remind me of one adjacent piece of news that i'll just briefly mentioned here there were there was also an article that got a lot of people slightly perturbed. It came to light last week that google had been buying personal data from credit card companies to do some of this this in store attribution on behalf of their ever. Scot: [16:58] On dh that's. Uh, so, i guess, that's. Just controversial because it's tracking you, mohr and everyone's freaked out about all that. Jason: [17:06] Yeah, it's, you know, it's all the personalization fears, and you know how much of your personal behaviour do you really want google to know, like they, you know, in their own ecosystem, they know a ton, andnow they're, you know, one one gap that they had versus amazon is amazon. See stuff you buy? Google usually doesn't on dso. More recently, we've seen google partner with a couple of big retailers like wal mart and target, who, for particular use cases, will share their sales data with google. And now we're seeing that google is going out and buying, you know, credit card sales data as well, the kind of augment that database and and build that big, in my world. That wasn't shocking at all, like, i mean, we've all known that that data was for sale. And so, like when it became a big news item you're like, oh, people are upset about that interesting. Scot: [17:56] And you guys are getting a ghost. Where have you been today? Jason: [18:00] Uh it's it's not open yet so they did just this week open a third ghost door but they're all still in seattle so they're all in downtown seattle on the one that just opened two days ago i have not been to yet, what's interesting about it is that it's the biggest go store so it's about twenty one hundred square feet, which is ah an average sized convenience store it's not a huge store but why that slightly interesting is the very first ghost door that's you know in in the day zero building is, eighteen hundred square feet and so then they opened a second one in seattle that was actually smaller it was fourteen hundred fifty square feet and they're a bunch of ah pundits are maybe i should say a few pundits theywere like ah, amazon's having trouble with the technology and they're having trouble scaling in and they can't they can't even make it work in eighteen hundred square foot store so they're having to downsize, to the smaller stores, which didn't seem very accurate to me at the time and then you know two weeks later after all that that came out like they opened the third store and, what a shock it's the biggest one right and it turns out more there's a variety of factors you used to pick a a store location and do a lease and you know you you have to take the size space that's available that means herecriteria. And sometimes they're going to be a little bigger. Sometimes they're going to be a little smaller. Scot: [19:26] Yeah, it'll be interesting to see what they used extra three hundred square feet for, you know. Will it just be more of the same, like more prepared food? Or really introduce a new area? Jason: [19:35] The thing i'll be particularly curious to know so that eighteen, the first door had a kitchen and they prepared a lot of food in there, right? And so one of the nice i think they're number one selling skew is this b masandwich that's made on premise, and you can grab it and have for your lunch. The second store does not have a kitchen, so presumably there they're driving prepackaged sandwiches from the other store or from some co packing facility somewhere. Um, and, you know, you is easy to imagine that the food's not going to be his fresh and that it's not quite as good an experience when the kitchen isn't connected to the store, and so i'll be curious, if that third store has a kitchen again or of the you know, they're trying to have a centralized kitchen that feeds the number of stores and, you know, i'll certainly be curious to see how the chicago store when it opens,which they haven't. I've been to the site it's under construction, they've announced the location, but they haven't announced yet like any details about what actual size that is or when it's scheduled to be opened, so i just have to drive byoccasionally. Scot: [20:39] Do they security run you off when they see you milling around out. So. Jason: [20:43] No, i mean it's, it's, it's, literally in the willis tower building, which used to be the sears tower. So it's, a pretty public space and it's it's on the ground floor. And, you know, just the windows, air, all newspapers off. So, you know, you can't. You can't see it. But it's. Not like you see a lot of robust activity from the outside, or guards or anything. Scot: [21:03] Yeah, cool that's, our amazon news summary. And then i know any geek worth their their street credit is excited about next week. Jason know, you and i are on pins and needles, because it's going to be new iphone week next week. Or do you looking for? Jason: [21:24] Yeah well you know so i feel like a lot of the mystery has gone these days that you know, apple is amazing compared to most companies at keeping like these private development efforts under wraps, but even for them has become next to impossible and you know apple in particular like to manufacture a lot of the phone so they can ship him shortly after the announcement so i feel like most of the major stuff has beenleaked, and you know so now you watch the announcement to see like the ten percent that was a surprise or that they got wrong in the weeks, but based on what has been leaked ah it's not super exciting for me it's it's what like i think apple has historically called kind of s year where they increment the, the previous products rather than a dramatic change like the iphone ten was last year, so i think it's going to be faster, going to have a little more memory you know, i don't know what your experience has been but like one of mine pain points is not that the phone isn't kind of performance or that i'm doing some, ah advanced math on the phone that needs more horsepower they're going to offer you and i both have the ten they're gonna offer a bigger screen size in the ten, which yeah i don't know what i'm going to do you ah i possibly will get the bigger sizes just tow. Have something more different. But what are you thinking about? Scot: [22:51] Yeah, i think the operating system will probably the big new things, so the less talk twelve will come out, it's, one of these it's, kind of like an s release itself and there's gonna be a lot of just kind of tuning and performance improvements and that kind of stuff. Um, yeah, i'm, uh i'm kind of there's, not a lot of e commerce stuff going on. You know, last time we had this, who had apple pay for webs, that was a nice little nugget on the commerce side. The only thing i can see that has a little bit of e commerce angle is some of the e r stuff is coming on, so this will be a generation on air kit. I know you've speculated about three d cameras, and are we gonna get one of those? So, you know, i'll be watching for any surprises around that. Jason: [23:36] Yeah, i think from a period commerce standpoint like, you know, the, the rear facing camera, the camera that you, you know, see that sees you when you're looking at the phone is a three d camera in the in the iphone ten that's what they use for the face, i'd, and their couple retailers that kind of leverage that right away for some interesting e commerce experiences, warby parker can scan your face and use that scan of the face to recommend frame specifically for you, whichis pretty clever. What would be really exciting is if that back camera ends up being a three d camera at some point, i haven't seen that b a rumor yet for this phone, but that feels like the kind of thing, that they could sneak in, and that could be a surprise announcement, and if that were the case, you can imagine, like all the furniture guys would be super excited. All the apparel guys would be excited because there's a lot of experiences that could be enabled with that that camera could be used for really accurate measurements of where to place furniture, art or, what size apparel the wear is. I'm with you, like, clearly, like a bunch of the things i'm excited about our inn, o s twelve. [24:46] The like i hear that it's just going to perform way better, and so you know, even if you keep your old phone, your old phone is going to be snappier because it's it's much more efficient, one features the camera now has native q r code scanning, so you know, for folks that are having to use a third party q r code scanner for any any use case you khun, you can now use the built in camera, so that is slightlycommerce e, and this isn't commerce e at all, but the the feature on most excited about in the phone going back to jason cramer ginny, they have a new feature called instant tuning, and what this what you do is when you get some annoying notification on your phone that you never want to get again, today, what you have to do is figure out what app made that notification drill twelve menus deep into the settings things scroll through your three thousand aps tto find that app, and figure out how to have a change notifications so that app doesn't, um, notify you in the future, and in this new os they have this feature called instant tuning, which essentially means like you can click an x on the notification and that apple never notify you again, which i'm eager for. Scot: [26:02] Yeah, i love the feature. Where, when you have to, do, you know, dual off that the it'll automatically just kind of copy the codes, so for you, and you can split it. Summer. I spent a lot of time entering the stupidaccess codes. Consulate. Jason: [26:16] Yeah, so i agree with you i'm excited to slash i i guess i more recently have mixed feelings, so the the feature for folks that aren't super from there would do authentication, so you type your password to get into some account and then as an extra security measure, they send a six digit code to your mobile phone and you have to type that six digit code in, so that verifies that you both, are holding the phone and have the passwords. So you have, you know, two factors of authentication. Two factor authentication is way more secure in text messages is one of the common ways to do two factor authentication and so, in os twelve there, automating that like you no longer have tto, switch over to the texting and remember the six digit number to type it in like the browser can literally like automatically detect the code from text messaging, which so like you, i'm excited about that comma. All the security gurus have told me that, using the sms text message for your second factor of authentication is next to worthless because it's, so easy to fake your identity and hijack your sms messages, that the security professionals really don't recommend using sms messaging as that that second factor and two factor authentication so. Scot: [27:38] One. So we're all just kind of like going through the motions. Makes me feel good. I feel so much better. Jason: [27:39] Sorry yeah, sorry to burst, we're all doing more work for no extra security exactly. Scot: [27:47] Cool the there's. Rumors of some watch upgrades and ipads. The one thing that's interesting. So apples, definitely doing something around. More of a pr are kind of, ah, area. They've got a bunch of patents. There aren't. Cos i don't think we're going to see anything here but there's, a lot of rumors going around that they are working on a pair of, you know, of a our glasses of some kind, so thatthat would be the big one more thing, if there was gonna be a surprise, i think. But i think that's further off, and, of course, they're working on a, you know, a kn automated car, but again also far off. Jason: [28:25] Yeah, don't i like, is boring, but i probably will. Ah, depending on what they look. I get one of the new ipads, like, i think they're going to have a lot smaller vessels. And my ipad's, which i used fairly frequently, are kind of long in the tooth, and they definitely haven'tbeen getting the same updates that the phones have. Ah, and i kind of want a pencil and don't have. Ah, ah, i like the small format ipad, which had they haven't out heretofore, offered a pencil for. So if they make a smaller pro, which the speculation is that they will. Ah,that could be an exciting upgrade for me. Scot: [29:00] Awesome, cool couple lightning around things. Just make sure no one saw some of these news items. Instagram, which is owned by facebook, has been flirting around with some shop bubble kind of options, and now they're going to roll out an app that really let's brands, published their catalog and the instagram picture kind of oriented way, and then consumers khun just shop using that app. S so that's going to be interesting. Are you hearing much from clients about the effectiveness of selling industry, um, over it, channeladvisor, we're not really hearing much about it, but maybe we're not talking to the rightfolks. It seems like it would be kind of really segmented in the fashion area. Jason: [29:39] Yeah, so there's, certain categories where influence or marketing is disproportionately affected, i would argue, influence marketing's, getting more effective across a bunch of categories, but it, you know, it's it's, totally dominant in fashion and beauty, and so definitely in those categories, people are excited about the richard commerce features. Come on. Instagram is emerging as, ah kind of the darling of the social of the north american social media platforms for discovering customers with buying intent. So it's kind of ah, taken over for pinterest in that regard. So i think people are excited about it, you know, comma there's, there's, certainly no one that i know of that's making a fortune on it yet, or, you know, is, um, you know, i don't think there's a grand slam case study justyet. [30:32] Ah related to that influence our marketing thing though, ah you know i know all the westerners the show know that we like to spend a disproportion amount of time talking about the kardashian family um so kylie jenner who has a very successful cosmetics line, has just announced that they're going to start distributing that product which was originally a pure direct to consumer play through ultra, um so through a wholesale channel and that's interesting to me because there's this there's this really. [31:09] Important divergence of influence or marketing like theirs what i'll call traditional influence or marketing or you go find these people that have a huge falling which kylie certainly does, you know kim kardashian certainly does and you pay them a bunch of money to say something about your product, and that advertising a super expensive and increasingly ineffective right because everyone knows, that kim kardashian's a paid spokesperson for that whit bomb and doesn't really have any personal affinity for that whip on and so that kind of paid mega influencer stuff i'm not very, excited about and have never particularly liked but what's working much better are these influencers, that are making their own products and turk turning themselves into a brand, on dso kylie cosmetics is certainly one of the best examples of that like arguably her her net worth has has surpassed some of her sisters because, of this line and so you know now this is an example of a digital, native, vertical brand that hit some critical mass. And now they're expanding to other wholesale channels and for our earlier conversation. Kind of interesting that the next channel they chose was olga. And not, for example, amazon. Scot: [32:26] Yeah, yeah, it's going to be interesting to see. Do you know if it's going to be stores and online err are just stores? Jason: [32:33] So that is a good question. I would expect that it stores and online. It is absolutely true. There are some cosmetic brands that give distribution rights to olders and sephora's for in store, but not online. So there is, ah different assortment that those retailers have online offline. But i would, i think, that's more and more rare. I think you know, older, generally doesn't want to sell anything in the stores that they're not allowed to also promote online. So i'm going to assume it's everywhere. Scot: [33:03] Yeah, another kind of ah na names on news. There was an interesting kind of ah, kerfuffle with walmart. Soso walmart acquired moose jaw back in the day about a year going guess now on dh then they just launched a kind of a store within a store concept. Andwhat walmart's doing here? It's quite classic mark laurie is, you know, they really want some of these kind of premium outdoor brands things that you would find it like an r e i or a back country. But those brands say, you know, we don't want sohn woman. So what they did is they acquired ms jo, which is a place where all those brands cell. Then they opened up a moose jaw store within wal mart. Well, some of the brands were having none of that. So several of them there's one called black diamond and a couple others were like, no, we never agreed to sell our stuff on walmart. Please take that down. So kind of a clever way of getting that product honey on wal mart. But i don't think the brands were really on board with that one hundred percent. Jason: [34:03] Yeah although i do think some of the reporting on it kind of misses the bigger point right like so there was this like, i don't know what the conversation was with black diamond and why wal mart thought that they could sell it and then black diamond got upset and said they couldn't. [34:22] But what what's interesting is that most of the brands that moose jaw cells are not on this premium portal on wal mart right like him very clearly wal mart didn't try to sell them so i know you read these articles andit's almost like, oh my gosh they tried to take all the products they have permission to sell through moose jaw and sneak them onto the wall mars mark site, and that's not actually what happened, if you go to moose jaw and you moose jaw dot com and you go teo like outdoor jackets, you're going to see like forty brands of jackets that they sell including all the aspirational brands in the outdoor space the you're going to see patagonia north face and um all of those those aspirational brands, if you go to the moose jaw shop in shop on walmart which is to me kind of awkwardly called the premium outdoor store, and you you go on outdoor you're going to see like two brands and one of them is the moose jaw house brand, so it's not like they tried to sell all that stuff and only black john diamond stopped them like the majority of brands that moose jaw cells, like clearly told wal mart way don't intend to be part of that, and wal mart didn't put them on there, so i don't know what was different about black diamond that caused, them toe to be, the subject of all these articles. [35:51] You know, i think the leveraging that the brands that wal mart owns on their site, you know, is interesting and ah, but but the shop and shop feels a little weird to me, like the way you get to this moose josh shop and shop wal mart is you go to the guided navigation and you say i want to shop for a peril on. Then you say, you know, they're under the apparel there's a bunch of choice is one of them is outdoor apparel, and a different one is premium outdoor apparel, and when you click the premium outdoor peril, you get this,like moose jaw curated selection. But it's it's, you know, the much narrower assortment of moose jaw stuff that's allowed to be sold on wal mart. So, you know, it's, a it's, potentially better shopping experience, but do shoppers really want to self select between average outdoor apparel and premium outdoor apparel? I'm not i'm not so sure they do. Scot: [36:40] Yeah, and, you know, i guess if you're intrigued by that stuff, you could go over to moose jaw, so it drives kind of within family traffic. I don't know, it's, hey, you know, you, you miss every time you don't take a swing. So i think it's interesting to see him taking some swings of this stuff and tryingto you know what, what, what, what i would do if i was them, as i would say, the brands. Jason: [36:57] Yeah, and they do. Scot: [37:00] Look, we're selling your stuff on warrant. You misunderstand our customer, our online consumer, wants your stuff, that that's the thing i've never understood, like why brands have such a like, oh, my god, i wouldnever associate with wal mart. Jason: [37:12] Yeah, no, i i tend to agree. And if i were walmart, i'd be using the search query data and things like that to be making those cases, you know, again like, to me, it's, a little bit of, ah, you really start splitting hairs when you're like, ah, selling via amazon's, not erosive to my brand. But selling on wal mart is and selling through jet, maybe is. And selling through moose jaw, which is owned by walmart, for sure, isn't like the the lines just get really bored there. Scot: [37:45] And i have ten out list. Jason: [37:47] Yeah, and all by the way, all your stuff is like unauthorized versions of it are being sold on every market place in the world. So what? Yeah, yeah, yeah. Scot: [37:54] And i saw last year stuff at costco. Jason: [37:58] So i feel like a little bit of that. Is people still acting like the old world economy in the new economy? I will agree with you. I do admire walmart seeming willingness to test, and one of the things that's interesting to me is, ah, moose jaw ends up being a shopping shop that's in the walmart, earl, they've watched some other new brands like all's well home, which is there, like premium home goods, and they watch that is a complete separatestandalone site on its own. Earl. So you actually camp all swells a walmart invented brand that you can't buy on walmart dot com, but you can buy from the separate sites. So could it be there, you know, trying to figure out what the consumers want and do it that way. And i like, i certainly think that's the right approach. [38:45] Ah, so speaking of wal mart, like one of the big categories that they're all in on, and that there's been a bunch of news lately is ah, walmart, target and party, party, city air, all dramatically expanding their toyassortment, as we start to approach holiday season and, of course, poison ruses and in the market. So they're all fighting toe to capture that. That additional market share that used to be owned by by toys, arrest. So that's that'll be an interesting battle this holiday, period. But we're seeing things like thirty percent mohr toy skews than they've carried in past years. Scot: [39:22] You have seen it. I spent a lot of time in my local target and walmart. And they're they're definitely kind of bulldozing certain areas and putting up more shelves for choice. It's going to be be interesting to see whatthat looks like. Jason: [39:34] Yeah, it's. Interesting, like you have a utah me unique use case like you're looking for these constrain toys, like the star wars toys that go out of stock pretty quick. And you've always had the smart strategy to goto, the less pop your retailer. So when everyone's in line at toys r us, you were in line at walmart. Now, if wal mart becomes a primary destination, like, you know, maybe party city, that your new new hookup for star wars toys. Scot: [39:59] My my secret sauce is kmart there's one k mart, left open in. Uh, no joking. They always get a nice, plentiful set of toys, and no one else is in there. But me and a couple of little old ladies hanging out, they're not in the star wars where they're out there getting urine and stuff. Jason: [40:17] I like it. They could get you a star wars sweater. Scot: [40:20] I may occasionally not one over on my way to the star wars while it's totally accidental. Jason: [40:25] I forgive you s oh in other news speaking of all these these retail own brands and what i call own brands which in my mind is ah evolution of what used to be called private label, one that really caught my interest is kroger has a very successful brand called simple truth and it's actually the the largest best selling organic food brand in north america, on dh to my way of thinking very wisely kroger has started to sell that simple to truth brand in china and hong kong on the various team all sites. [41:07] And to me that's really smart like it it turns out it's really hard to be a retailer in one market and expand globally, so you know best buys a super popular concept in the u s and they open stores in china and it doesn't go very well and targets you know very popular in us and open stores in canada doesn't go very well wal mart in brazilthere's tons of examples of, retailers that are very successful in one market, legal in germany trying to come to the us and when they try to expand globally, it's very difficult but this new model of retailers having desirable owned product brands, you know creates a new global expansion opportunity it's much easier to expand your popular organics food brands internationally than it is your retail concept internationally so i uh, i don't think kroger will be the last retailer we see that, you know, takes there. They're pop your own brand and tryto use that as the new tip of their spirit for their global expansion. [42:13] Um, and hopefully that is a interesting topic to end on because it's happening again, we have run out of our allotted time, but as always, if we missed something or you want to continue the conversation, please jump on facebook and you can correspond with us there. As always. Have you enjoyed tonight's show? We sure would appreciate you jumping on the itunes and giving us that five star review. Ah, there are a number of e commerce events coming up, so i think it's next week is the shop dot org's show in las vegas, so i will be there all week. I'm doing a couple presentations. Eso if folks are interested, i would love a catch up and say hello. It shopped at ord on dh, then, because i can never get enough las vegas. I'll be going back to las vegas in october for grocery shop, which is a brand new show focused on food and see pg e commerce, which i'm pretty excited about. Scot: [43:14] Awesome. We look forward to some detailed trip report from those on. Then we have a couple guests coming up, and then we need to get some listener questions out. So definitely jump on. The facebook will be collecting some listener questions and trying to work that in, as we have a couple of guests coming on the show tio to answer your burning questions about retail e commercepayments, or whatever's on your mind. Jason: [43:37] Terrific scott until next time, happy commercing.

EP144 - Tommy John founders Tom Patterson and Erin Fujimoto Erin Fujimoto and Tom Patterson are the founders of Tommy John, a vertically integrated consumer brand in the underwear category.  They have recently expanded to include direct to consumer, woman's apparel and are now opening their own stores. In this interview, we cover a wide range of topics including the origin story, direct to consumer versus wholesale, the challenges and opportunities of being a digitally native brand, omni-channel expansion, and the future of commerce. Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 144 of the Jason & Scot show was recorded on Tuesday, August 8th from the eTail East tradeshow in Boston. http://jasonandscot.com Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Transcript Jason: [0:25] Welcome to the jason and scott show. This episode is being recorded live at the detail east trade show and rainy boston on wednesday, august eighth. I'm your host, jason retail. G goldberg. Unfortunately, scott had a personal conflict and couldn't make it, so you guys are stuck with me, but to make up for it, we have to really exciting guests for this episode. Tom patterson and aaron fujimoto are the founders of tommy john, a a digitally native vertical brand in the apparel and underwear category. Tom and erica, welcome to the show. Erin: [0:57] Hi, jason. Thanks for having us. Jason: [1:00] I am super excited to jump into it. I know you've listened to the podcast before, um, and one of the things we always like to start with is getting a little background from our guests about how they came into into your roles. So maybe tom. We could startwith you. Tom: [1:16] Shirt mind was not a natural transition. I'm a former medical device salesman i got in underwear but frustrated with the fabric fit and function in my undershorts, buying fitted suits, starting my dress shirts, and icouldn't figure out why are all the undershirts bagging boxy? So in two thousand eight, i had this idea and created some undershirts and started selling them online with aaron, and five months later, the follow it happened. I was laid off my medical sales job and i decided, you knowwhat? I don't want to be this could've would've should've guy have this idea? I want to see how far it can take it and cash up my four oh one k savings used my friends that all the credit card companies that financed the startupfrom there, that is a very cool origin. Jason: [1:56] That is a very cool origin story and it's crazy. If you had just gotten in a more casual job, we'd all be walking around with annoying t shirts that don't tuck in. Tom: [1:59] You have just got in a more casual job. We'd all be walking around with that noise. You're totally right. Jason: [2:07] Yes, say. Ah, thank goodness for the formal attire in the medical sales industry. Tom: [2:12] There'd still be a lot of guys talking their undershorts inside their underwear, which is not a great visual. So i think if i could be a part of saving that, i feel it's all worthwhile. Jason: [2:17] No, and thanks for putting that in my head. [2:22] Very cool. And, aaron, how did you come to the. Tom: [2:23] Michael and aaron, how did you come from? Erin: [2:25] So i actually have no business being in the apparel in fashion space, either. I transitioned from a career with jp morgan as a financial advisor, and i got the entrepreneurial bug when i was, there, and i actually started a small website selling organic products, natural prague, skincare, stuff like that. And i had a lot of fun with building that initial website and choosing all the products and getting the site launched. And then when it came to the marketing side of it, actually promoting the site, i kind of lost all interest. But, you know, tom and i had the entrepreneurial bug, and we're always idea ting on, what can we dio that could be impactful? What are some of our pet peeves in the world? Would what are some of the things that wehate? And this idea of a simple undershirt that would stay tucked in and was fitted to the body, was the idea that took off. Jason: [3:18] That is awesome. And because scott is not here, i get to take advantage and just solve all of my personal problems on the show. Some, some listeners, will know my wife is in the same industry as i am. So we always had this. This ah dilemma that we, you know, both do our day job all day long. And then it's, the main thing we have to talk about when we get home after work on. If i'm not mistaken, you two are also married, eh? So i'm wondering if you have any. Ah, tips or advice for working with a spouse, or how that, how that's going for you guys. Erin: [3:52] So tom and i have always had complementary skill sets. And, you know, he used his medical device sales background as kind of just how to get this thing off of the ground and use his skills. Teo, you know, pitch to buyers and broken to our first account. Neiman marcus and i was much more behind the scenes and kind of more on the operational side. Basically, anything that could be done on the spreadsheet.That was my job. Jason: [4:16] That seems like a good division. I have a similar division with my wife were very complimentary because she's talented and i am not so there's that that that was a shadow tow to my wife and her in laws of therelistening. Erin: [4:17] That seems like a good division. [4:23] Uh Tom: [4:26] No, my wife and her in laws. Jason: [4:30] So let's, talk about tommy. John, can you give us, ah, feel for how big a company tell me john is today. Tom: [4:31] So, john, you feel for, so so. We're a private company, so we don't disclose revenue but were ten years old. We turned ten years old in april. Um, you know, for us, you know, we now disclosing, but i can tell you, we've grown five times since twenty fourteen. We just sold our five million pair of underwear earlier this year, and we open up our first or last fall. We're gonna be opening up our second brick and mortar store later on at the end of this month in august in charlotte, north carolina is so a lot of exciting things, um, that have happened, and still to come. Jason: [5:07] Very cool on dh. In the beginning of the show i introduced you is a digitally native vertical brand, this ah phrase that i think andy dumb done, the ceo, founder of bonobos, invented. Usually, when we talk about digital native vertical brands like rightly or wrongly, most people sort of imagine that their initial model wass, we're going to sell direct to consumer in your case. Well, i sort of do you think you're doing native vertical brand because you are all of those things? I'm not sure that was your original model, right? Like when you first sort of i d ated the product problem and your solution to the problem. Did you guys envision that? You'd mainly some director? Where you thinking about selling through a wholesaler? Tom: [5:52] Not at all it was really built to be a wholesale business and with my background being strategic selling to get in contact with the department store buyer was very similar to getting a touch of the hospitaladministrator a doctor, a surgeon, but i think what we found is you know, wholesale as it started to grow, we couldn't grow as quickly as we wanted to in two thousand twelve we really started focusing more on that direct to consumer channel building adirect relationship with the customer. [6:17] And i think that was a really in critical part because getting the insights and the data i'm the feedback from the product as a really allowed us to continue to innovate and deliver a better product to the customer and ithink what we believe that tommy john we really focus on fabric, fit and function, and having your ear on the floor at a wholesale department store is great feedback from actual in store experience, which we did a lot of in the early days and we still do, but we also have that real time feedback online that's immediate ce we look at the omni channel experience as a full three sixty feedback loop that helps us continue to improve the customer experience improved productwhere you may have some challenges on fit, fabric, whatever but also thinking about what aren't we delivering the customer that they want or maybe they don't know that they need yet that we're going to bring in, deliver, too the next two or three years. So i think the digitally native vertical brand, i think i hope that term will go away. I think it would just be it's a brand. The brands in the twenty first century have to be on a channel. They have to be at all channels, where the customer is the end of the day, and i think what you're finding is digitally native on ly, brands, are kind of their growth is becoming very limited by not having that offline experience with what we talked about, over eighty percent of transaction still happen off line at the end of the day. And i don't think it's goingto flip in the next couple years, the opposite. Jason: [7:37] No, i would. I would till i agree. And i would at least hope the definition people have in their head. And i suspect this is what andy originally meant. Will evolve. Like, to me, digitally native doesn't mean you have to sell online. It means you were born in the era when digital was already an equal part of the eco system. So you need to think about how you catered shoppers that air, using their digital tools to make purchase decisions, and all of those it's more to me. That's. What the d m means, then, necessarily, we have to sell everythingthrough a digital champ. Tom: [8:10] Yeah, i totally agree. I mean, you have to be digital today. I mean, if you look at a lot of brands, every digital is the fastest growing channel for pretty much everyone today, yeah, for sure and it's. Jason: [8:20] Yeah for sure and it's funny like ah, i'm a fancy consultant and so you know, a lot of our clients have gone through this phase where they've hired a chief digital officer. Tom: [8:21] Funny. Like what fancy consultant and it's, you know, a lot of our clients to the space, but he hired a chief digital officer. Um, well, bye. Jason: [8:30] And you know, we are i chuckle one of my own body my old boss is the chief digital officer at ibm i'm like, what is ibm need a chief did like who's not digital at ibm right? Tom: [8:33] My old boss is the chief officer of ibm. I'm like, what is ibm needed, chief who's? Not yeah, right, like and so do i think, it's. What? Jason: [8:40] Like um and so i do i think it's what? Putting digital in front all this thing is one of those temporary things right? And ah so i do have a point of curiosity though, so you have this original product inside that like, hey, you know, the ubiquitous product everyone's familiar with, doesn't doesn't mean the need and you guys invented a great solution on that product and then you're going to go sell it into a bunch of retailers and the traditional wholesale model, every week i watch shark tank and they make it seem like you can't possibly sell a product to a retailer unless you have a shark to make the introductions for you. Andi, i have a hypothesis that that's that's sort of b s s o i'm curious like did you find like having ah great product did you find you were able the open doors and have conversations with merchants and sell it in or was itreally. Tom: [9:36] Up for sure, i think differentiated product is one thing that buyers look for more than anything else. And so we already had a unique product that really stood out from everyone else. And i think what you see today is a lot of brands air focussing in differentiating their business model, and the product isn't often of forethought where the product is really from day one b been the be all and end all to our to our business. And if we don't innovate in the product and keep improving on it, people will catch up and we'll become stale and that's. Something that we've always really pride yourself on is. How do we not be happy with where we are today, but continue to improve and, well, there's. The iphone five six seven eight we've also had different interational of many of our categories and in styles over the last ten years and building the pipeline out very far, much far further beyond twenty eighteen. Where we are today is a really important part of building a longevity and lifeline into the business. Jason: [10:33] Very gold. Eso started the company in two thousand eight, predominantly with a traditional wholesale model in line two thousand twelve. You really turn on the gas about selling direct, primarily the website. And then it sounds like last year you opened your first own store. Um, can you talk a little bit about, like, what? The mixes today of, like, direct sales versus wholesale? Erin: [10:55] Yeah so we are primarily online so more than fifty percent of our our sales are direct online and we still have about over a thousand points of distribution through wholesale, our first stores in king of prussia and that we call it a learning lab because everything about it is just learning, first of all you know to sell men's and women's underwear in a retail space and men's underwear specifically that's a kind of a unique experience for most men, they just haven't had their own personal space in a store where they can go buy men's underwear, so there was a lot of learnings and we knew we needed to make it a new experience so we have you know, local brews on tap per seco on tap and large, so fun because we have a lot of families that she'd like to shop our brand and, yeah we try to make it a real experience to walk through we have comfort concierge that walkies through and give you a guided tour of all the products that features and benefits because our products do pack a lot offeatures they're not just kind of standard you know, pick pick anyone there's you know a lot of people have specific preferences and we've had a lot of learnings with our first retail space so we will be running, plans to open more stores. We have our next store opening in south park mall in charlotte, north carolina after labor day and more stores to come in. Twenty nineteen. Jason: [12:19] Very cool. And i assume that second story was located primarily to be convenient for scott wing go. So, um, he he will appreciate that one. I spent a lot of time in the king of prussia mall, so that that totally worked for me. I've had to spend the night and that's that mall many times. Erin: [12:25] Oh, yes, of course. Special requests. Jason: [12:37] Maybe you guys did, too, when you're putting this door. Ah, but i am curious, like the original decision to open that store. Was it, um, i mean, what? What was the impetus that made you say up? Now is the time, and like what? What did you hope to get out of opening your own store? Erin: [12:54] Well, i think, you know, just homes point earlier. We want to be everywhere that the customer is. And while we have a lot of presence through our wholesale partners and you know it gives it gave our brand a lot of prestige and credibility, being behind some of these wholesale names. But at the end of the day, we still want to have very close communication with our own customer. We want to own our own data, understand the data, understand how we interact with our customers, what our customersexpect to see from us. And we take our customer feedback very seriously, whether that be around product, the experience, anything that they want to see from tommy john. So those conversations are so important to us. Yeah, and we also wanted teo be able to control the brand experience because at the end of the day, it's underwear. So we try to make it as fun as possible. And, you know, we the only way to get that is either through our website or in our own retail setting, where we can interact directly with the customers. Tom: [13:53] And i think to the other things that we looked at it's, obviously lease availability is an obviously ideal. So you have to look at a handful of of locations and also proximity to new york city's. So we could have a lotof presents from our team at headquarters to really like aaron talked about a learning lab. How do we have different teams there, testing different user experiences for the comfort concierge's team? Two questions that we asked how the store's merchandised not really to see how good the beer tastes on tap that's not really important part of that, but it was it was early on, but not so much anymore, but so, yeah, i think our criteria for stores of little different, too, and the fact that were, for the most part itself on a business, we really have to be profitable very quickly in a market and ideally, new york city would havebeen the market. We opened up our store selfishly, because we're based in new york city. But new york city rents are very expensive, and we really think our customers are all over the u s in philadelphia is a great representation of the u s and general, versus the coastal city like new york or san francisco, where buying behavior and tourist concentration may be a little different. Jason: [15:00] Cool. And you did mention early on that being in the wholesale channel helped helped you get a lot of feedback from customers. You primarily had a lot of prestige retailers. So i i imagine that added some prestigeto the brand. But now that you have your own store, i'm assuming, ah, that you like. The feedback loop is much faster and, uh, presumably richer. Tom: [15:26] For sure, i mean, early on, you know, the first two years i was pretty much in stores irn aaron at times, but i went over ninety north from stores. Jason: [15:34] And was busy paying all the bills. Tom: [15:35] Yeah, she was very busy in the spreadsheet. See, i was just checking facebook in stores, but going to ninety stores over a year period and spending full days on this in the store, talking to salespeople, training thesales. Team's, talking to customers was vital to really where we are today, because what do you like about this? What would you change? And a lot of our product ideas were inspired from that feedback from customers. So if anything, and i still think you can learn more in a store in ten minutes and anywhere else today and that customer face face experiences really valuable. So if anything, we really pushed our team being in stores our store more often because you can't it's, not all data driven a lot of it you just can't interpret. We don't believe without that experience. Jason: [16:22] Oh for sure and it ah well there are tools but for the most part like the online experience the customers you have a best relationship with online are the ones that had the best and worst experiences, so like they had some horrible problem and they called customer service you get to know those customers pretty well, and the your most loyal customers that proactively reach out you might hear from but the overwhelming majority of those customers in the middle, the online experiences pretty anonymous right and so you know it's harder like there are tools to kind of you know look at the analytics and watch how people are behaving but i'm one hundred percent with you, being able to stand in a store and see how you know how people are interacting with mannequins how many products they're taking into the dressing room you know are they asking for help from a sales person are theynot all those sorts of things, there's a rich source of insight that, seems much easier to get out of the physical environment than the digital environment at the moment, i am curious just ah from the boring technical stack thing s o we have a direct website i think you guys on shopify if i'm. Erin: [17:30] Yes. Jason: [17:31] Is that right s o so you're on shopify you're having released successful director consumer channel via e commerce now you open your first store and you need a point of sale system and the inventory system for thatstore. Did you, like, try to pick some omni channel things, like, did you extend the shopify eco system to the store? Or did you just like, how did you? Erin: [17:54] That's. A tough one, that's, something that we're still working through, and that's. Why we call our king of precious store a learning lab, because thes air, all the kings and it's it's a big, you know, i think many brands are probably struggling with us howto integrate online with the retail environment andit's, a real problem. So e think there's a lot of opportunity, but, yeah, we're, we're definitely looking into its hot on our radar and just teo integrate that customer experience so it's seamless, because so many of our customers do go back in force from retail to online and back again. So, you know, we just launched a loyalty program. So how do we, you know, get them engaged on loyalty, to able to shop in any environment and take advantage of those parts? Jason: [18:38] Oh, and i actually want to come back to the loyalty program. But one question on the that decision is open. A store that had physical inventory. And, like what you see, some new brands are opening the ah showrooms or, ah, guide chops from bonobos. Nordstrom, who i think is, ah big partner of yours, now has some some white inventory stores in l a, the north from local stores. Did you guys think about that model and all? And how did you decide? Erin: [19:08] Horse, yeah, way didn't think about it, and we did some focus groups before we did our actual opening store opening, and, the focus groups, loud and clear, said that they wanted to walk out of the store with product and, you know, it's, i think, it's, that instant gratification of shopping and retell you want to touch and feel the product you wantto see. Is this going to fit? You know, you maybe want to try things on, and you want to walk out of the store with it, right? And the great thing is, is that if there were anything that was missing in the store, we could ship it to them overnight from our website. So we have the benefit of being able to fulfill that way. But at the end of the day, the customers still wanted to walk out with a bag in hand, get. Jason: [19:52] Okay, um, the and i there's something we haven't talked about yet, but i now realize we need to bring it up so that i can ask my next question. You and you sort of alluded to it. Aaron, you guys on lee recently expanded into women's apparel as well, is that do i have that right, eh? So we'll come back to the women's apparel, but i'm i just wanna get the sequenceright. Erin: [20:08] Yes. Jason: [20:14] Did you decide to open a store and then later added women's, or did you know you were gonna have men's and women's before you open the store or didn't happen at the same time? Tom: [20:25] So i think we wanted to open up a store earlier ended up being pushed later but we knew women's would be coming down the five and be part of the brand and be launching shortly after so, a lot of when we opened up the store we wanted we didn't want to lose sight of, having men's and women's in there at some point some day making sure it's a unisex experience and the great thing is we had a lot of women already in the store buying for their husbands or sons for gifting, and we were able to get feedback and really understand what was you know important to them in the shopping experience, selfishly to point earlier i think having a guide shop where is really very limited inventory is much easier on a business, it's much less of an inventory burden and i think most brands would be crazy not to do that if their customers are asking for it, but i think we've always believed in the customer's always right and the customer really guide you towards the right experience, and who knows we could be talking to you three years from now saying you know what we actually have virtual showrooms people don't need to try on underwear and t shirts and socks they could just come in touch feeland they can wait two or three days to receive it online. [21:34] In the mail so we're always open to change but i think what we've seen is this the velocity of change today in our space, it's so much quicker than it was two or three years ago. And i think, that's. The challenge of a lot of systems is a lot of brands invest in systems arguably too early. And then they're outdated very quickly, where we would rather not painfully, but, learn as we go before, we make a big investment, because first, we need to understand what stores means to our business at a larger scale than one or two stores, to really justify some of these bigger investments that aremore infrastructure driven. Erin: [22:08] Yeah, and as as faras our stores, we have tto learn very quickly and react very quickly, because our goal is, well, our stores have to be profitable. Everything we do in our business, we're not heavily funded, were not happily vc backed, so we have to make our retail experience profitable as soon as possible. So if we see that pivot, if we see the customers are responding in a certain way, we lean in very quickly, and our entire team is on board with that strategy of, being nimble, maintaining nimbleness, always learning right cause even the environments changing so quick that things that we knew six months ago, let alone a year ago, are completely changed. Like we have to constantly be testing and re learning and revisiting old things. That didn't work, you know, six months ago, because maybe they work now, and it means it leads to higher revenue. Jason: [23:02] And that that is a great insight. That's really hard to internalize, right? Because, you know, you think about all the clients i walk into, and the most common reason that a client doesn't want to try. Something is, oh, we tried that once, right, like, you know, back in the day someone tried that. Tom: [23:11] Mine doesn't want to try. Something is, oh, we tried that, right. Like, you know, back in the day, right, someone tried that, and, like, access is about having the right idea, but also at the right time and your point. Jason: [23:19] And, like, you know, success is about having the right idea, but also at the right time and your point. The customer expectation is always moving. So just because something wasn't right in nineteen ninety, by no means means it's. Not right today. Tom: [23:25] My expectation is always moving. So just because something wasn't right ninety nine. Yeah, we may have fifty stores, and we'll still be calling him learning labs. You know, it may still be changing that quickly. Where we don't have a reform. You'll figure it out. Yeah. Jason: [23:41] Yeah, i do. So i have a personal wish for you. Having worked with a bunch of retards that start opening stores, the first door is a huge disruption to the business, right? Because everybody's got a day job, and now they have to put their day jobs aside, and i'll get in the car and drive from new york, philadelphia, and you're like, you know, there with a sawed cutting store fixtures and figfiguring everything out, and, you know the business kind of stops while he opened that store, usually by the tenth store it's like, oh, we have a system now, right, like i pick up the phone and i call i call my store guy and i say let's, open a store in this market and. Tom: [24:13] All my store guy and i say let's, open a store in this market. And, you know, there's dedicated employees in the process. Jason: [24:18] You know, there's dedicated employees in the process, and it becomes much less disruptive to the to the business. Tom: [24:23] So i'm hoping that you're able to short circuit that a little like the second story. Still still probably pretty bespoke. But hopefully you continue growing twenty nineteen year able. Jason: [24:23] So i'm hoping that you're able to short circuit that i like the second story, still probably pretty bespoke. But hopefully as you continue grow in twenty nineteen year able, the tow, have it not be such a big disrupt. Tom: [24:33] Have it not be such a big a great point. I think the second store has been easier than the first, just based off of simple things that we learned. Jason: [24:43] Yeah we were we did a show recently with the founders of beta which is this great brick and mortar, concept that started out on the west coast it's in it's a shop and shop in macy's in new york now see you can check out but he was talking about like oh our first store the fixtures cost a fortune and they were all made out oflike exotic woods, and he's like the second store the pictures looked exactly the same but they were laminating right yeah. Erin: [25:11] Oh, yeah, you learned fabrication really quickly. Tom: [25:13] Yeah, i mean those. Those were just kind of the common evolutions. You, you mentioned that they even were just a men's brand. Like we still have the care to female shoppers. That, to me, is always one of thefunny and. Jason: [25:13] Yeah yeah i mean and those are those air just kind of the common evolution's you you mentioned that he even were just a men's brand like we still had to cater to female shoppers that to me is always one of thefunny insights, when you're talking to people about opening a men's store like and i'll make a joke about where the man chair is going to go right like and you know the man chairs this metaphor for where the dude sits down while thewoman shops and they're like we're not gonna have a man shareware we're a man store, and i'm like yeah but you still like you're still gonna have couples walk in and the guy's gonna plop down on the chair while the wife goes shopping for him, and so i was curious on your couch is that they were man couches or whether they're they're multi gender couches it sounds like. Erin: [25:57] Front, everyone couches, right? I mean, sit down, have a beer couch. Tom: [25:59] They've definitely been multi, multi, jenner. I mean, well, i remember black friday morning at like ten a m we had some, eighty five year old woman come in and sat down on the couch and drank two beers well while her grandson was shopping or her someone shopping, so we haven't had to kick anyone off the couch because it wasovercrowded. But yeah, i mean, i think if anything, it just allows people to rest and there's no pressure for their spouse to hurry up and buy your stuff so i could go to this store. It could be on their phone and it's more of a comfortable experience, and i think that's one thing we've really tried do it because we're brand based on comfort, having comfortable furniture, comfortable sense. When you walk in the store, we really try to think about the entire user experience from the moment you walk into every second that you're in the store, too, the moment they walk out. Jason: [26:47] Very cool. Let's. Talk about the decision moving. Ah, tau women's. Where for a second, like you, you've built a well known, highly regarded brand and men's where, like his has that translated to women like. Do women, you know, have a preconceived notion of your fit in quality based on the men's brand? Or you having to start from scratch? Erin: [27:08] Yeah, those were so the launch was in april of this year, and we sold out of six months of product in our first six weeks. So we were out of stock for about two months, and we're now slowly getting back into stock, so you can say it greatly exceeded our expectations. You know, there's, a lot of we knew that we'd have a strong customer following just with our existing customer base. Like tom said, we have, ah, ah, pretty large, built in female customer customer base, already who's shopping for her significant other or family member on who's a guy. But, you know, we we knew that that was going to be there, but overwhelmingly. I think, you know, people just gravitate to the brand. I think we built a reputation much stronger than we knew, known for comfort and function and innovation, and really giving the customer what they want anddelivering on our promises. Tom: [28:05] And i would add that i think about five years ago we started hearing when you're going to make women's and every year up until last year it seemed like it would just become louder and louder from from womensaying you know i want to be as comfortable as my husband is and i think, aaron talks about someone posted on facebook that this is what it's come to after where my husband's boxer briefs because nothing is this comfortable, so that's when i think it really made sense for us really guard now is the time to do it and to the category and, bring deliver comfort in a new and unique way that we believed in exists before in the women's category. Jason: [28:40] I feel like if you're going to really deliver on that brown brand promise, you're going to have to address shoes, because it's like that seems like the biggest disparity to me and men's and women's comfort in theworld, but, ah. Tom: [28:41] If you're gonna really deliver on that brown brand promise you're gonna have to, but that seems like the biggest disparity to me and women's comfort for women's high heels and stilettos and stuff like that yeah. Jason: [28:51] Yeah, exactly, yeah, yeah, ah, that, yeah, women totally gets screwed on the shoot comfort thing. Tom: [28:55] That yet women telling it screwed on us you comfort i'm utterly convinced. Jason: [28:58] I'm utterly convinced, ah, but ah, and i guess one more point on the women's brand, that's interesting to me, like a lot of times you have a successful means brand they expend and women by inventing a new brand,and i actually think even buddha boasted that, like they invented a. Tom: [29:00] What and i guess one more point on the women's brand that's interesting to me like a lot of times you have a successful means brand they spend in women by inventing a new bird don't you think even boasted thatlike they a program for women. Jason: [29:13] Different brand for women that ultimately spun off, you guys decided to leverage the brand and sort of expanded, like, was that something consciously that you did? Or was it just? Tom: [29:15] You guys decided to leverage the brand, and it was that something consciously that you did or was it just wait? Yeah i mean it was really never thought to create a different brand. When the brands that we admire, whether it's, patagonia or nike or lose a lemon, they never created another brand. You know, we've always believed that comfort doesn't matter if your men are manner woman. Everyone deserves to be comfortable in their underwear and it's really hard to build a brand and to build another brand. I think it's been very few and far between, where brands spun off and created a male and female brand that have been able to scale to the same levels. We're for us. We felt there was so many center jeez in the men's business with the brand awareness, recognition and distribution that we have, that we wanted it, really. I don't think we thought about it. It came up acouple of times, but. Erin: [30:07] No, i mean, we definitely did our due diligence. And, you know, early focus groups that we spoke, you know, spoke with various women throughout the country, and just, you know, ask them about the brandname. If that was going to be a turnoff in any way, or with that, steer them away from shopping, you know, for women's underwear with the brand called tommy john. And, if anything is, it was funny. Wasn't a reaction that i expected. But they said they actually felt like there'd be more innovation because they feel like men's. Clothing in general, gets more innovation on dh has generally has more technical and smart properties to the fabrics. So if anything, they they liked it. Have it. Jason: [30:45] That's. Totally fascinating, it's almost the inverse you were seeing that sometimes in ah, beauty, like where men want want men's products, but they want them from aa company that makes women's companiesbecause they perceive there's a lot more. Erin: [30:50] City like where men want one minute. Women's company. Jason: [31:00] R and d behind the the products. Erin: [31:01] Yeah, interesting. Jason: [31:04] I do want to pivot for minute. We teased loyalty earlier, um, and that, like, superficially, i go. You know, when i saw that you offered a loyalty program. Have to be honest, i'm like what's. The frequency of purchase of of underwear, like you know, is like you don't have a huge breath of products to solve a bunchof different problems for the customer. What what was the thought process behind loyalty and and how, how is that going? Erin: [31:30] We'll repeat, is such a huge component of our business, so, you know, starting out underwear, it's. We want people to fill their door, would tommy john underwear, so and you have to replenish your underwear. You have to replace them every so often, and we wanted teo. We want to be the brand that people go to. So that's always been a huge component to our business model and it's. It will always continue to be so it's, very important to us that customers have a reason to come back, and that we reward our best customers for being loyal to our brand. Jason: [32:02] On one of the things i noticed about the loyalty program is it's. Ah, not exclusivity, rewarding people for purchasing the product. So it feels like there's. Multiple triggers that can earn earn points. So it does seem like you're you're trying to entice people to engage with the brand. Erin: [32:17] Yeah, definitely. Definitely. The interaction is important. We want to encourage people to also write reviews, you know, share just who they are, you know, i mean, and just kind of start engaging in and, you know, there's many different things that we can just kind of give, incentivize small points for just to get that initialengagement and, kind of have them start navigating through the platform as well, because the more they use it, then they'll kind of know where it is and how to get back to it. Check their points, how to redeem points, so it allows them to get familiar with the system as well. Jason: [32:49] Nice. A question i have to ask on scott's behalf is about funding, right? So scott's, a serial entrepreneur, is, you know, taking several companies a company public, and been very successful. Ah, and so he, you know, likes to talk a lot about the sort of vc legacy for companies. And you mentioned that you hadn't raised any money through a traditional vc. Was that overt strategy? Tom: [33:16] Way haven't so so starting in two thousand eight during the recession i think we, we start out where we had to sell the dollar for more than a dollar versus selling a dollar for say thirty five cents to build top line but we did raise a small round of funding of one point five million in two thousand twelvebut what was really important to aaron and myself was to maintain control the company, and by having slower arguably slower, more profitable growth we're not chasing evaluation that we have to live up to and the pressures that that. [33:45] That come around that where we really put pressure on ourselves to grow the brand the right way and built for longevity and quality and duration, so our approach has been a little has been very different i think especially from a lot of the brand's you've seen emerging just the categories in general the last three or four years, where you can grow in two or three years maybe what's taking us to grow ten years but is it sustainable growth is a profitable growth can they become profitable at some point a lot of that is still to be determined where, it's a lot easier to spend someone else's money when it's not yours so we talked about earlier we had to be really thoughtful with our money whether it's stored we have to look at stores differently because they need tomake money, when we look at building the products that you know, they they have to be able to support the infrastructure that we need to scale over time. So we don't have a lot of pressure to grow. And, um, we we do like pressure to grow. But it really comes from ourselves. I think at the end of the day, if you have anything else to say, said. Jason: [34:47] It is interesting it annoys me a little bit like one of the challenges with the v c model is once you take that institutional money, the successful outcome they're looking for is a billion dollar exit right and so like there really is no happy medium where your ah, ah profitable company that's you know sustaining a bunch of employees making customers happy in your your you know, even half a billion dollars a year in revenue, you're you're still not a success to your your institutional investors, and to your point what we've seen a lot in these did you donate a vertical brands is, you you build a brand promise that appeals to a certain market size right and depending on your product and the promise and the category that could be, you know, one hundred million dollars a year with a business or it could be ten million dollars a year with the business or you know there's some sort of organic cap that your brand positioning earned you, but if your venture funded once you hit that cab you have to keep buying more customers and that's usually the point when you start seeing people do really stupid things, um like ah, you know these crazy customer acquisition costs and you know i think there's been some companies and went public recently where they're paying like fifty one hundred dollars customer teo to acquire customers and itjust seems like like what's the payback on that right, like. Tom: [36:17] Yeah i mean you know as a business we don't we don't look teo enter a category unless it has ah replenishment nonseasonal component to it so whether it's underwear or t shirts or lounge where it's something thatpeople will need to continue to buy throughout their life for a, or some of these products have ah repeat within five or ten years so we know that there's going to be a repeat revenue stream coming in so the customer turn is in this high as some other categories, we also don't have tech valuation there's a lot i think there's been a lot of tech valuations in this space where it's not a nap it's not a software it's actually a product, so i think they're coming back to reality now with how the evaluations of the companies in our space or being evaluated, but it's been painful valuations or down rounds for a lot of the companies that we've seen in this space. [37:02] Where we've seen a lot of brand to come and go over ten years you know? So i just think you know, every founder makes a different decision for what they think is best to grow their business and they try to make the best decision they can with the information that they have at that time, but i think what i've learned to a lot of conversations a lot of people regret taking so much money early on, and if anything if they could do it over again they would have grown slower, and maintain control of the company and try to figure out how big the business model was and helping the revenue opportunity was within that category where i think a lot of um i've just been over valued the market sizeisn't this biggest they think it is, and then on top of that they have a lot of pressure to make it bigger than it probably is going to be ever, where you know underwear is actually one of the few obviously we saw. [37:51] Many products outside of underwear but underwear is actually the only, category in the last three years that has continued to grow especially the premium space so, um underwear doesn't last for decades we've actually found with some of our customers it does unfortunately, but there is there again that whether it's underwear t shirt socks there's that repeat component which is really critical to our business, but that was not white space that we identify before reap built his business by any means it is just something you know this business was created off from a problem that i wanted to solve, we've really taken that problem solving mindset to other categories and use the learning so what we have um, to continue to grow but also minimized the level of risk and inputting the business in a position where we may go out of business or we may need to raise a large amount of funding. Tohave, a lifeline we've never wanted. Put the business in a position where we were exposed to something like that. Jason: [38:47] Yeah, no, i don't. I don't blame you. Um, i also have a perception that early on, one of the things that you used help build your brand was some influence or marketing. All right. And the in my in my head, i feel like i've seen maybe too many pictures of kevin hart. Naked is that is that. Tom: [39:03] I mean i don't know where you're seeing naked pictures of kevin i haven't i haven't seen those. Jason: [39:07] Semi naked sigh in comfortable loungewear. Tom: [39:08] Say my name you know we've been comfortable way we've been fortunate to know, a handful of influencers howard stern ended up getting our product and talked about how he's never been so comfortable but it was after he try the product we didn't even pay him we're now ah paid advertiser on thisshow, but kevin ended up posting on instagram three or four years ago and someone in our office a tom here and check this out kevin hart to dancing around in our underwear with the shirt off, not naked and he saw his underwear away span and, i knew someone who could connect me to kevin sent him a note said hey i'm a huge fan congrats on all your success here some more underwear and a couple years ago he was in new york and said, hey, i'm a huge fanthe brand can i come meet with you i just want to learn more about the company, and i just love everything you guys are doing so when we look at influencers we're not paying people, to promote our product actually kevin paid us through through ah meaningful investment in the brand because he believed in this so much and as a result you know kevin has one hundred million social media followers. [40:13] The most successful comedy tour of all time and is just this honest hardworking, funny, relatable guy it's also very thoughtful and a lot of things that he's done, and we just had a lot in common. He's, like tom it's, taken me eighteen years to become an overnight success. People think i'm this overnight success, but they don't understand it. Been doing this since i was eighteen years old, and i think the way we have built tommy john, we had a lot of empathy for each other in the way he's built his business and hollywood not having any connections inhollywood. Us not having any connections in the fashion, retail space and it's just been amazing partnership for us. And we're actually launching our second, kevin hart to point online this october, the sex over with him, which is really exciting, and i definitely want to congratulate you understanding. Jason: [40:57] Very cool, and i definitely want to congratulate you on deciding put pictures of kevin and underwear on your website, and not howard i. I'm glad he enjoys the product. Tom: [41:03] Yeah. Jason: [41:07] I'm just saying, probably a good aesthetic decision. Tom: [41:07] Nothing, probably. Jason: [41:09] Um, the i am curious, the like they're so i totally get that and that's very different than paying a kardashian toe tweet about your product. Tom: [41:11] I secured the right there. I totally get that and that's very different than paying a kardashian to tweet about your problem. Yeah, in my mind, that sort of payed mega influencer technique has kind of played out. Jason: [41:20] In my mind, that sort of paid mega influencer tactic has kind of played out. I think customers see through that and know that that's, not authentic, but we're starting to see emerge. Tom: [41:26] I think customers that and know that that's, not antic, but we're starting to see emerge a lot, sort of. Jason: [41:32] A lot is these sort of micro influence, our campaigns, where brands partner with, non celebrities that have, ah, you know, a niche falling in a particular category, like is, if you guys looked into that at all, is that something you could see being part of the, the marketing mix at some point? Erin: [41:51] I'd say never say never more than anything when we pick any of our partnerships, it's, usually comes from a place of authenticity so it's an authentic partner, somebody who's a true fan of the brand or were a fan of them and we see our great alignment and alignment and our values in general, that was what was so great about kevin is that he came to us and just said, i'm a fan of your brand, how can i help? How can i help you? Right? And that was his approach, and, you know, we were so stuck in our heads saying, well, you know, we don't we're not really looking to endorse anybody, we can't afford to endorse anybody wecan't afford it endorsed kevin hart, you know, and he's had to really just shout loud like, look, i'm trying to give you my money, i take my money and i want to help i want to help you guys grow, you know, and and we're kind of thrown back by that thinking, well, this guy's real deal, he actually just loves the brand he's a fan, he wants to be a partof it, he wants to be part of the growth, and, those are the types of partnerships that we would look for very cool. Jason: [42:53] Very cool s o unfortunately wouldn't be a jason and scott show if we didn't talk about the book resellers in seattle. Ah, amazon, right? And ah, you know is interesting is the number of years ago amazon sort of announced this like, you know, shift to get into the apparel business, and back then there were a bunch of people predicting like, oh, apparel is way different than the other categories. They're not going to be successful fast forward about four years, and it seems like the evidence is, they're very successful in apparel, but it's a specific subset of apparel like it, it is the basic needs stuff, more so than the luxury fashion stuff at the moment, right? Like, i'm i'm not betting against them, the jury's out on the long run on the the fashion stuff, but i'm curious is that scary to you? Because you're in the underwear category, which kind of sounds like basic needs? Or is the fact that you're a premium, differentiated product, like, really put you insulate you from some of that success that amazon's having, or are they a potential partner? Erin: [43:59] I think it comes down to you know, of course they're a threat just because of their sheer size, right? And and when you talk about market share, anybody that's competing on market share and taking that that awayis a potential threat. But guess where we don't get so scared is that it's not necessarily what you do, it's, how you do it, and i think we've, you know, prove to our customers, and we continue to prove to customers that we're here as the loyal brand, we have a strong line of communication with them. We're here to serve them, and we really listen and take into consideration what they want, and i don't know, i don't know if amazon, if anyone's really been able to talk to amazon and tell them what they want, you know, or if they have, ah, open ear to listen and unnecessarily here, that so i think what we've built as a brand and how we continue to communicate and engage with our customers is what separates us. Tom: [44:55] Yeah, i think the relationship is really important. You know, loyalty is something that we want to offer. We really wanna have a deeper, more meaningful experience. And, you know, there's restrictions and guidelines that you have to work within within amazon, that we just don't feel are. They just there. It's not fit for us at this time, but you never say never. You know, things change and models models evolved, so i think we're open to the future. But right now, at this point time, it just doesn't make sense for us and awaiting question. Jason: [45:22] I want you and related question. Like, when you talk about the big market places, one for a brand. One of the issues that always comes up is authenticity and counterfeit products. Like, have you guys run into that at all? Is that something you're having to battle in terms of? Tom: [45:33] Yeah, run into that and always battle with counterfeits. Jason: [45:39] Yeah, in terms of people knocking off your product or something. Tom: [45:41] Of course yeah i mean yeah i think there's been a lot of brands that have reinvented underwear since after we launched but i think it goes back to you just we actually embraced competition competition only makesyou better, but like i think what we're always thinking about it what are different types of partnerships whether it's kevin hart i'm doing you need things with nordstrom how do we deliver value to our wholesale partners how do wedeliver value to our existing customers? A lot of it comes back to the product and continue to innovate and evolve as a brand, and you know and also i think what we've really enjoyed as as we've grown is we have a unique way of talking about a very uncomfortable topic underwear and a more funny in a funnier, more relatable way and that'ssomething i think, brands need to continue to do is just, i think authenticity is a very overused word everyone's talking about it you have to be yourself and you know it took us seven or eight years to really figure out what our tonal voices and really get it out there in a clean,concise way, and that's really when the brand i think became much stronger and the relationship their customers hasn't is continuing to become much deeper and that just something you can't get on a lot of other platforms that re sellyour product and i think the brands i can figure that out. Maintaining evolve. It are the ones that will you continue to outrun the competition. Jason: [47:05] Nice. I think that is going to be fascinating to see how that continues to evolve. And that brings me to sort my last question. If you take your sort of today, head off and think about how the industry is going to continue to evolve over the next four or five years, do you have a sense for how different things are going to be like? Are we, you know, is everyone going to be a brand selling direct in five years? Our, you know, you know it r is the shopping experience going to be wildly different? Do you have any guesses for, for the future of commerce? Tom: [47:40] I mean, no, i mean, if you told me you were going to be here five years ago, you like, maybe, okay? I mean, i think a lot there's so much out there right now, and i think there's so many things that came into the market too early, whether it's like a i or chap pods, and i think we're still we're not one of the earliest adopters, you know, like apples, never first to market, they kind of sit back and learn from the learnings from other brands. That's, really, how we've looked at the market in general, let the bigger brands who have bigger budgets, more money or funding, let them spend money trying to figure it out, and we'll come in and at some point well enough that but we're not really in this space of being the earliest of doctors unless we really feel strongly about it. And i think it's been more on the physical product side that we've taken that approach, but as faras the systems and technologies we're not selling ourselves as the tech company, you have to be a tech company today to bein retail, especially, is it digitally native vertical brand, but i don't think, i don't know it's. Erin: [48:45] Yeah it's a great question it's of course don't, very hard to tell where it's going to go i do see this shift you know, there's a lot of the digitally native brands as we talked

EP143 - Dell head of digital transformation Sarika Puri Sarika Puri is a Senior Director and Head of Digital Transformation Acceleration Organization at Dell Technologies. In this interview, we cover Sarika's background and discuss Dell Technologies journey to digital transformation. Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 143 of the Jason & Scot show was recorded on Tuesday, August 7th from the eTail East tradeshow in Boston. http://jasonandscot.com Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Transcript Jason: [0:25] Welcome to the Jason and Scot show. This episode is being recorded live from the detail east show in sunny boston on tuesday, august seventh. I'm your host, jason retail, g, goldberg, and unfortunately, Scot had a personal conflict this week. S o he's not able to make it, which means the listeners are getting twice as much jason for half the usual price. Ah, the great news is, we have a terrific guest for you on this episode. We have sorry ca hurry who's, the senior director and head of digital transformation acceleration at a little company you may have heard of in austin, texas Dell computers, and i probably already blew it. Have a nice erica it's, not Dell computers anymore. Sarika: [1:08] Well, it's still technologies were not very, very big. It's, it's, delhi emcee. But it'll all the seven strategically businesses aligned and of your big companies. Jason: [1:15] Hey, exactly. I'm trapped in this like old time warp from, like the nineteen, ninety five version of Dell it's, it's, it's. A little bit sad. Sarika: [1:22] Okay, yeah. Jason: [1:24] But before we get into that, one of the things we always like to do on this show is getting to know our guests a little bit and get a feel for how they came into their roles. So could you tell us a little bit about yourbackground and how you ended up a Dell? Sarika: [1:36] Yes, absolutely. So i started my career a Dell thirteen years ago, working on the Dell dot com commerce team. As a programmer, i have been a programmer for many years and love building platforms. Last year, i had the scenic opportunity to go lead the digital transformation off a future commerce platform. And that is how i came about to this roll. And, you know, it's, been it's. Been an exciting journey, being a Dell technologies overall, you know, i was surrounded by really smart people, good, great developers and and had a and that really sparked my interest in the commerce world. And on guys. Consider this like a very glamorous world where you have access to, like all the technology choices that she could make to go drive that outstanding customer experience. Jason: [2:22] I totally agree, it's. Odd, because in my personal life, i find very few people that think my world is glamorous. So i'm i'm glad that we are of a like mind on dh were cruelly correct. And as we're sort of alluding to before, like, you know, folks probably think of Dell as, ah, primarily a computer manufacture. But as you alluded to earlier today, it's ah, huge portfolio of prada, b to c b to b products and services. And so i assumed that part of the scope of that platform is toe. Think about all the different use cases for for all of that. Sarika: [3:01] Absolutely, absolutely so what's happened is when i was in wild, you know, buildings have been here thirteen years have been through several transformations, and this this transformation is really about we're on being on this mission to go deliver a global cloud based omni channel, commerce platform that enables our customers to buy a needle technology product line from anything and from anywhere, and also established agreed fantastic work culture for our employees, and that's the mission because we are dealing with traditional platforms, which are, you know, siloed across the different ecosystems, were dealing with lengthy leases and inefficient it processes were also dealing with disconnected experiences across Dell dot com, premier amc and the other strategically line businesses, our customers are no longer looking for a specific server or a storage option or a specific computer. They're looking for solutions. They're looking to transform their digital future, and they're looking for entering solutions, and we're building this global common platform, that can deliver that into an experience or customers have needs, and they're looking for art comes, they contrive the entire experience for them. Jason: [4:12] Very cool. And i'm curious. Weed. In my my day job, my practice, we talk a lot about selling and implementing platforms on behalf of clients and there's. Always this sort of build versus by conversation, was that even in the dialogue, Dell, was it a no brainer that you guys were that your next generation platform was going to have to be built? Or like? Sarika: [4:34] Great question i think we go it's it's like a ping pong game right you go through barrier versus pie you make some by decisions and you realize oh my god not so good, and then you end up going down the path to go build your platform and then you you realize oh it's not you know why am i building a platform if there is something that's already out there that can do the same thing, and how can i innovate faster rather than going to have i have to go having to go bear the same functionality that could be just procured from the outside i think the key it's not really build verses by i think it's not the ideathat that really matters, it's the execution off that idea sometimes we just don't have the patients to see it through, you know sometimes by a product and will realize oh it's not it's too expensive or it's not something that we really want to go down this path there's too much custom work that has to be done what was promised is notdelivered, and then you go down this path to go bury something and guess what when you're trying to build something there's just not off like for like functionality that has to be built, and and you realise why why why is this so slow like i would like to innovate faster so it's really how you execute and i think the speed in how you deliver your software changes to production is the key. And that is why i keep bringing up it's, not the idea. That's, so much that's. Bad that's. The execution of that idea. That's, that's, so critical to success. Jason: [5:49] That makes perfect sense. The only bummer, though, is that execution is like messi and boring, and it requires all kinds of hard work. It's way more fun to just talk about the shopping and, like, oh, my god, should we go builds by some shiny bobble from one of these friends. They'll take us to a nice dinner, or should we hire a big team and develop ourown stuff? Sarika: [5:59] Yeah, yep. [6:04] Dell wait we're changing that so we're changing i mean i think i and i said this before it's not just about you know delivering another platform, it's about creating this fantastic work culture for employees so it becomes fun building a platform, and we're using you know what some people may might know about this is pivotal labs methodology and technology that really drives employees experience so we're so centered around the customer, will be bitter things that there are customers care about you're no longer building things that are customers no longer care about, we're constantly validating it rating we're talking to the customers the entire team is talking to the customer it's not, that you're not operating a traditional waterfall software life cycle where you have a team in the business that comes up with an idea and you have a team of product managers that figure out how to write rightrequirements, and then you have another team of architects that who figure out all right how do you architect this entire solution and they handed over to a team of developers which, could take months to go deliver something to into ah sit environment and then it might take you know, another few weeks to get it tested now all disconnected themes and it can get very, very boring and very frustrating, what we've done is we've infused those dysfunctions do not go away we have infuse those functions within a within a very small product ing. We're moving away from project. He esteems into more small product. Hastings and and the steam is responsible for design. [7:29] Develop and delivering changes to production and how to support those changes back in production is really changing that entire operating cycle, so we're going to actually be on this path to make it a fun exercise.So it's not going to be boring. Jason: [7:41] Nice. I think that is critical because, you know, we talk a lot about it is ten percent, the tool in ninety percent, the people and on dso like putting those people in a position tau be successful and add the most value seems seems critical. I don't wantto spend too much time, but just to get like, so transformation implies a current state to a future state. So so the state you're moving away from, i'm guessing you had a number of platforms that came in through your various acquisitions in your legacy businesses. And is it fair to say you mentioned that the aspirational state is a cloud based solution? Is it fair that you may have had some class stuff before, but i'm guessing the bulk of your stuff was sort of on graham type solutions. Yet so making the big migration to the cloud on then the other buzz word that i usually hear in that sentence that you did not say so i'm just curious if you were trying to keep it simple for my my ah non engineering brainmicro services are you? Sarika: [8:41] Oh, absolutely. I think that and this is where, you know we've been on this transformation journey for a long time. And what's different about this transformation is, i think we took a big leap a few years ago where we were trying to deliver more seamless, online offline experiences. And we went down this path to create heavy, service oriented architecture and and and that led to big, monolithic services that did too many things across too many different personas. And it became very hard for us to deploy incremental changes to production at a faster rate. So we are on this path to decompose those big, monolithic services, into more micro services, again establishing more autonomy with these small product teams that owned these micro services so they can they can really leverage the speed in which they can deliver these changes intoproduction. So absolutely, i think that's, a very that's that's, a very critical architectural component on how we go, you know, drive speed to mark. Jason: [9:38] Nice. And when you talk about those small, autonomous teams, i always hate toe draw analogies to the evil book reseller in seattle. But, like they famously coined this to pizza team term. And it sounds like philosophically that's, a little bit. What you're what you're thinking. Sarika: [9:56] Yes, so what? Me, when i say high autonomy, i mean, you need tired on me across thes product teams, but you also need high alignment, to ensure there are all working too well towards one singular purpose to deliver that one single customer outcome and on dh. These are very small product teams. We don't call them project teams anymore and the three essential rules within the steam one is the product designer product managers, and then you have product developers who arepart of the steam, and they will work together, and they were like i said, they're sitting very closely with the customer. The business is part of the steam. We're no longer working on requirements to in in silos were very closely working with the customers, validating every feature that goes out live to ensure that it's creating the out things that we want to go see from a business standpoint and continuously trading on that product. So these are, like very small teams, six product developers, designer and a product manager on the same team. Dell. Jason: [10:50] Nice on dh, if you can say, are are you guys envisioning? This is something that would run on aa Dell hosted cloud. Are you guys thinking about leveraging the public cloud? Sarika: [11:01] Well, i think this is our i mean, look, i mean, Dell technologies is, ah, is a unique family of businesses that that provides all the essential infrastructure to help companies for their do digital future. And we really have access to all this infrastructure in house. So this is our story around. How can we deliver a modern, global cloud based commerce platform to sell Dell technologies on their technologies? So that's, that's, a that's, a key part of our success. So we'll be looking at leveraging our in house, we, um, where e m c, cloud based solutions transforming our data center so they can act in a more optimized cloud environment. And we're using our own technology and methodology to go drive our own transformation. Jason: [11:49] Very cool on. I do want to dive into the transformation aspect a little bit more. But before we d'oh a sort of when, when you think of platforms for Dell, like one of the unique experiences that you would certainly think about is when you are selling that, uh, made to order configured to order stuff, which i feel like a lot of your catalog, has heavy customization components. You rely heavily on, ah, a configuration or experience on i'm i'm curious, was, is that something that you also felt like you had to develop yourself? Were you able the leverage to my p from the open market for that? Or? Sarika: [12:25] Well, i mean, if you focused on so we have, we have our own in house customer experience that enables the configuration of both from a front and a back and perspective again. It's, it's, very it's. You know, we were dealing with again a monolithic application where your front and is likely coupled with your back, indeed a structures. And with Dell a dmc the when the murder happened, we no longer can support those applications that just support one kind of product. So there is there's, a huge effort going on around abstracting a product structures. So regardless of what your product line is being able to go, go abstract, these global common services that support the configuration experience and can support configuration across any product line. And i think it's been hard for us to go find something that can do that in the marketplace outside. So it's really about establishing those services that can be abstracted away from these masters so we can support that frictionless and seamless configure experience. And we can play around and experiment different configuration experiences against closely working with our customers and understanding what what? What leads to higher revenue? What leads to higher conversion rates? So that just gives us more flexibility with our own solutions as we develop them in house. Jason: [13:41] Sure, and it does feel like in the evolution of configuration. Ear's in the old days, like the goal, was really just, ah, reduce friction and enable the complete complement of configurations and follow the business, like just the basic block. And tackling was hard. It seems like today, in addition, getting on that block and tackling, which is still hard, there's a lot of art to so which configuration do i present to each potential shopper by default on what's, the highest profit configuration, what's, most successful for that client and to your point, like, the answer, isn't the same for everyone. So how do i split? Test that and and all those sorts of things. Sarika: [14:22] Absolutely, i mean you're dealing with simple configuration, others that do not have too many validation that needs to happen. The customer just needs a few options and few choices, and they can place an order in the cards so it's really about providing that seamless experience and focusing on each persona at a time, you cannot bear something that applies to all personas and understanding what your persona eyes. I mean, for example, we're also dealing with customers, for example, if they're looking to install her dupe a solution and they're looking for what are my small, medium high options, and their customers were looking to install splunk in their in their environments, and they're looking for small, medium high options and that involve our products across the entire product portfolio. It's no longer just legacy Dell legacy and see product product, it's it's the combination of products across the entire portfolios it's, it's really, really depends on the persona that you're trying to serve, again working, you know, becoming this customer centric organization, customer centric team and working backwards into utilizing all these capabilities to deliver the right experience for the right persona. Jason: [15:23] Yeah, you know, it's fascinating, a fun antidote from the last couple weeks for my life moves of my client's look a lot like you. You guys would be a sort of a typical client for us. But, you know, who's getting disrupted a lot at the moment are like food and restaurants. And so i have, ah, fast casual client, and they're our cages and quick question. Should we be trying tto add cheese to the sandwiches, or should we be trying to sell fries with the sandwiches like what's? A better question for the server to ask. And you know, at first you're like that's really interesting, and then you start thinking about it, and it it is the same configuration conundrum. And of course, the answer is exactly what you describe. We should get to know all of our dining guests and, you know, for some guests were smarter to offer add ons and for other guests were smarter to offer side dishes. So we got to give the servers tools. Teo, help identify those opportunities on. Sarika: [16:19] And that's, right? I mean, and then also, you know, we're going to stop just going to stop guessing, you know, anymore. We are going to focus on using customer data and what drives that, you know, selection, and then use that to it, potentially also pre compute these configurations, so we don't have to every single time validate, make sure every single option works with that configuration, and s o, you doing a lot of intelligence around, you know, what's, one of the most bought, what are the most purchased items? And and having to go reconfigure them over and over again by our customers may not be a great idea. So how can you go pre compute them? So it becomes, like, a very fast and a seamless experience where they can just check out with that configuration. So, yes, yeah. Jason: [17:01] Now, there's. Ah, funny old, quote that that i adore. If we're making this decision based on data, show me the data. If we're going with opinions, let's, use mine. Sarika: [17:05] We're making this decision based on data. Show me the data if we're, that's that's, right? That's? Absolutely right. Jason: [17:14] S so you're at detail today. You were on a panel this morning talking about the transfer business transformation and the transformation aspect of this project. So i want to jump into that. I have to be honest, like, intuitively, i think of Dell is, is, you know, arguably one of the very first, digitally native companies. And so, you know, part of me goes like most of these are analog companies that air transforming as a result of digital, somewhat surprising that Dell needs to transform. Sarika: [17:48] Well absolutely i mean we have to transform and look i mean we have established some key metrics that we want to go achieve and without going digital we won't be able to go achieve those those those numbers imean for example, we want to get to five nines off availability, which is like less than six minutes of downtime every year we want to get to one point five paige second speed response times globally, and historically we're focused on that number in the u s due to the limitations we've had in acts in accessing the cloud infrastructure solutions, and we want to get to seventy five percent and above sea sat the customer satisfaction score, which is really a way for us to measure if the customers of the customer was satisfied you know, going through an onlineexperience, and also the employees that promote a score we're not where we need to be from an employee you know, engagement standpoint, and and i think they're making great progress we've seen some really good numbers in the last year, and those those those numbers are like super critical for us so until we go achieve those numbers were not going to stop transforming and it's a journey it's not like a destination i mean you keep transforming, it still takes us you know, i remember you know him and i used to say this that you know, men even somebody in the business has an idea and the in the morning. If you're not able to publish our deliver that idea into production that afternoon, then you need to transform. Yeah, uh. Jason: [19:09] I love the idea that it's, it's, ah journey and it's it's, probably a perpetual journey. There's. This terrifying survey i saw this year that sort of broke my heart for a star goes out on the survey. Like twenty thousand ceos on, they said, like, where are you in your digital transformation? Twenty one percent of the ceos said they were done. Sarika: [19:31] Dell yes, man, on the bad investor, but i'm shorting all those nuts and, you know, i think you're done and it's and it's very dangerous, because every person you talk to, they have a different definition of digitaltransformation. Jason: [19:33] And i'm like, man on the bad investor. But i'm shorting all those stocks because if you think you're done. Sarika: [19:46] And if the thing think they're done that's very dangerous for their business. So, i mean, every everyone in the company, they have to realize that, you know, the future is upon us. The customer buying behaviors and buying patterns are changing. We cannot just continue to, you know, re architect are solutions every single time. There's a new touch point in the market. How do they establish the right architecture? Er, with the right process is in place so we can deliver things into production faster so we can deliver those outcomes for our customers. And so that every single time there's anew touch point in the market. We're not re architect ing the whole solution. Jason: [20:21] Absolutely. So i'm in a company your size. One of the things i find to be the hardest is all of those legacy systems were chosen by individual stakeholders, likely based on a on a set of narrow requirements that they had for their business. So, gmc, pick some stuff. That was right for amc and the Dell bea to see guys pick some stuff for the computers. That was right for them on dh. Now you're trying to build this global platform, and, like usually the first problem is, stakeholder alignment, like how, like, how do i get all of those dispirit stakeholders to trust that what i'm going to build, like honors and prioritizes? The the capabilities that they need is that? Sarika: [21:08] Yes well i'll tell you like i think i've been very fortunate to be part of their technologies and i think one of the best things that's come together is, it's it's the alignment from a leadership team it's the alignment across the entire executive teams on what's important, this is not lead from the bottom of this transformation that's really lead from the top it's a it's a mandate across the entire company to go transform and and go through this transformation, and we go look at pros and cons we look at data were very objective about what makes sense what does not make sense across the ecosystem we're going to pick the good pieces in the ecosystem not everything is bad, and then we're going to augment it with new innovation and new capabilities so so that's that's really the approach that we're taking it's not you versus me or it's not i think we have, past that i think Dell any m c has has not come together as an organization were not part of the same digital organization, and we're all making the same decision we all are operating as if you're one single organization with one singular purpose so those silos do not exist anymore you've taken those silos you know we've toned down thosesilos. Those barriers won't exist for us anymore. You're past that nice, uh and the way you got past that it sounds like a part of that wass, uh executive yes, yes, absolutely. Jason: [22:18] Nice on dso. The way you got past that. It sounds like part of that was executive buy in and, like, so did that started. The c suite is that way. Sarika: [22:29] I mean, you start when i said you have it has to be it has to be at the top you much these teams because you cannot expect the silo teams to make the decisions that are good for each other, right? I mean, you have to really bring these teams together so really aligning all the leaders, to understand that we have one global set of common commerce capabilities let's go bring those teams together, let's, let's, let's pull them accountable so they can deliver on the new use cases that we want to go deliver,so it has to be much too at the top. So the top leaders came, came together and they re aligned on what the new york times outcomes were that we have to go established in the company, and that really helps trickle down the right message in theorganization and then and then you're, teams, they work really well together, you know, again, i think collab if you're still working in silos and sister working in these, you know, traditional set up of the organization and that collaboration and cooperationbecomes very, very messy, it can be very exhausting, and, you know, sometimes people lose patients and they leave, because they just can't get anything done because they don't agree with each other, they don't align with each other. Jason: [23:34] So it sounds like, get get that alignment from that top. Get those dedicated teams. Identify some measurable success criteria. Then, did you guys do some, like, ah, global requirements gathering, like, how did you guys tackle the sort of requirements? Gathering in scope generation? Sarika: [23:55] That's a great question so i think what we did was when we started down this digital transformation that way said it's important that we go stand up, stand up an agnostic organization that's not tied to a particular business and that's the organization that i'm part off we said we're going to start up in organization we know these changes need to happen. [24:14] So we decided to go you know identify resource is across the multiple different teams and we brought them together, and it's part of each team again regardless of the reporting structures regardless of who they work for and we brought them together as part of one common theme, and and and the way we decided we're going to go deliver on those new capabilities and established the new platform wass he let's understand the missing pieces in the existing platform today instead ofthe taking like forlike and, you know because they're supporting our existing businesses were running the business we're keeping the lights on and we're generating the revenue from a current ecosystem from the current ecosystem we do not wantto disturb that, we want to make sure there is constant focused on ensuring that we deliver value to our customers through that platform at the same time they're called missing pieces called missing capabilities so let's start there, rather than doing like for like let's focus on things that we cannot do on the existing platform today and then privatize and sequence your platform work so we can deliver on those incremental business outcomes. It's not going to be let's. Go in a silo, build another platform, and then we'll show value. In three years. This was going to be what the missing capabilities let's, understand what those are. Start burning global common services so that it can easily be extended to not just support amc product lines, but then also support the american. Also start supporting, selling, marital another in other use cases. Jason: [25:38] Ah, one of the things i'm always interested in. So usually like despite the fact that it's ah ah, multi business unit, multi discipline, project, like, usually there's, a owner that comes from a orientation, right? And so, you know, even though you're thinking about all the different business unit users, it's not uncommon, that, like the the platform transformation, is ah, lead or engineering led. And so then the pitfall you run into there is, you know, how does that team get good at understanding marketing outcomes and supply chain outcomes and all those those various stakeholders like where they like, did youreach out to those stakeholders? Air? How did you sort of integrate them into the process? Sarika: [26:22] So what we do is we start s o b become a put, the work that needs to be done and why and how we're going to show incremental progress, and then you and what we've done is we've engaged the stakeholders on a monthly basis, hey, look at the progress we're making on the platform change on how we do things and it's really about its ensuring that you have your stakeholder alignment, where their teams become part off the balance team. So we have these small product teams where we're not just going to he tell us what the requirements are, let us go build it instead. It's come sit with us as part of the team, so we're we're really creating a very seamless, you know, interface between business and i we're not so different teams anymore. We're part of the same team, you're driving the same outcome, so those resources are actually part of the same team so that's that that is what pervert labs methodology advocates where you conclude your business andyour end users, they're part of your team, they're constantly privatizing the backlog. You're not working on something that's misaligned against the business and that's how you saw that. Jason: [27:19] Got you on dh for listeners that aren't super from later with the pivotal labs methodology, why generically, you hear a lot of sort of traditional waterfall approach, and on, you know, buzzword now is more agile. Approach like is a is pistola. Does pivotal abs have a point of view on that spectrum, or is it? Is that more stakeholder approach, or what's? The. Sarika: [27:42] Pivotal labs is is really, really the methodology on how you, how you make folks within the team work together, and how they work with their business partners and how they walk with their end users. It's really, the methodology, your this, the steam. Like i said, the three key critical rules designer product manager and developers on the team, they work together and understanding the customer requirement that developers on the team, the duke bad programming, they used test driven programing practices to develop software. So they think this first before they write any good, and that ensures that you know, there's there's, good quality in the system and it's, really the methodology and then also pivotal, pivotal also comes with a new great technology, which is their platform is a service but little cloud foundry that lets these product teams deliver software changes to production in a very cloud agnostic fashion. So regardless of what your cloud environment is, it could be a public cloud hybrid cloud. You may decide to change which your cloud, but if you use platform is a service which is pivotal flowered foundry, you can deploy these applications agnostic off any cloud environment and ensure that there's an, youknow, continuous delivery in driving the outcomes. Jason: [28:53] Yeah. It's, really both a methodology and a tool set. Yeah. Sarika: [28:55] Dell methodology and, technically, yes. Jason: [28:57] Ah, so how far into, like, when would you say you started this transformation, transformation? How far into it are you? Sarika: [28:58] So far. [29:04] So i way started this transformation a year ago. And i've been in this Job for the last 12 months. It's, it's, it's been almost a year. Okay? And so years seems like enough time. Jason: [29:15] Okay, and so year seems like enough timeto, really getsem learnings, like, have you identified what, what? Some of the big pitfalls khun b for this type of project, or like what? You know, what are the top reasons this project of this scope, my fail. Sarika: [29:27] The top reasons. Well, the top reasons the project might fail is people related. I mean it's not technology, it's, not process. And let me tell you, technology alone cannot transform your organization. All the three essential pieces these people process and technology must be effectively aligned. You cannot, you know, take a new technology by a new technology and have people working in the same non age. I'll methods using the old processes and you expect outcomes. You also cannot have people working in an angel environment on then expand, have and not have them make the right technology choices or not have access to the technology choices, that can also really, you know not you cannot drive transformation. So all the three essential pieces must come together and there needs to be effective alignment across the three central pieces and the top two reasons why a transformation can feel his people related, which is lack offalignment across the leadership team, and lack of skills needed to execute on that transformation. And without having the right people with the right skill sets and a shared vision to execute on that transformation, any attempt to due process and technology will fail. It will not work. Jason: [30:42] Which is a big bummer right here. Ah, and at Dell, did you guys primarily assigned dedicated resource is to this project. So you took people. I'm assuming these were often existing Dell employees. And so you took them off of their previous assignments and made them full time members of this team. Or do they have sort of a hybrid role? Sarika: [31:02] So yes so what we did was b we be identified some existing resource is within the organization. [31:11] That were truly passionate about building future state commerce services because we don't want folks in the organization to feel like they're not part of the future state because everyone is part of the future state. [31:21] And s o way identified resource is across the entire organization, and we've also hired fresh talent coming in from the organization i mean to be frank everyone has blinders on including myself and b we have lot of limitations approach has lot of limitations based on our past experiencebased on, what we've done so far we know this is never going to work we have tried this in the past it never works, and in that kind of baggage we all come back very heavy baggage so bringing this fresh outside talent and really brings that fresh perspective, and and and things that you may not even know what to ask you know those those folks can really help you drive that transformation so really creating that you know that the nice much team with good from fresh outsidethinkers, merging them with the existing resources in the organization and should always be hiring for skill sets that are missing in your organization because the skill sets that are needed, to transform the future commerce is different i mean they're different skill sets you need folks to understand how to continuously integrate deploy and deliver changes to production. What does that high velocity environment looks like? And you also need, you know, folks to understand how to build cloud native applications, and that's and that's, a different skill set all together. So it's, really about, you know, hire ingles. Resource is from the outside. Merging them with the existing resource is so weakened, ramp and scale, the talent within the organization. Jason: [32:41] Very cool. And so it sounds like you bring outside people in both from a resource standpoint, that you need more resources from, ah, perspective, sandpoint, that they maybe don't have some of the legacy biases. And from a skills gap standpoint, did you also do any ups killing of the legacy employees that got assigned to this? Like, did you guys have to do more of like the cloud based methodologies and pivotal training? Andalthough. Sarika: [33:08] Oh, absolutely, absolutely constantly training, we're constantly, you know, putting folks through, you know, new skill sets that we want them to go acquire. We actually have the spirit labs transformation program within within Dell and what that means is that we be repair our existing developers with the pivotal developers and the pair program, and they're bearing togetheras a team, and also the product managers there, pairing with apparently trained product managers. And the designers are also pairing with another designer, the constantly bearing and and there in a twelve week program where they get officially certified that they cannot think, you know, very customers that can bethey think they should be thinking about the customer. They can't be making decisions that are very business outcome based, their validating, their assumptions there validating their problem statements and their solutions constantly with the customers. So so they're really working together, so absolutely, like, you know, upscaling that talent is to put them through. What we've done is put them through private labs program. Jason: [34:07] Okay? And and a curiosity. This seems like a self defeating attitude. But i sometimes have clients that are like when they talk about getting people on these exciting projects, where they get to work with moremodern approaches and technologies. Ah, admittedly, one of the risk is that employee is more valuable to other employees. And you guys are in austin, where there's a bunch of tech start ups all the time and all this sort of things. Like, was there a fear about retention? And if you had any retention issues or what's, the attitude? A Dell. Sarika: [34:38] Well, the attitude actually it's, it's, it's gotten a lot better. I mean, i don't have talked about the employee that promoter school earlier and that's the question that you ask your employees every year, how likely are you to recommend Dell and and we see that school going up, we see less and less, you know, folks leaving the organization because they like the new culture they liked any operating model you may think that Dell technologies is a really big unit in a big company, but we're really a small startup. Then the commerce teams of a very small start up, so they're highly energized the highly autonomous in their decision making. They don't have to go through the same same processes t get yu know their decisions made,and like i said, it's really lead from the top. I mean, our our executive teams are constantly asking us what help do you need? How can help you go move faster, who's, your barrier what whatever obstacles, and that really helps move the transformation along for sure. Jason: [35:29] Nice for sure. Let's, change pages for a second and talk about the outcomes for a minute. You mentioned up front some of the metrics that you used well, and i'm sure there's a ton of metrics was there in your mind. Sarika: [35:34] You mentioned a front. Some of the metric. Well, i'm sure there's. A ton of metrics was there in your mind, was there, like. Jason: [35:41] Was there, like a high, high level k p i or where they're like specific, measurable outcomes that came from the sea. Sweet that you think about for this project. Sarika: [35:44] Like specific, measurable outcomes that. [35:51] Yes, absolutely so one was, you know, if you want to deliver future state, but we also want to, in your deliver incremental customer outcomes and how we measure those customer outcomes. I talked about c set, which was the customer satisfaction score. We monitor that very closely. We also monitor our page response times globally. You know, we want to go achieve those page response times, and also we measure stability. You know, what are your stability? How many incidents are you causing in production? Are you able? Are you building applications that are more resilient on more fault tolerant? So those are, like the key metrics, availability, metric, see, sat page, response times and employing that promoter school. Other four key metrics that we've aligned our organization on. Jason: [36:35] Nice and addict. Riaz ity how deep do you go into something like, ah, page response time, like one of the things i find, like so okay, so people weren't paying attention to page speed, and then they got taught thatthat's important. Sarika: [36:38] Go into something my. Jason: [36:49] And so now, everyone nose, nose, superficially, had to talk about paige speed. Sarika: [36:50] One yes knows. Jason: [36:54] But as soon as you start scratching under the covers like, oh, how do you measure? And are you using? Synthetic browsers are real users, and our you know you. Sarika: [36:55] The cover's, like, oh, how do you measure? And are you using? Synthetic browsers are really users and our, you know. Jason: [37:03] You pretty quickly find that, like the whole world is saying like that, they're targeting some number, but they have. Absolutely. They're not measuring that number in the same way. Sarika: [37:04] Quickly find that like the whole world is saying like that they're targeting some number but they have absolutely, they're not measuring that number in the same way yes yes so what we measure yes and they've gone through that evolution ourselves right we think we thought we were measuring, paid speed but we were not measuring page speed because your browsers are different and you know do geographically you know you have customers that are you know located where they're trying to browse anexperience that's hosted with in austin, and since it's really critical so what we did was we actually went through this transformation were not measuring time to interact which is your t t i, and we look at that metric because that really gives you true sense off i was in this country and i was using this browser and what was a page response time, and it's that that data is so important to us and we have technology clea transformed and identifying the right technology solutions that will give us that information, on dh that information like i said it's so important because i could be sitting in austin and looking at Dell dot com and these experiences and be like they're just fine on what the customers are complaining about. Jason: [38:05] Yeah, the home page, george. Just fine. Sarika: [38:05] Yeah but when you look at the data and your ability to go measure and aggregate all this data and have visibility to all this data and those those numbers can be very astonishing. And you need that customer data. You need the data to be able to go mate, great product decisions. All right, so. Jason: [38:21] Yeah, no, for sure, and one of the things i always, uh, i'm crying. But i'm chuckling at the same time. So, you know, someone's thinking about new plant form, and they're, you know, they're getting the sales pitch from the platform, people on the right and let me show you all the cool features like this is the super powerfulpromotion engine, and this is the personalization engine. And these are, you know, and all these desirable things that the that the enterprise wants. And so they buy this plant form on dh. Then the performance team comes in after they bought the platform, and the performance experts from the same company that made the platform are like, yeah, so step one. Wehave to turn off all those features. Sarika: [39:00] You're right, you're absolutely right, and i think it's really important for us to understand what the outcomes are and walk backwards, and what happens is you. If you start with black form first technology first that's not going to work, you have to start with the customer outcomes, and this is why i think they have gone through this huge transformation. We've not become very customer centric organization. We understand the customer outcomes, sometimes it's page speech, sometimes it's a great experience. Sometimes i just need access to these features and functions let's, not guess let's, ask our customers and continue to trade on that, you know, and and i like to say the successful digital experiences they always areachieved through it, oration, using destined, learn approaches and and, however, like it's, impossible to go, use that approach if your development processes that way too slow, sure on dh so that speed of development. Jason: [39:51] Um, and and so that speed of development seems critical. You mentioned in the very beginning that, like, hey of a business user, as a requirement in the morning. Sarika: [39:55] In the very beginning. Jason: [39:59] And we can't deliver by the afternoon. We haven't finished our transformation yet. Is that one of the the metrics that you use is like time to release, sir. Sarika: [40:00] Liver by the afternoon is that one of the, the metrics that uses like time to release absolutely it's very critical i think it's not just about the water it's aboutthe how, and we're not and we're not saying tow our business stakeholders are we're not done with transformation yet you have to go build this platform that's not what's happening, you know way have identified some critical experiences that we want to go fix for example i think the focused on our such experience as a starting point, we looked at the such experience and said all right we not only want to make sure that we have the right search platform we also want to make sure that when a business person in the business team has an idea and wouldlike to go change something, and i need that change made in the afternoon so what we have seen everything some fantastic results you know, just accomplishing that where we are now able to deploy our changes multiple times a day to production, through a highly automated ccd pipeline that requires no manual intervention everything is automated, and we're able to deliver changes to production in less than eighteen minutes and that is transformation now we can change the platform we can ring new features and functions we may not have the right experience thaton that day, that's fine and we'll go it rate like i said the digital experience is successful original, you know, properties they trade their rate of success so. [41:23] And that's, just so critical. How is so important, their speed? Two deliveries so important, if you don't like something, no problem. And we want to get to a point where we're always experimenting. And these experiments are so less expensive that that we can, that we can achieve great success, right? And we don't have to every single time, re factor your entire platform. Let's, go ask for another, you know, a couple of million dollars to go trance, you know, to go deliver any feature or function. Jason: [41:52] Yeah, it's, it's. Fascinating. How, as the, the platform evolves, it actually changes how business users think right in that if, everyone has to fight for these precious resource is and there's some, you know, horribly slow release cycle, then you've got every stakeholder making a big bet and, like and, frankly, a nun ce abs dance hated back, right,like, just i need this on the road map. It's time. I know i'm not going to get it for nine months, but this is the thing i most want. No idea whether that thing is going to add value or not, right. Sarika: [42:24] That's, right. And the yes, exactly. And the key to success is include those business partners as part of your team, and then have the speed to go deliver changes to market, and then they're less anxious. The less didnot panic anymore, exactly, and what they. Jason: [42:36] Exactly, and what they what you start seeing is as they get used to this much faster pace of it oration. Instead of saying, hey, it's, the one big bet. Wait nine months, it's! Hey, let's, test and learn let's, try something, let's, think about more iterated of approaches on, and so i do. I do. You know, i believe that there is this enterprise wide mind shift. You see as you start, ah, unveil more, more nimble processes and platforms in the organization. Sarika: [43:04] Yes, yes, exactly, s o year in like, are there? Jason: [43:06] Um, eso year in like, are there some public success stories that you talk about, like, are there any particular elements of the customer experience that have gone live and that have benefited? Sarika: [43:17] Yes i just talked about the such experience that we were able to go put life and again we're again making very data driven decisions where we're focused on the customer outcomes were looking at revenue per visitwe're looking at were doing, a b test to ensure that the newest such experiences indeed better than the old such experience and and using those were driven decisions to go you know incrementally launch more new features new functions, and i think the biggest success that we've had is just the ability to go launch to production faster. [43:50] The ability to go automate the entire continuous integration and delivery pipeline so we can launch these changes that required no manual intervention that has been another big success now once you have thatpipeline, now you can go build new services new you know new and add new features to these services, i think that has been critical really really critical to our success in the last year a few months and we've also established you know, great progress across different fbi's, and and and and the kind of collaboration that we have achieved been working with our business stakeholders, and and really transforming thes thes development teams or product teams into operating in the new culture they're more happier way capture their testimonials you know every once in a while, and that that that is also a huge success that's really changing the foundation fixing the problem at the root and not really focusing on these shiny bells and whistles, but but focusing these problems at the root. And you're seeing some tremendous, you know, progress on that. Very cool. Jason: [44:50] There you go. Although is a consultant, i'd really like the shiny bells and whistles. It feels like how i make a living, but yeah, but i forgive you for focusing on fundamentals that actually had business value instead. Sarika: [44:55] You get it. Jason: [45:01] And so, speaking of time, that's going to be a perfect place for us to wrap up, because we've used up our allotted time. But i certainly want to remind listeners that if they have further questions, i want to continue the dialogue taken. Jump on our facebook page will continue to interact, sirica that there is a place on the internet where listeners can contact you. Are you on linked in or twitter? Sarika: [45:25] Yes, absolutely. So i'm on linkedin, and actually i was just talking to my sister just before the Scot and she goes, why are you not on twitter yet? And i'm like, i don't know, why am i not on twitter yet, but i'll try to get to twitter, but i'm definitely yes, yes, yes, and i'm on linkedin. Jason: [45:35] They need the users. They desperately need the user growth, so help him out. Sarika: [45:41] I'm on facebook and you know they can always contact me. My first name underscore last name, last name, a Dell dot com said me questions. You know, i'd be more than happy and eager to help us answer any questions. Jason: [45:55] Oh, that's, terrific, and i will put those links in the show. Notes. A cz always of the listeners enjoyed today's show. We sure would appreciate it if you jump on the itunes and give us that. Five star review sirica, thank you very much for your time until next time. Happy commercing.

EP142 - Industry News and Retail Earnings Scot Wingo Tarheel of the week. Amazon News Amazon licensing it’s Amazon Go “Just Walkout Technology” to Hundai in S. Korea Whole Foods now selling via Alexa Whole Foods  offering 30-minute windows for curbside pickup Party City selling on Amazon Walmart News Earnings – Same Store Sales up 6% y/y (highest in 10 years) 40% E-Com Growth  Traffic and Tickets up 2% in US Grocery pickup is now in more than 1,800 locations (40% of US Pop by EOY) “Clearly, the consumer backdrop is favorable, we’re getting a little bit of benefit from that”, Dan Binder VP Investor Relations Allowing 3p returns in stores Walmart co-leads $500M investment in Chinese online grocery service Dada-JD Daojia Target News Same Store Sales up 6.5% y/y (highest in 13yrs) E-Com Up 41% (vs 36% last year) Traffic up 6.4% “I’ve been doing this for a long time, and I think this is the healthiest environment I’ve ever seen” Target CEO Brian Cornell Same Day Delivery 1100 stores / Curbside pickup 800 stores Owned Brand Cat & Jack $2B in 1 year Mallageddon 4,379 closures / 2,239 opens = 2,100 net fewer stores  (net 2800 reduction in stores in 2017) Loss of 35M ft sq of retail space (closed stores are typically smaller footprint than new store openings) Industrial space is now MORE expensive than retail space Upcoming: Shop.org September 12-14th, Las Vegas Groceryshop October 28-31, Las Vegas Don’t forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 142 of the Jason & Scot show was recorded on Thursday, August 23rd, 2018. http://jasonandscot.com Join your hosts Jason “retailgeek” Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Transcript Jason: [0:29] Welcome to the Jason and Scot show. This is episode 142 being recorded on Thursday August 20 3rd 2018. I’m your host Jason “Retailgeek” Goldberg,and as usual I’m here with your cohost and TarHeel of the week, Scot Wingo. Scot: [0:47] Hey Jason and welcome back Jason escutcheon listeners. Yes it’s true. Star High I guess I’m Tarheels this week. So we have a newspaper here in Raleigh called The News and Observer. It’s been around forever. And they do this weekly thing where someone is the Tarheel of the week. And that was me this week. I get I get a pen. Evidently I’m excited. Jason: [1:11] I think that’s actually totally cool. At the risk of sounding corny I am sort of proud for you. Scot: [1:18] Thanks man. The thing that is a little complicated. Musher in this area you may not understand. And so our state is the Tar Heel state. But you can see the Tarheels and immanence 8 person. So I’m really a wolf pack fan. It’s all my Wolfpack fans have been me crap this week that I’m Tarheels the week because lot of them don’t understand it’s a state thing and not a season. So yeah. So it is friction between USC NC State Duke. Jason: [1:44] Gaji so. Scot: [1:50] There is so that’s been fun to do. Jason: [1:51] Oh I could totally imagine I’ve just gone from being proud of you to thinking you should not accept. Now it’s very cool. I do. I do get that conundrum though. Scot: [2:04] Yeah. And you were at east up in Boston. How did that sugar. Jason: [2:10] It went really well for those that have never had a chance to spend time in Boston. It is very easy access to a Dunkin Donut from anywhere in downtown Boston. Scot: [2:21] I have been to Boston and there are a fair number of Starbucks to see must of been a happy camper. Jason: [2:25] Yes. Yes. As I may have joked with you in our our voluminous rehearsals that we do for these podcasts the the show Hotel is, a nice Sheraton that has an adjacent Starbucks and a Shake Shack so that basically has all the amenities I need. Scot: [2:44] And a none. There sure there’s your meals right there boom. Jason: [2:47] Yeah yeah. I never got an opportunity to have any of the show food because I was I was you know always making the super healthy Dunkin Donuts Shake Shack runs. Scot: [3:00] And the plan was we were both going to go but I couldn’t make it because I had to help my daughter move into college. We got a last minute note that she could move in all early so we had to do that. But you carried the Jason Scott banner up to Boston where your triangle had played flute and you laid down some good podcasts that we’re going to be rolling out here soon. Jason: [3:20] Yeah I sure did. It’s a good event. You know it’s a little more intimate than some of the biggest events. You get a chance to interact with more folks. And I got to record three great shows so listeners have probably already heard her as who’s the web psychologist from quick tell on last week’s show and into upcoming shows will be talking about, Dell and sort of their their evolution, from a you know pure consumer B2C company to this big enterprise company today. And we’ll also be talking to the two founders of Tommy John and, they’re they’re great entrepreneurial Nergal story of sort of inventing a better T-shirt and turning it into a very successful business and you know kind of an early digitally native vertical brand that will get more and moreabout. Scot: [4:13] Yeah it’s funny when I’m not listening to the Jason Scott show my favorite podcast. I do listen to some other podcasts and you can’t really listen to anything without a tommy john added being on there. If I listen to XM Radio they’re on there they’re on CNBC so they seem to have really embraced not only digital and that media but the analog media as well. I look forward to hearing their whole story. Jason: [4:38] Yeah yeah I don’t want to spoil the surprise for you but I think it was a good show. They were super interesting so I will look forward to hearing your feedback. Scot: [4:47] Cocq Well this week we are going to really focus in on some e-commerce news. We’re recording this at the back half of August which is an interesting time because in the world of retail what happens is we we take a luxurious summer and then Labor Day hits and then everyone freaks out. It’s theholidays right around. So this is when the news picks up. So we wanted to pick up some of what’s going on for everybody and and watch this highlights. We’re going to start with. Jason: [5:30] Yes. I think the first piece of Amazon news is exciting because it arguably makes you and I sound wise. There was a news report that came out this week that Amazon is licensing a bunch of their technology including just walk out technology from the Amazon go store to Hyundai, to be used in a number of retail stores in South Korea. So you know Wisner’s of the Amazon go episode of our podcast will remember that we we talked a bit about the potential of Amazon licensing that technology and it appears we’ve we’ve seen the first version of that inthe wild. Scot: [6:08] Yeah yeah. The you know I always you and I speak, out in the world a lot about Amazon and one thing I like to tell a lot of people is the Amazon playbook and you know the playbook pretty simple now and they’ve repeated it hundreds of times but it’s dog food. So dog food something out meaning use it internally. And then every one of these steps there is a path off this ramp that is it doesn’t work until it likes the Fire phone for example it went down the kill path. So dog food is step one step two is scale first party steps. Step three is scale third party and then the next step is really kind of opening it up even outside of third party. So you’ve seen like cloud computing with this FBA has gone through this and now I think this just walk out of Cassiel a store will walk through this as well. Jason: [7:03] Yeah. So it’s going to be interesting to see how it all plays out. As we’ve already talked about there’s a Amazon story that’s going to open soon here in Chicago so I’ll get a chance to see it in the live with much more regularity than periodic visits to Seattle. Scot: [7:22] Have you. When does the campout start. Jason: [7:24] I don’t think the publicly announced a date. I have gone by the site and it is all sort of newspaper up all the windows and whatnot. So like it appears work is happening. [7:40] I am slightly less excited about this next piece of news but it may be interesting to listeners nonetheless. Amazon has extended the Lexx voice shopping capability to all of the Whole Foods products so you can now place orders not just from, the huge Amazon catalog but from all the the Whole Foods in-store products directly from your Amazon. Alexa. Scot: [8:09] Yeah and I saw that also within the whole foods part of Amazon. They now have you know they’re expanding the number of stores that have curbside pickup and they have 30 minute windows now. And I think you were telling me that there’s a if you do an hour under there’s a fee but two hours is free. Is that right. With Prime. Jason: [8:29] No. So you can order your food online and pick it up in an hour for free or you can pay a fee and I want to say it’s like seven dollars to pick it up 30 minutes after you order it. Scot: [8:42] Have you. I looked at the list of stores in major metros of late with that. Jason: [8:47] Yeah. Yeah I’ve tried it and it does work well. The whole foods causes to mind supports it but it doesn’t feel like they did a major build out to support it. I’ve seen photos of other Wholefoods where they clearly constructed some new infrastructure to support high volume curbside pickup. [9:08] But you know to me this is a very thin Mandic for Amazon first of all I would just remind people that prior to the acquisition Wholefoods didn’t have a digital copy of their inventory online anywhere. Like you couldn’t get a whole foods accom and even see what products Wholefoods had in their store much less. Order anything. And now of course you can order anything from Whole Foods and have it delivered in an hour to your house or you can have it ready for pickup at a store in 30 minutes. So I just think that’s super impressive and a much faster pace than most traditional retailers move. And then I can also tell you that there’s a ton of grocers that are super excited about order online curbside pickup and they’re all debating the pros and cons of every nuance of their experience. And they’re all thinking about this kind of like should we do same day pickup versus next day pick up. And is it a four hour window after you order a six hour window. And you know of course Amazon just comes in here and drops a bomb and says no the customer standard is going to be 30 minutes to an hour after you order you should be able to get your groceries. Scot: [10:20] Yeah I was actually. So two interesting things here real quick. The when we did our deep dive on the acquisition of Wholefoods you know one of the things that was kind of a question mark out there is to cart had you know a deal with Amazon. And then you know I think it had been described as exclusive. But now we see Amazon doing curbside pickup which you would argue maybe it’s the same obviously as art which is still free but then Amazon is using flexto deliver things too. So I think the insta cart integration is still alive so it’s really interesting you know it’s initially confusing to a consumer you know because you can go to Whole Foods directly and get it delivered or go through to card oryou can do the curbside. Jason: [11:02] Yeah but I do think it is the case that in most markets it’s a much better deal to order from Whole Foods slash Amazon rather than to order Whole Foods through insta cart. And the the Amazon experience is a superset of the product catalog it’s available on insta cards. So the you know I sort of predicted when we did that that acquisition show that this was bad news for insta card and that they were going to get squeezed out. Like I don’t think Wholefoods is still honoring the duration of that that contract. But it certainly doesn’t seem like a good long term prognosis for insta with Wholefoods. And you know in fairness I would point out there’s there’s one potential experience advantage that insta has that I’m not sure a ton of people take advantage of. But in many markets it is possible to place a multi retailer order from inside a car. So you know whole foods you know famously is missing a lot of unhealthy national brands that people still crave. And so you know if you want some Captain Crunch cereal with your organic milk in some markets it’s possible to have a card. You don’t go to Kroger and get the Captain Crunch and go to Whole Foods and get the organic milk and you obviously won’t be able to do that from the Whole Foods direct delivery. Scot: [12:25] Yeah. And then the other one is I was tweeting with one of our listeners and, you know what drives me crazy about most of the grocery experiences for pickup is you’ll go to this pretty laborious process you know can take up to 20 30 minutes to get through everything in your card and then theytell you you know it will be a Saturday morning. I’m doing this and in the end it will say the first available window is Monday at 2:00 p.m. and you’re just like. So it may be a chicken and egg thing where they can’t tell me upfront but they should be able to you know they they should know. You know they should get a pattern for their border and realize it’s four bags of groceries and they can’t do it until next Monday. So it’s terrible user experience because you go through all the investment upfront which may be what they’re after but then like that Hillary window is terrible. So hopefully Amazon can offer. Jason: [13:15] Yep that’s a universally bad experience that you see all the time right. Like I call it the when we get a problem and there’s lots of permeation where you go hey I’m ordering this thing online for you know my nephew’s birthday party or some upcoming event. I only want to order it if I know I can get it by a certain date. And very often you can’t find out what that date is until after you’ve offered up all your payment details and in some cases not even then. So that’s that’s just always a bad experience and you’re right. It’s a it’s a super common bad experience on grocery ordering. Scot: [13:50] Protip i just throw an apple in there and start the checkout in the middle. Jeremy tell me what the window is and then there’s the ability that to either. Jason: [13:55] Yeah but how ridiculous is it that you that you have to learn how to hack the system to do that and think of other analytics that are like why can’t we sell any apples our conversion rate on Apple is horrible or a cardabandonments superhigh. Scot: [14:08] Now. Yeah. To me that’s a sign that that’s their punishment for for for not telling me of. Jason: [14:14] Yet double protip next time you want to do that click on the Google product listing ad for the app or to test it in there so they have to pay for the quick to yeah I’m a bad person. Scot: [14:23] Kate nice. So they’ll get your devious Saari like. Jason: [14:29] And so there this this last piece of news which is going to be interesting I could see this going either way. Party City has formed a partnership with Amazon where they are now selling their goods on Amazon right. And you know when you first hear that you go home party sell city sells third party products that they don’t make. Why would a retailer want to sell someone else’s stuff on Amazon when that you know someone else can also sell that stuff. So it’s pretty hard to have a competitive advantage there and obviously you have to give away the the margin from Amazon’s take rate. Party City does contract manufacture some of their own things and I think a lot of what we’re going to sell on Amazon are Halloween costumes. So in some cases these are are things that are exclusive to party city. But then you look out in the world and you go gosh most retailers are primarily focused on on owned brands or exclusive products primarily as a strategy to compete against Amazon. So it’s interesting that cities creating some of their own desirable products and embracing Amazon as a platform to sell them. So I just haven’t hadn’t seen that particular dynamic play out in this exact way before and I’m gonna be curious to watch how it plays out. Scot: [15:48] Yeah you know that will be interesting. And it was a really weird week news wise because Amazon that’s kind of the of the Amazon news and usually we have like 50 things we can talk about talk about, that that being said a lot of other retailers had pretty interesting news it’s kind of the time of year where we’re getting the same store sales and updates from YouTube. So Wal-Mart had a lot to say this week. Watch to kick us off with some highlights from that. Jason: [16:15] Yeah yeah. In general I think if you’re a fan of retail it was a pretty exciting earnings season this quarter. So Wal-Mart came in with a 6 percent year over year growth in their same store sales which was a beat over there. Their expectation in the U.S. It was a 4 percent year over year growth which is still beat the expectation. That’s the highest growth in same store sales and Wal-Mart in ten years. So that’s a huge win. They also announced a 40 percent increase in their e-commerce growth. And they they reaffirmed that their guidance for the whole year is that they’re going to grow Econ. by 40 percent. Some listeners may remember last quarter they only grew by 33 percent and, the market beat them up a little bit because the market was promised 40 percent for the whole year and they only turned 33 percent in that first quarter and Erwin’s like how are you going to make it so this quarter they hit40 percent so they still have some makeup to do. But but trending in the right direction and 40 percent growth, it at Wal-Mart is a big number I give you know you know anyone other than Amazon you know Wal-Mart e-commerce business is very big it’s north of 15 billion dollars so growing that by 40 percent is pretty darnimpressive. Scot: [17:32] Yeah. And as a reminder the bay side of e-commerce growth is 15 percent so that’s you know a two to three acts based on. Jason: [17:39] Yet. And we’re Pragyan to have to talk about that again later because that that 15 percent is feeling increasingly fishy as as we look at all the news here, but one of the things that’s super interesting for a retailer is that traffic is actually up in the stores right. So there’s things you can you can control by changing your experience in your pricing and all these sorts of things. But like one of the you know the biggest needle’s most difficult to move is to get more people to show up in your store and do more shopping and at Wal-Mart in the U.S. Foot traffic was up 2 percent in the stores. And the size of the average ticket was up 2 percent. So those are two super favorable metrics that at Wal-Mart scale translate into a lot of gross margin dollars which is pretty exciting. If you’re a Wal-Mart investor so super Rosy. [18:34] I like to remind people a couple of the underlying reasons why some of those numbers particularly the e-commerce numbers were so good. So in their earnings announcement they also said that they were now at 8500 locations where you could order groceries online and pick them up in the store. And so it’s my contention that a big chunk of their 40 percent growth is that they keep adding more stores that offer curbside pickup right. So normally when you talk about e-commerce you kind of think of it as this big homogeneous thing and oh we sold one billion dollars across the whole U.S. online last year and this year we sold one point five billiondollars. That’s great. [19:15] Your goods online are generally available anywhere in the country but curbside pickup groceries aren’t right. You can only sell curbside pickup groceries in a zip code where you have a store that can fulfill those orders. And so the fact that they only had 1000 stores last year that could fulfill those orders and they have 1300 stores now means they essentially doubled their capacity. So it’s not surprising that there are e-commerce growth was so high as well. And so I’ve actually talked to analysts like you you really need to think about digital grocery sales sort of as analogous to same store sales like you really want to see a number that says what was my e-commerce in theset of stores that I had last year. And then what was my incremental growth from new stores that I opened this year. Scot: [20:02] Yeah. So you can make the argument that they’re kind of like you know playing a shell game and moving stuff out of the store piano and into the e-commerce know what which sounds like there’s a little bit goingon, but the fact that still you know same store sales were 6 percent indicates that you know they maybe there’s a fair amount of incrementally in there with the Grocery pickup that that there are not. Does it seem to be cannibalizing the store side of the business. If if if it’s growing 6 percent. Jason: [20:30] Yeah and there are a bunch of interesting dynamics. We’ll have the deep dive into another time. But it’s funny the things you are willing to buy and that you do and don’t spend your money on when you walk through this door and put all your products in the cart tend to be different than the things you’re willing tobuy when they’re anonymously put in your trunk in the parking lot. And so they’re they’re actually like there is some evidence now that consumers are willing to buy more unhealthy food for curbside pickup than they are in the store when all their neighbors are going to see them with thebig tub of ice cream in the cart, for example. Which I find is interesting. Wal-Mart in addition and this curbside pickup which I of course I’m very bullish on Wal-Mart is also playing a placing a big bet on home delivery of groceries from a store and they said that they’ll have, coverage in 40 percent of the U.S. Population by the end of this year so that that is scaling as well. And I think they made some some announcements a little earlier in the month that they were exploring some interesting automation to help pick products to expedite those grocery deliveries in the curbside delivery. So lot of investments in that space. It’s a hot space in grocery overall. [21:42] And you know as the executives were talking about the climate that was driving this you know they were pretty clear. They’re like hey the number one reason that we had such a good quarter is the consumer backdrop is so favorable. And I think that’s a theme where we’re going to hit you know again later in the show. Scot: [22:04] Yeah absolutely. The there was some third party news where you can now so Olmert had a marketplace. And now you can return those products and the story used to be if you bought a third party online you couldn’t return it to the store which was super confusing for people. So consumers get confused by the whole third party thing. So you know this is this is a huge win for the marketplace because now you have a similar experience to any Wal-Mart item you can buy it on line or turn it online or return the store. Jason: [22:41] Yeah and I imagine that that’s a huge benefit to consumers and pretty annoying to a bunch of marketplace sellers that are now forced into more generous terms than potentially made economic sense for them. Scot: [22:57] Call did you want to move on to target or any other Wal-Mart stuff you want. Jason: [23:02] I guess one last Wal-Mart note Wal-Mart made another investment this quarter of 500 million dollars in a Chinese online grocery service during a grocery in China is huge. There are a bunch of big players. Wal-Mart has stores in China. It’s one of the international markets that they continue to fight for. And it’s interesting to see them still in growth in investment mode as people remember they made a big investment last quarter in Flipkart in in China which makes 500 million dollar investment almost seem like chumpchange. But but very clearly you know that China is still a huge digital land grab and all the big global players want to want to have a strong presence there. Scot: [23:47] Yeah. One other aquisition thing there. They did close out the acquisition of Flipkart. When you when you do these big international deals governments get involved and you know there is risk in there that you know either India or someone in the U.S. There’s this whole foreign investment board thing that can kick in and say you know we have a problem with this. This acquisition and this example is you know a lot of that happens around China. So because U.S. has a friendly relationship with India I wouldn’t see it go that way but it is very squirrelly about retailers out of the country coming in. So it is good news that they were able to close that flip. Jason: [24:26] Yeah I’m sure that that was a sigh of relief for all the folks in Bentonville. Scot: [24:31] Yes. Literally the day after Wal-Mart this week then Target announced and it was kind of funny because there was a little bit of shade being thrown there. So there same store sales were up six point five percent which is you know 500 basis points higher than Wal-Mart and it was the highest in 13 years. So they know a lot of people listeners that show kind of noticed that target use a lot of the similar language but that had know slightly better results than Wal-Mart. That was kind of funny. Their CEO. You know I think it was a little bit giddy with excitement. So Brian Cornell he said quote I’ve been doing this for a long time. I think this is the healthiest environment I’d ever seen. End quote. So clearly the economy has you know kind of. And if you look at a lot of the data I will belabor it but if you look at consumer price index, unemployment is way down and then even now we’re starting to see wages go up across a lot of different bands not just college people but hourly employees. So. So it feels like these guys are feeling it. You and I have a little bit of another theory. We’ll talk about after this. But that’s benefiting the department stores. [25:50] But what are. E-commerce was up 41 percent versus 36 percent last year. And then they have same day delivery in 11 areas. You and I have been talking on Twitter as I go through different targets. So I was down in South Carolina at a target and I saw him installing the same day delivery the curbside pickup there and stopping at a lot of stores around here. And there are currently 800 stores. And then you know they have been investing a ton and owned brands. One of the most popular ones is cat Jack that has reached a two billion dollar run rate in a year which is just amazing. And I can say as a guy that just took two kids to college you know more and more of the stuff you buy at Target especially if you get like dorm furniture and seasonal seasonals is is kind of brands. They have one called Room Essentials and I think we personally. Yeah. The silver dollars on Room Essentials for college kids. Jason: [26:50] Yeah I mean I think that’s a super common strategy that we’re seeing a lot of traction on his own brands. But Kevin Jacques is particularly amazing. I mean imagine any any company watching a new consumer brand and getting that two billion dollars in sales in one year. That’s that’s pretty spectacular. Scot: [27:08] Where did that go. So like what did they displaced think. Jason: [27:13] Baby Gap. Now I’m being slightly sarcastic Baby Gap did have a gap had a bad quarter. But why. Most beneficial Babies R Us is a big chunk of Toys R Us. And so you know I think there’s an argument that that target was a good beneficiary of that. Toys R Us closing their stores this quarter. Whether that was all. Kevin Jacques or not. I’m less clear. But but they’re killing it. But the eye popping number out of all that target news to me was that their store traffic climbed six point four percent. So that’s a huge number that you’re not used to seeing in a well-established retailer. And just to put that in perspective for people I want to see a target it has about 1100 stores so, having their traffic increased by six point four percent is the equivalent of they magically had 110 more stores that just opened for free this quarter. That’s amazing. Scot: [28:20] Yeah and one of the. You know they don’t quantify it but they did have a lot of superlatives around what they called it. They had a Prime Day sale both online and in-store if I recall they did call out on their conference call that that that had some you know some really good benefits for them. And Jim. Jason: [28:36] Yeah. Yeah I think they definitely got the nice Amazon Prime Day kiss. Scot: [28:42] Yeah thanks dimsum. So as we were going over this we thought it was kind of interesting because the economy is doing well. But really look what’s changed in the last 30 days. And when you dig into that I think what’s happening here is Mollah again. So so in an ironic twist of fate we want to update you guys on store closures but we think that this is having an impact on Wal-Mart and Target. You know the simple example is Toys R Us closing has created you know a huge opportunity even party city we talked about before. Everyone is adding toys Barnes Noble’s adding toys. I think that’ll be you know they’ll be OK. But I think consumers are thinking about that. Now when you think about toys you really have two choices Wal-Mart Target and Halloween. And back to school so so it can be interesting but we’re two thirds through the year and we thought it would be good to havea Maalik get an update. So the way this plays out is so far this year. So again this is through mid August when this data is collected. We’ve had 4000 379 store closures and two thousand two hundred thirty nine opens. I think it’s important look at this data because I see online a lot of times that there is no retail apocalypse. There’s you know for every store that closes there’s five that opened and they’ll talk about war or something likethat. [30:07] That’s just flat wrong. So this is the real data. This is announced closure so it’s hard to know exactly when a retailer is opening a store or closing it. So these are announced opens and announce closures. So you net those two numbers out you get about 2000 fewer stores. [30:23] Now looking back OK that’s that’s kind of where we are in 2018. If you look back last year and again 2018 is two thirds of a year so we’ll probably have some more. And in fact since the 15th when this data comes out there there have been more or I’ll give highlights on last year. There are 7000 closures. So you know I don’t think we’ll get to 7000 this year. There have to be quite a lot. And then there’s 3000 opens. So last year there was a net loss of 2800 stores. So I do think we will probably replicate that you know. All we need is another 6 700 stores to be announced. And I think we’ll get there. So we’ll see. So for example Sears just announced today 46 more stores and then Lowe’s announced they’re going to close something called or worker. Jason: [31:12] Orchard Supply Hardware. Scot: [31:14] There you go. That’s news to me and that’s about 100 stories. The other thing is that that kind of gets missed in a lot of these conversations is the square footage right. So it’s easy to lose a Toys R Us and you gain a I don’t know a word. You know a 2000 square foot Wabby showroom. You know what. What’s the difference in the square footage. So there are some Wall Street firms. Chris was really good data on this. They’re projecting so. So they had they said 2017 was the worst year in since 2001 when we were in a recession then and it was a 100 million square feet that closed 110. [31:58] They think this year will be about the same. So it’s I guess it’s good in that it’s not accelerating but we’re not losing a 100 million square feet of retail which can’t be good. And then when you start to look at some of the stores that are closing we’ve talked about some of them but some of the ones that are opening for example Dollar General’s opening 900 stores Aldi 5 below is opening 125. So I think what you’re seeing is this really interesting kind of to kind of speak to the bifurcation that Casey has introduced to us. A lot of the show you’re seeing the value oriented retailers really opening a lot of stores. But the convenience and and there are some of those things and there like a would be but we’re being open like you know 36 stores they’ve announced. [32:45] Then you have like Inochi opening 18 there’s just no countering the the other side of that coin where you know 46 Sears I think of the size of those things that’s going to be worth, you know 90 or 150 warbirds or something like that 50. Jason: [33:00] So a lot of tests dealership’s Exactly. Scot: [33:02] Yeah. Yeah so. So it is interesting to kind of think through that. Now the other thing that’s really interesting is, I know a lot of people in the real estate world and for the first time ever in just Aeriel the price of industrial space exceeds retail space. Our mall space. So there’s a lot of mall space out there it’s heavily discounted. You see things. Another big one that’s a problem is this Bonneton I’m not that familiar with these guys. There are evidently in with a lot of these years that are closing in on these analysts also do this the math that says if you lose two anchors you’re pretty much toast. So what’s Bonneton announced they are closing I think about 200 stores that put a big chunk of malls at risk. Solok 100 store you know kind of half the band tines probably will make some malls fail. So this put extreme pressure on the retail pricing in malls specifically. So now you are seeing industrial which is essentially like warehouse space. The square footage there it’s in such supply Amazon and all these people are going up and buying all they can get. They are now seeing that invert for the first time ever which is pretty interesting. Jason: [34:10] Yeah it’s super fascinating and probably explains why Amazon opened the fulfillment center in an abandoned mall this year. Scot: [34:17] Yeah yeah. Amazon just opened another famous here center here in the Triangle. And they had to put it kind of a pretty good distance out because there’s just like you know and at the same time they’re they’re building million square foot fulfillment centers and 2 million. So. So the amount of land they need is going up. So it’s pretty interesting. Jason: [34:37] Yeah it’s it’s very fascinating to just put those the net store counts in some context. I think it’s possible that the 2017 was the first year in like the history of tracking retail that we had net store closures. So I bet that is not the normal trend like you know even in years like the 2008 when we were having a real challenge. There were still more store openings than there were closing and so the fact that last year we actually lost net number of stores. And we’re going to again this year and to your point like probably more severe when we look at square footage than store counts. That is absolutely a disruptive new trend in the market. And so like I’m perfectly fine jumping on the bandwagon with you and talking about Mawle again because you know I do think this this is an Armageddon for a lot of the malls in the U.S. I’m less willing to talk about retail Armageddon because I do think. [35:47] That there’s a lot of segments of retail outside the mall that have far fewer headwinds than the mall based retailers have. And you know so I like retailers absolutely being disrupted but right now like digital is certainly one of the big factors I would argue there are other other factors that are contributing to it as well. But as we’ve talked about on the show a lot the U.S. is uniquely over stored with 24 square feet of space per person versus like the UK where they have five square feet of space per person. So even if retail was going to grow revenue and be healthy we still have way too many, stores and so the fact that that we’re having a correction in that like to me alone isn’t isn’t super worrisome. But but I think what we’re seeing is even when the economic factors are really good like they are this quarter and in Wal-Mart and Target are giddy. It’s not. It’s affecting different retailers in different segments, at dramatically different rates and so it’s that rising tide is not lifting all boats lifting a bunch of boats and it’s weaving a number of those boats boats in the malls in dry dock. Scot: [37:04] Yes it’s a really interesting set up thinking about holiday 18 because we’ve got the economy really cooking. You’ve got less competition because these stores are closing. And then you’ve got Wal-Mart and Target kind of heading into September with what feels like a really robust tailwind. So it’s going to be a pretty interesting holiday to see how things come out. And then you kind of teased this earlier that the thing that continues to befuddle me is you know everyone talks about e-commerce growing 15 percent. I just checked the U.S. Commerce data. They came out with Q2 it like 15 percent like fifteen point five percent e-commerce growth. But here we have now we know Amazon reported you know kind of in the high 20s. Wal-Mart and Target are in the 40s. Platforms like shopper fire in the 20 30 percent the only the only company I know of that’s below 15 percent is eBay. Kind of like six to nine percent. [38:05] So it just really continues to not add up for me where if we take the biggest guys Amazon’s half of e-commerce Wal-Mart is is a big chunk. A lot of times Apple gets counted in here. Apple had a great quarter. I don’t understand there has to be like when you do the math there has to be like a slice of 10 percent that’s growing minus a thousand percent for e-commerce. Only growing 15 percent. So I keep coming to this conclusion that I think e-commerce has got to be growing faster than the 15 percent it just kind of mathematically has to so well that someday, we’re going to get to the bottom and build a table and really dig in on it but not today. Jason: [38:47] No. Very true. It’s going to be interesting to see as it becomes a more important part like accurate data is going to become more important. And like we we just don’t have numbers we can rely on right now for the actual size of e-commerce and the growth. So, something we’ll probably talk about a lot more. But there are a number of other odds and ends in the news that I want to make sure we saved just a little bit of time to cover. So again I don’t want to brag. Chicago feels like the the new retail e-commerce capital of the world like we get all the new stuff first. And this this month Google announced that they’re going to open their first permanent store. And of course they have chosen Chicago for that store so Google has done a bunch of pop ups. I think we’ve talked about some of them on the podcast before. They’ve done one in Tribeca the last couple of years selling all their their Google branded products. But the first permanent Google store is going to open up here in Chicago and there really hasn’t been a lot of word about like, what the goal of the store will be is it predominantly selling pixel phones in, google home voice products you know or you know is it going to sell third party products and so it’s going to be interesting to see what that looks like and I will look forward to doing a trip report when this store open. Scot: [40:09] You can only camp out for the Amazon go store in Chicago or the Google store which winning in a. Jason: [40:15] I would do the Google story because I had been Amazon go store so it just you know for me it will be newer. And I guess I’m I’m less certain what I’m going to see in it. Scot: [40:27] I remember you gave a trip report to Google pop up store and you were not happy. There was some V.R. thing that didn’t work and they didn’t understand a pixel question you had. So I don’t know. We’ll see. I think the bar is going to be set high for them to do a major. Jason: [40:44] Yeah. Right. Retail is very hard. And you know so some of these digital companies that that’s not their core business you know find it out the hard way when they first started trying to have these these directconsumer experiences. Scot: [40:56] Yeah I saw two interesting digital native vertical brand news items. So in the empty your movement watches and this is interesting because they kind of both fit in a theme I thought that was kind of interesting so I called the the analog dinosaur by as the digital diva. So they sold their company for 100 million dollars cash upfront plus a hundred million dollar earn out to movado. So a traditional watch company buying the direct consumer kind of digital native brand. And then as part of announcement it was revealed that a company had 70 million dollars in revenue run rate which is, you know so against 100 million that’s maybe like a little bit more than one times one and half times revenue which isn’t too exciting but if they can get their turnout at 200 million then you’re talking three times that. That’s that’s pretty good when there was more secret. So I don’t have any juicy numbers but it is in this theme is their traditional mattress company Surtur acquired tough to needle one of the many Casper like kind of mattress and box companies. [42:00] And what’s interesting about that release was a couple of things. Number one they specifically said the reason we bought this these guys is we’re going to have them build a whole platform for certain. So I guess it of doesn’t really sell direct to consumer. And this is probably driven by the chaos in the mattress world that the mattress firm announced that they’ll probably go into bankruptcy, and sort of is owned by a private equity firm and there’s a lot of speculation that private equity firm kind of has to buy the Mattress Firm because there that’s like some ginormous chunk of their revenue. [42:37] And then a lot of people have been wondering about Mattress Firms because there’s kind of a you can hardly drive a block you know in these strip malls without you know sometimes you see pictures on mine ofMattress Firms effectively next to each other. And so there are there were clearly overbuilt on Mattress Firms. Another little tidbit of that is they did say they believe sort of said they believe 30 percent of mattresses are now bought through e-commerce and this was kind of there. You know it was fed to them saying hey this is pretty serious we need to get involved. Jason: [43:14] Yeah that certainly seems like an industry that was disrupted like the traditional model is pure wholesale model and has come of the slimy version of a wholesale model like all these Matt mantra’s companies makeunique models of their mattress. For every retailer so that the retailers can all offer price matching guarantees knowing that they’re the only ones in the world that carry that particular sort of mattress for example and so that the whole model is wholesaledistribution, and you know of course they’ve been disrupted by all these direct to consumer matters companies Casper and Tupman needle and you know I think there’s a cohort of like six of them. So yeah not not shocking that you’re seeing the old guards you know play defense by trying to acquire the new guard. [44:05] I also you know there were a bunch of other retail earnings reports we’re not going to deep dive into all of them. But T.J. Maxx which you know there they’ve been a very good position in the market place for a long time with the value oriented retailers. They had another beat this year this quarter. That’s them them having a quarter is impressive because they’re working against pretty aggressive comps so some of these retailers that have had you know sort of a lot of bad quarters, you know announcing that your growth was good against those soft sales in the past isn’t as impressive as as it is for like a T.J. Maxx Macy’s had a really good quarter. They had a beat. [44:47] They also credited the sort of turnaround in the consumer environment as a major factor and they I think actually raised their guidance for the rest of the year. So that that’s encouraging. You know they’re they’re the big anchor left in most of those distressed malls so you know they’re going to be particularly interesting to watch, Nordstrom had a beat you know Nordstrom is normally viewed as kind of the safest of the the the anchor stores and the department stores and so you know they’re working against decent comps and they were up 4percent same store sales. Their economy was up 23 percent which sounds modest compared to some of the companies we talked about earlier. But to your point that still dramatically above what allegedly is our industry average growth. So you know doesn’t doesn’t seem to jibe. And then one last piece of news that was interesting to me on this show talked a little bit about own brands and retailers investing in that strategy. And you know I see it a lot that that’s one of retailers primary strategies for defending themselves against Amazon has sell stuff that Amazon can’t sell. [46:06] Kroger has an own brand called simple truth which is actually the largest organic foods brand in the U.S. And an interesting piece of news I noticed this month Kroger is now selling simple truth on teamo. So this seems like a extra benefit of doing well in the own brand. Most retailers really struggle to expand geographically and just because you’re a good grocer in the U.S. Moving to China and trying to open grocery stores in China is really challenging and you know the most retailers don’t successfully expand internationally the way they’d like. But when you build these own brands and then you can leverage existing marketplaces to expand those brands internationally. That seems like a much lower risk higher likelihood of success waited to diversify their revenue into international expansion. So I wouldn’t be surprised to see a lot more of those kind of plays and certainly we mentioned Captain Jack earlier that that seems like an obvious one to see some some international expansion on. [47:17] So that is a lot of news. And I want to remind listeners that we’re coming up very soon. Less than three weeks away is the annual shop dot org Summit in Las Vegas. It’s the 12th through the 14th if you haven’t made your plans yet. Go ahead and book that trip. I will be there and would love to catch up with any listeners that are going to be in Las Vegas this year. And that is going to be where we’re going to have to see that because it’s happened again. We’ve used up our allotted time. As always if you have any questions or comments about the show please jump onto ourFacebook page and we’ll keep the dialogue going there. And you know now would be a great time to finally thank us for this podcast by jumping on iTunes and giving us that five star review. That’s really the best way for you to thank us if you are finding the show to be valuable. And of course if you’re not finding the show valuable the best way is to call Scott on his personal number and talk to him about your Greven. Scot: [48:22] Absolutely. I look forward to hearing this. Jason: [48:24] And so until next time. Happy Commercing.    

Liraz Margalit, PhD, is a Web Psychologist, a Keynote Speaker and Head of Behavioral Research at Clicktale. She integrates Cognitive Psychology and Behavioral Economic perspectives to analyzes online consumer behavior and delivers actionable insights for business stakeholders. In this interview, we cover Liraz's background, digital body language, the mobile mindset, and the role of emotion in shopping. Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 141 of the Jason & Scot show was recorded on Tuesday, August 7th from the eTail East tradeshow in Boston. http://jasonandscot.com Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Transcript Jason: [0:25] Welcome to the Jason and Scott show this episode is being recorded live at the e'tae least trade show in Sunny Boston on Tuesday August 7th I'm your host Jason retailgeek Goldberg unfortunately Scott had a personal conflict and wasn't able to make this show so you guys are stuck with just me but we have some great guess this week and first up we are excited to have dr. Laura's mark delete from cooked tail on the show or as is head of Behavioral research cook tail and she's going to share some fascinating psychological research that that she's been conducting about online Shoppers and their behaviors welcome to the show with us. Liraz: [1:10] Thank you I'm very blessed to be here. Jason: [1:12] The president Charlie R's one thing I was like to do to get things started on the show is just for a little bit of background about the guest so maybe you could take just a minute and tell us how you came into the doesn't seem like online marketing is necessary the first place you think of her psychology. Liraz: [1:29] So interesting the fact that there is no such a degree in web sites out or web psychology or digital say Call of Duty and people keep coming to me and ask, how can I become a psychologist and there is no one answer so for me I have a PhD in Psychology. Specialize in decision-making processes and cognition also Game Theory and over the past 5 years I've been utilizing model from cognitive psychology neuropsychology and behavioral economics how we can understand and identify customers behavior and did you deter work because we know that there is a slight difference and you don't like it's not so slide, there are differences between how people behave online and in the physical world and they are communicating frankly even their personality trait. James like if someone is an extrovert become an introvert and vice versa so I think there is a huge need to understand how people behave in those Windows media and those Arenas so a disability. Jason: [2:37] That's very cool and I'm excited to dig into it before we go too deep maybe we should tell our listeners just a little bit about cooked tail for anyone that's not for me. Liraz: [2:45] Sure she looks so cute Bella is an experience analytics company so what we do is that we, how to analyze and understand the customers Behavior the motivation for example what makes them motivate them to purchase certain products and why they would has it, before clicking on a call to action their Journey at the differences we can have different Behavior patterns we're talking about, thousands of visitors all together so we can take a view of individual visitor of thousands of visitors all together and this is how we can have heat inside into what's going on in your mind before deciding to purchase or to leave website or what is there Experian. Jason: [3:32] Wonderful in the way I sort of think of it there's lots of tools out there that I'll call Page analytics tools that sort of keep track of how I consumer moves from page to page and what unique about could tell as in my mind you were one of the very first tools that were what I'll call on page Analytics and you could actually see all the micro behaviors of the consumer wow they're spending time on a page so are they you know are they scrolling are they hovering I mean not I know there's a small part of it but like. Gray superficially I think people always think about the heat maps and understanding where like the real fold is on the page how far down is the consumer really going. Liraz: [4:10] Exactly so there is a common mistake that we are a heat map company goes much deeper than heatmap so if you think about it I can understand how you feel I can understand what you are going to remember from The Experience only based on how you interacted with the different pages I can under, if you're going through shift from positive to negative negative to positive and I can take, into consideration all your behaviors and actually see who you are or your personality traits are you crying to mine said so there is a whole lot of things we can detect only based on your micro-level behavior. Jason: [4:49] I feel like I'm never going shopping again I love online shopping and now I'm terrified that all my deepest secrets are going to be revealed by my my my mouse behavior. Liraz: [4:58] It's so now it's all I have. Jason: [4:59] Just made me very self-conscious. Liraz: [5:02] I have actually I can use it up for you because I don't care where you are I mean I care a lot about you. Like from we can we are not going to save the information about you the gender only based on what you doing what you did online so that's it and it means that I don't know who you are I can only see what you're doing online. Jason: [5:26] And that is it that is another interesting thing like a lot of times when people think about personalization or even, I I care more about relevancy necessary then personalization they think about like storing and collecting data and knowing who is user is individually and accumulating more insight that you can somehow use to change the experience one of the things that's that's cool about this field is you can use kind of contextual signals in a single session so I can be entirely Anonymous Shopper or shopper you've never before and you can instantly start getting some signals you can use to make the experience more relevant for her. Liraz: [6:03] Exactly exactly so is I look at it ice I've used the language model meaning that at the bottom of the mother we have the letters of course so these are like. Peaks and espola to have hers and then you go one level up and then we can talk about words for example if you click and butt before you click to hezzy. So I will call it hesitation are you at school really fast or really slow and then at the app we have the mindset for example if you are gorgeous. So I would see a direct action and then click so meaning that you know exactly what you're looking for and how to accomplish. On the website so I can actually understand your mindset if your focus if you're frustrated so this is like the the sentences in Thai language. Jason: [6:51] Very cool and it's this is maybe a silly analogy but the the expanse I feel like Moe's online consumers have had that makes this sort of apparent is the the little button I am not a robot. Right and everything goes well that's stupid like if I were a robot I would be able to quit that. I am in what what you're not realizing is that that which it is watching how you move your mouse, the button and the the unique way that a human being moves the mouse is different than the perfectly linear way and I'll order them is likely to do a. Liraz: [7:26] This is the magic word actually the house because actually my whole research is focus on the how customers behave and not what you're doing and also you know there are many many companies today. Dad or like your your detect that you use bad. I think that it doesn't matter because you know 70% of our day-to-day interactions are actually based on nonverbal signals meaning. Hope you're saying to one another so I can ask you if you like to come over and you will say yes because you are being polite but from the way you say from how you say I can infer that you really don't like to come over so it's about our body gestures and her facial expression when we're talking about the physical world but when were talking about the online it is also about the how is that it as you described right now. Jason: [8:14] Yeah it's super exciting let's jump right into it now you've done for the three big areas of research and I want at least be able to touch on all of the the first one is when we talk turn it down on the show we talk about this thing we call the mobile Gap right and in general you got all the traffic on the web is predominantly moving to mobile devices but if you're an e-commerce site people don't tend to shop as frequently and successfully on mobile devices that used to on desktop so you so that's a scary Trend and we're always talking about how sides can do better what we can fix in the customer experience and you know frankly you have a chance to settle up our way in on his dispute Scott and I always have without putting words in Scott's mouth while he's not here but he's not here so I might as well. He thinks some of that Gap is in friends and that it just harder to shop on mobile devices in the screens last. Liraz: [9:08] I would like technical issues. Jason: [9:10] Yeah not all of it I don't think you would say but I think he would you know just say hey it's West convenient and and I argue that a lot of it is inferior experiences and execution that as we get better we can remediate and and that we should expect to see. The mobile Gap certain Arab so I love to hear your perspective on that and tell us tell us a little bit about the study and what you learned. Liraz: [9:36] So yeah I'm sorry Scott but I will have to go with you or with your assumptions about it, if I say we we are calling it The Mobile man mindset meaning that I think exactly as you described we have a different mindset as we go on mobile and if you think about it it is done unconsciously it start with her body posture meaning that when you when you browse. Add to desktop when you add to your table to your straight up so he's actually affect who you are what you think what you do and when we on our mobile device where usually on the go and for us I would mobile we have an association between our Mobile in our social social life and we are. Conscious about about what we do and that is why we like to buy more precious thing on the mobile and you know our mobile is like an extension of our body so we treated completely differently you know. I thought that was conducted about people how they treat their mobile they found it if I will give you my mobile people we always start being jealous at you for touching my mobile if they make us feel more emotional about her mobile so also it from wanting that we have discovered is the three of you in completely different types of corn. [11:04] Lake Murray Sports Bar social media on our mobile Facebook and Instagram for for Generation Z and the desktop so. Most of us will also feel most secure like to complete the purchase so like there is a processing cycle you start with your mobile your brows for things and you landed at your desk but they also because we feel more emotional. When we are holding our mobile so we will be more people's purchaser meaning we we are not going to think about it too much we're not going to use a rational system because you know we have two different systems operating in or my system 1 system too so system to is the rational system. [11:50] And 61 is the emotional it is more at o matic so it is based on war base you don't. Too much so this is exactly how you behave on your mobile you don't, too much you play out of habit so this is a habit forming most of the mobile website or the mobile apps these are habit-forming apps and when you are like you lost yourself you don't think too much so that is why we will buy more I will be engaging more impulse purchase and for the desktop we are more self-aware and we are price-conscious and the reason address, because you have this big screen so so are exactly is called said so because you have this big screen this is an illusion that you can see clearly you can see all the details so I'll for some people most for the elderly guys out if they feel like they feel more safe to purchase order this. Jason: [12:48] Very cool and so and I imagine it's all somewhat relative like so for example I always talk about how in ux design Everyone likes to, to act very rational right and you know my promise is the overwhelming majority of all purchase decisions are made with that fast system they're made with the irrationals not that I work the subconscious portion of our brain and and so what you're saying is on the mobile device it's even more so. Into one of my takeaways from that is what you there's been this big Trend and they slightly misused word but we'll talk responsive-design like one one experience and it's just kind of fluid in a liquid so it can, Flex to fit a big desktop screen or small Mobile screen and well that's certainly better than have any experience that doesn't fit the screen it's probably not the optimal experience because your point, there there could be more emotional triggers that I want to deliver to someone on that mobile device and there might be more. Rational objective information that I want to deliver to that. Liraz: [13:56] Yeah definitely that's what I keep saying to our client it's not about the designer design shouldn't be different what you'd be different is the content. Contact because on the mobile we are on the ghost so mostly we are not, to be interested in all the details and information we want to to see images we want to be to have an access to the information and we want the more emotional con. Like like for example if you're talking about our social media so we want to be connected to our social media we want to know what my friend bought before me but on the desktop this is completely different on the desktop you want to review all the details, very carefully we want to have access to two Idol reviews so yeah it's not about the design it's about the content to be completely different and it should feed our minds at her mobile or desktop. Jason: [14:49] Yeah that's pretty cool until I think of that is sort of like on the desktop I might want a deep dive into all the reviews in the numerical rating. On the mobile I want to see a picture of the person from my social network that I know that that bought this product and had a good outcome yeah that's that's super interesting and exciting part of me it's sad because I feel like most designers work on these super expensive giant monitors and if anything they they did say their best most emotional visual experience is. For the big screen and then when they say hey what's the mobile experience they're like oh it's much smaller I'm just going to give him a thumbnail and give him. Attacks and and what you're funny cuz that's exactly opposite of the. Contacts to the user very interesting I can talk about mobile with you all day but I'm super interested to Diamond to the the next two studies and the next one that we were talking about is this. I think it's a huge opportunity for people to improve their customer experience it's shopping stress. Liraz: [15:56] Exactly so you know there are different tips to the shopping stress there different finding so first we know that for some of us, is like an addiction it's like you like to go shopping the same as you like to smoke it's relaxing and fun and you get to forget about yourself and just be like. When you play a mobile repair like mobile game so for some people it is exactly the same mostly women but. [16:25] I also some men that like to shop ever. Although we know that is supposed to be fun and enjoyable it can be all so it can also be stressful especially when we're talking about the checkout process and especially for men because what we have found that you that we can we have. [16:44] Different mindset for men and for women I think the differences between how men shop and how woman chokes is extremely important here. Because we said that men they want to find what they want to go shopping they know what they want. Ahead of time and they want to find it as quickly as possible looking for similarly related items and they are a price conscious and it's not about the fun it's not about the pleasure fat woman it's not about the end result so we found it sometime woman will enjoy the process itself they derive pleasure from The Experience they say calf and sensory stimulation when they are shopping so it's all about applying the associative thinking so they can start with I don't know why I baby back in skin care and they will find out go find himself they're going shopping for bags for example, so it's all about the pleasure in the fan and the association so you can see why it is less stressful for women if you are going to focus on the experience itself but for men if you are looking for something and you cannot find it especially play in the holiday season or if you really need something so then it become pretty stressful. Jason: [18:00] And it is interesting to me I often feel like the best opportunities to improve experiences and in increase conversion is shockingly sometimes it lasts about. More tools for task completion in more about this stress avoidance that like the low-hanging fruit is usually what can I take. Out of the experience that's causing the stressors and releasing like all those hormones into the bot like it's it's a. Liraz: [18:30] Espressos yeah exactly because what we see is the people the designer for example about the customer State of Mind what do you need like what would I need to find out they don't think about the actual experience so let me give you one example we found that the most stressful thing for some people is that they are entering a voucher or there is a voucher and they don't have it so they keep comparing himself to the other people because we are all engaging social comparison so oh my God. I could have this item in the lower price and I can't have it even if it is even if it is not so we need to think about this ecology over customers because those types of things they are what make them stressed. Jason: [19:22] Yes and that that particular use cases a huge pet peeve because not only is it it hideous it's at the exact wrong point it's at the very end of that purchase. They're 99% of the way through and you just said a new anchor change their pricing perception and made them feel like they're stupid if they make this purchase. Without a and none of us none of us like to feel that way another one that I talk a lot about is just the underlying Speed and Performance of the the site and it's shocking to me how much stress it induces just when the page loads slow or a button someone clicks. Liraz: [20:01] Because you feel wasn't what went wrong and oh my God what about my money because whenever it comes to your money because if you think about it. Long I mean of course we have the internet for many years now but still like the money is going somewhere we cannot see it's not like we can feel the actual money so everything about what's going on with the transaction can make a really really stressful even if you just like a slight error and everything because and then even if it was a slight error and everything comes back to normal afterwards we will still. Have a negative feeling about experience this is the. Jason: [20:42] Yeah that memory effect from that so there's a steady out and I'm terrified some was going to do bunk this study because it's one of my favorite studies in the space but they weren't they were studying, the the level of stress induced meant from different experiences and the Baseline was watching a horror movie and and they actually found that like, the average subject was releasing more cortisol and having you no more of a stress reaction to a slow mobile page. And watching a horror movie and I think that's hysterical like the most talented creative people in the world that are intentionally trying to stress you out. Just having a slow web page can accomplish the same experience on the part of the user. Liraz: [21:28] Exactly and you know what's the interest another interesting finding was that when I talkin about the holiday season so when you need. To buy to buy something you will feel much more stressful and then we can see more at disoriented behavior and because when we shop about a stand when any told about the van and we don't have a certain purpose purchasing then it could be relaxing and fun and we can avoid everything else in the neighborhood but when we need to do something it becomes press for, and we need to pay it. Jason: [22:00] And again like when you're getting practical advice to people and you're saying like so maybe that that best experience during a particularly task-oriented season like like a holiday season or your big annual sale needs to be different than the browsing experience that. Yeah any other like cheap pieces of advice that you give clients based on the emotion research. Liraz: [22:24] Yeah based on day is stress research so we know that we were actually analyze how men and women shop and we found that men that don't like the broad selection and Foot Woman if they don't have the road selection it's like they did in the if for example I'm going to buy seven jeans and I find exactly what I wanted like the exact same size as the exact course I will feel a frustrated because. It so if it's all about the shopping I like to have a road selection it's part of the fun to try it out in the brake and rotors service also when I talkin about the online experiences we need to have the accessories and we need to have a broad selection and we need something that fits the hours to see a patient so are we really need to create a different experience for men. Jason: [23:14] That that's super interesting and like so there's this a book in a principle that's out there in that a lot of women are familiar with the Paradox of choice right I think Dan ariely. Yeah and. Really smart guy lots of super interesting insides I feel like that particular inside is now. It has been difficult to repeat like that the whole notion that that the original test for westerners it maybe don't know is you bring a shopper to a Shelf with a bunch of jellies on it and if there's more. Liraz: [23:52] 54 vs 6 the word to two flavors are like they were trying to have the septic station of gems so in the grocery store that was at 21st flavors of jam and only six people of course came to the 24 but when I talking about how many purchase. Purchase three times more only six flavors. Jason: [24:18] Which is fascinating right inside the original inside there was. Liraz: [24:22] But this is Walden Diner really this is what she not anger but yeah he's talking about yourself. Jason: [24:27] Yeah he is talking about her study and he made it very popular by writing a consumer book and any is very approachable and joy is his reading quite a bit but. The takeaway from there was like oh my gosh Apple they have 47 different kinds of laptops and when Steve Jobs made them normalize it down to three laptops it reduce a lot of shopping stress and did all these things and and they sold a lot more and so they were suddenly this huge Trend towards curation. And I think what we've seen in further studies is there are context in which, that that affect is very real. Your point you know from the differences between men and women. Liraz: [25:08] Exactly depends but not for everyone. Jason: [25:10] Text where it's actually a mistake to assume that curation is. Liraz: [25:15] So it's all about Sigmund Tatian is all about I mean when I talk about personalization what is prisonization it's actually the realization that we have different types of customers so we have to provide them with different types of experiences and you know the two words that I hate the most in all these, online arena is. What are best practices we have a common basis for everyone we don't we don't we need to treat everyone as an individual and on state taste and this is the opposite of press. Jason: [25:54] Yeah but the actual technical definition of best practices is whatever I say. I'm totally teasing yeah but you're course right right in and it's I mean that's a cognitive bias to write like the clients are overwhelmed with all these decisions that they have to make and sometimes it just easier to Advocate some of these decisions and say hey what have people done before. And had a good outcome and what they don't understand is there's an unlimited number of variables that affected that outcome that are not the same. Liraz: [26:27] Sometimes you're not aware of all these variables. Jason: [26:29] Can't be in many cases it's it's it's fascinating but still for my clients just feel free to just take my advice. And is my clients hopefully no I don't recommend that either right like it's interesting to have hypothesis is but like it's it's really good to test those and pierpoint the old model of one-size-fits-all something and then you know that's why I like frankly we had all this a b testing and multivariate testing in the world for a long time and there's this interesting phenomenon. Conversions no better than it was 10 years ago everything regresses to the mean in mini case. And part of it's because the the experience that succeeded for Shopper age does not succeed for sure. Liraz: [27:16] And it's not only that because if you actually mentioned maybe says there is not a problem with a B test because when I talk to designers or two product analyst and they're trying out some tests they don't really have the notion. Maybe like the evidence we should maybe three work maybe it's not but it's not based on a committee the Samsung it's not based on psychological research and at the end of the day we are dealing with human being so it's not about okay so I have an idea let's try that it's about how people will behave in about reading the secret vehicle research and I know that you don't have time for this but it will at the end of the day of the long run we save you so much. Jason: [27:56] Yeah and it and then side note because most people are using his test to validate a preference rather than actually learn permit test like they're all so they're there generally the math is horribly flawed and people don't don't use proper sample sizes in the Simpson but we don't have time to talk about that you have a third study which I've only recently just wondering about an emotion so tell us about that. Liraz: [28:22] Right so we know that for example in the reported first a reason to release day Road brands that want to break away from the pack should focus on emotions, and you know what the part is I like the most is how an experience makes customer feel is a big influence on the loyalty to abandon Effectiveness series of using nearly every industry. And you know what we know it's not only Foster over the past five years we have been hearing about the significant fall off emotions and driving engagement and experience and brand awareness organization. No one really knows and no one really tells you how what is the mechanism behind it you know what's the relationship between emotions and experiences and how emotions can be utilized to drive digital experiences so this is exactly what we said to do and what you need to ask is how our brain, memorizes daily experiences and what do we need to be discussing his emotion emotion as a gateway to our memory. [29:23] Let me check with you a personal storage is to demonstrate it so it was a few minutes ago we were sitting in your family after Friday family dinner we were sitting in the living room and then my oldest daughter she turns to me and asked how we met her daddy so I told her the story I told her that I went because of my friends to a dance club and as we entered the club I saw him standing there the battery cover. And he was so good looking and then we went to the dance floor started dancing and after a few flat it looks he came over cancel my friend and ask if he can see me away from them. [29:57] And this is how we talk again and he is there sitting there listening to me telling the story and says oh my God liraz it was nothing like. [30:05] And for a minute there I was doing. But you wasn't eating and you know today after starting the dynamic nature of our memory I know that you wasn't kidding because our memory is greatly influenced by. Our recurrent mindset and our private stations in our emotions of course and that is why and this is very important lesson it doesn't matter what we need happened to the digital experience what matters is what we're going to remember from The Experience right so in order to study emotions in the digital world we have developed this mother According to which the emotions evoked are the result of our private stations and a recurrent mindset. [30:48] And by private spectation I mean the actual wrong. Interacting with digital work we have developmental model that guide our XP patient is to what to expect from different online experiences and what do I mean by mental model for example you are going to rest. [31:05] You know how to behave you know this need to wait for the hostess first date you know how to behave so we have mental after interacting with him so he's the actual interaction play online interactions meets our expectation it is considered to be an an event and no emotions are involved so for example if I want to buy a certain the product this is what I expected, and that's it but if the actual interaction at least below our expectation meaning that is -2 what we expected then the experience would be associated with a negative emotion however if their experience rises above our expectations then we can do, talk about Peak experiences and delight and then the experience will be associated with a positive emotion so it is extremely important to understand our products spectation in just to give you an example, there's something that we need to understand about our brain a brain did not develop as fast as our technology, in one of the basic human needs is the traffic control and the response to the loss of control is the same and it doesn't matter. [32:20] If you find the jungle fighting for a life if we are trying to possibly the street or if we are on stage in front of a big crowd so recently we have one of our clients music station do analyze the customers behavior on the pages and they were trying to push video content by having them load automatically. [32:36] On your pages so what me so when we observe the behavior is it whenever the customer and to the website and counted the video immediately clicked on the pause button. [32:46] 85% of the customers think I called you the video and click on the start button because clicking on the pulse by then put the control back into their own hands so it's not about the video was click and well-designed it's not about the video it's about our private station and our emotion and you know different emotions affect. Whole different functions today influence information processing in-memory in different ways and it is extremely important to understand it. Jason: [33:16] Andrew thinks of that autoplay video took the control away from me my expectation was birth control so there was this negative Delta of the experience versus my expectation and the. The further the Delta is from the the expectation positive or negative the more likely that emotion is to be preserved in our memory. Liraz: [33:42] I need it depends because if you think about it from ever and evolutionary. Negative experiences are quicker and more likely to form long lasting memories because. It is much more valuable to hold on to those negative experiences and there is something that we need to know about our brains memory system Brands memory system work something like a pen in and out. So for a brief time before the ink dries it's possible to smell what's written. Did the memories Consolidated it changes very little so you need to be self-aware about the emotions that are revoked in your websites and products. Jason: [34:21] Yeah and that's exactly what happened to you and your husband at your meeting right is you you both had this expectation and smudge the memory. The time and now they're heavily imprinted years later and I'm sure your memory was the accurate one by the. The another thing that's odd about that emotional memory that I've heard and tell me if I have this wrong but I've heard that sequence can also have some impact so we've always had this this piece of common advice that like the first and last experience in a a path are more likely to be imprinted in that memory than some of the inner. Yeah okay. Liraz: [34:57] So for example if you go on vacation so when let's say that you are visiting to different states so the shift. Between when you move from one state to another then you're going to print it as well. And I you know the continent has a really great analogy about emotion he says that in one of his letter in the Q&A session there was a man and the man says that he has been listening to Symphony and it was absolutely a glorious music I need the very end of the recording there was a dreadful stretching song, and any of the really quite emotionally it's ruined all experience for me I think about it it hasn't had to experience it had 20 minutes of Glorious music. Accounted for nothing because he was left with a memory the memory was ruined and the memory was hold your garden. Jason: [35:49] Yep and so I think there's even things like I have a three-year-old at home and you know going to the doctor or stressful and they give you all these immunization shots and now they like they give you a dose of sugar. At the end of the shots and I I presume that part of that is so that like the last. Liraz: [36:07] Find Alex. Jason: [36:08] Final experience that kid has is like a nice nice dose of Sugar Rush which I feel like every time I go shopping if someone would just give me a hit of caffeine at the end I feel like that would be a really smart. That's why I think it's interesting cuz I talked with plants a lot about. The the role of brand and Tumi brand works both ways there's a psychologist at Stanford Professor Samsung that does. Is a principle called the absolute value and essentially it's hey brand has often been a surrogate for Quality when we can't judge the quality of products we associate quality with the familiar brand but they didn't the modern world it's much easier to judge, the true quality of products we have access to all this information at our fingertips and in an environment where it's easy to get objective information. Brand becomes less important as a surrogate for Quality Inn. Liraz: [37:06] Yeah I think that it's not about the fact that Brands become less important it's about that people. Meaning of the growing flag of information goods and services the emerging middle in our memory and we cannot separate one brand from another and that is why, when our brain needs to choose a product for my multi to the product that are more that's the same characteristics the deciding factor will always be the emotions that are, so deciding to buy a certain brand has nothing to do with the features of and benefit of that product, think about your own smartphone how many of you can celebrate yours on the differences between your smartphone to the competition maybe if you like, most of us choose based on emotions that are attached to that bread so if there is an association between dead product in a positive emotion you think about the benefit you. You feel and you know Gladwell wrote in his book playing about the emotional shortcut hero they're the only way that you meant being could have ever survived the species for as long as we have, is that we have developed another kind of decision-making apparatus that is capable of making very quick judgment based on very little information, so if you have these emotional shortcut you don't need to think you just need to feel. Jason: [38:25] Yeah exactly and that's always liked it when I do that to Value thing to a very famous brand they're always just hard in like oh my my friends is valuable in and then that's my Counterpoint no brand still has super important roles it's it's a it's a shortcut to these emotions. Liraz: [38:42] Play The Association. Jason: [38:44] I can be permanently associated with these emotions now the one downside of that is the relative to expectations. The expectations. Go up with that brand and then it it becomes increasingly difficult for Apple which is already beloved if they make a product that like disappoints customers in anyway it's a negative association versus. Yeah Samsung where we're at. Liraz: [39:12] Yeah I wouldn't expect too much and yeah and it is very easy to disappoint our customers I think this is the most easiest thing in the world. Jason: [39:21] And in you mention that like you know most of us like pick our phone and couldn't, describe why we we pick it up I would even argue it's worst most people will try to describe it the rationalize it. And not even realize that actually those rational reasons you just ate it had nothing to do. With why you until I always like on the internet where this big Echo chamber and you know you follow my Twitter feed and you'll see thousands of studies and all these studies are like surveys of stated preferences and I hate those two studies because again those are consumers that are rationalizing why they did something instead of observed study. Liraz: [39:59] Yeah we keep seeing these in psychological studies there is a God. People weekly inhabited really feel and you know what it's not because you're lying to you. Not lying it's because we just don't have it true regarding what motivates our behavior and there is a great experiment that was recently conducted the demonstrated so customers brainware scan using fmri device. And this technique measure changes in blood flow to correspond to increase and decrease in mental activity and the interesting finding all that customers were showing different products is part of the go-to-market strategy of these brother and interesting be if customer declares that is going to purchase a certain product but it was not an increase in the emotional brain Terraria those products usually felt, so it's not about asking people it's about trying to find out a different measurement to understand how they felt. Jason: [40:52] Very cool and that's actually going to be a great place to leave it because it's happening again we've used up all our a lot of time. And I know it it it goes too fast and I could deep-diving a bunch of these topics with you would be be fascinating but it wouldn't want to continue the conversation or they have further questions we have a Facebook page they're welcome to go to Facebook and post questions and I'll be happy to forward them to you. Liraz: [41:16] Always would be great. Jason: [41:17] We we can continue. The Dying Light there is listeners want to get in touch with you directly are you like is there a you have a preferred like you are you active on Twitter or do you. Liraz: [41:28] Sure on Twitter on LinkedIn and of course if they are going to post question to the Facebook I will be more than happy to address the person. Jason: [41:37] We we sure appreciate it I will put your links and our show notes and as always if you enjoyed Today Show we sure would appreciate it if you jump on the iTunes and give us that 5-star review there still rational listeners that want to read those. Does does reviews to pick a pod and you know you can imagine Scott and Jason's great looking pictures if you if you want to go with it emotional reason to listen to our podcast but thank you guys very much in until next time, happy commercing.

EP140 - Stripe Head of Stripe Issuing, Lachy Groom Lachy Groom is the head of issuing at Stripe. Stripe is a payment processor that provides a set of tools to help businesses accept payment online.  Their clients include Warby Parker, Wish, and Target.  Lachy was the 30th employee at Stripe, he leads Stripe Issuing which is an end-to-end platform for quickly creating, distributing, and managing physical and virtual cards. In this interview, we cover Lachy's background, the range of Stripes services, the state of online payments, mobile payment best practices, digital wallets, and marketplaces. Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 140 of the Jason & Scot show was recorded on Friday, August 3, 2018. http://jasonandscot.com Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Transcript Jason: [0:29] Welcome to the jason and scott show. This is episode one, forty, being recorded on friday, august third, two thousand eighteen. I'm your host, jason retail, g, goldberg. And, as usual, i'm here with your co host, scottwingo. Scot: [0:43] Hey, jason, and welcome back, jason's got show listeners. Well, jason, one of our favorite topics on the show, and certainly something near and dear to your heart, is payments on dhere in two thousand eighteen. You cannot think about payments without thinking about one of the top payment companies out there. Stripe we're very excited tohave on the show, laki groom, who is the head of Stripe, issuing here with us today, he is employee number thirty, and we're excited to have you lucky. Welcome to the jason scott show. Lachy: [1:15] Thanks very much for having me. Jason: [1:18] We're super excited, and i'm eager to jump into payments. But before we do, one of things we always like to do on the show is, have our guests give a little bit of a background of their career and sort of how theycame to the role. And particularly in your case, it seems like Stripe was still a very small, entrepreneurial company. When you came to them. So could you. Could you give us the kind of ah, the version of your career project progression? Lachy: [1:43] Sure so i i started seven in online development startups things of that nature pretty young my my granddad actually taught me html when i was a kid, which got me pretty fascinated with the internet and from there i had a, i started a business creating websites for friends and family and that sort of just, just grew into servicing clients around the world on di i got started in and sort of something tangentially related to payments when i started a company called card nap which is a was a gift card marketplace, on dh ii build this side out in australia it looked pretty similar to a company called plastic jungle here in the u s, and it was just a nightmare to set up setting up this marketplace where i had to accept payments and pay people out manage inventory in and verifications and and so i ended up pivoting that business to be something elsethat it didn't really have a lot of those complexities. [2:41] Ah and and from there that that really just kicked off my fascination with with startups and tech and so i knew i wanted to move out toe, san francisco and had had a few friends that walked it Stripe didn't really understand this whole, developer tools thing until they explained it to me and explained how starting my business back in australia could mean so much simpler if something like Stripe have existed ah and that that began my my joanie it'sStripe as one of the, first few business high as high, initially focused on on one of our products, a product called check out. Then i moved in tow. International expansion, where i helped Stripe launch, and singapore, australia and new zealand, hong kong, on bit of the rest of europe. And from there, i i worked on partnerships and, our co payments product, walking with all the different credit card networks, building our copayment acceptance infrastructure. And after doing that for a few years, i got fascinated with the whole other side of of payment acceptance and the credit card networks. Which is, is sort of where i've landed today, issuing cods. And instead of making in payments, rather than focusing just on accepting them. Jason: [3:47] Very cool on dare you talking to us today from san francisco from the bay area. Lachy: [3:52] I am, yeah. We just moved into it new office here and talking to you from from san francisco. Jason: [3:59] Well, congratulations on dh for listeners that aren't super familiar with Stripe, can you give us, ah, kind of the the high level overview of aa. What you guys doing where you sit in the eco system? Lachy: [4:10] Sure, so fundamentally, we're a global technology company. We build, economic infrastructure for the internet, so we work with businesses of all sizes from from brand new startups to public companies like sales force and facebook who all you Stripe teo to power some, some part of their economic infrastructure, and accepting online payments, managing their businesses online, you've got millions of customers and over one hundred hundred or so different countries that used Stripe to start, run and scale their business, on one thing that we've really being focused on is just reducing the barriers to entry for starting a business and then subsequently growing it in scaling it especially internationally. Andi, we fundamentally believe that we're still in the early days of the internet's potential on we're seeing people you Stripe to build the kinds of companies that couldn't exist ten years ago. New models like online crowdfunding or undermanned aps e commerce marketplaces really high growth companies with a broad appeal on dh. We build that the tools that allow them tio stop those kinds of businessesand scaled them out. Scot: [5:16] Very cool. Let's was kind of jump into some payments. Just topics that that we've covered on the show would love to hear what you guys are seeing out there. There's been a lot of innovation around, you know, touchless payments. So, you know, google pay, apple pay and those kinds of things. If my memory serves me right, you guys were like one of the first folks to reallykind of support. You know, those platforms, how are they doing? And he thought, son, on where that's going? Lachy: [5:43] Yeah, i'm i'm a huge fan of these kinds of payment methods, i think it is if you've got an iphone and you're paying with apple pay it's almost the perfect payment experience, you know, there's been some, i think some hitches with the new face i'd method, but when it was touch idea and you just press that one button to pay, i thought that was, you know, it's almost perfect. You don't even need to think about the payment experience, which is is our real aspiration to make payments fade into the background. It shouldn't need to be this this thing that consumers think about on dso for may, apple pez i think it's had an even bigger impact on purchases online than purchases offline, we we work with with a bunch of companies that have the apple pay flow is a core part of their e commas floor, their mobile check outflow, and i want one of those companies insta cot, which is a a marketplace here in san francisco and throughout the rest of the u s for purchasing groceries, they see their customers check out, i think it's around fifty eight percent foster with apple pay on so it's just the these kinds of methods really simplify the payment flow, so it's something that we're, we're really bullish on the trend that we're seeing. Jason: [6:53] Yeah, that's. Awesome on dh. I have seen some similar stets, stan. Ah, there definitely is. Ah, sort of universal, axum, that if you have a lower friction, check out option b it apple pay or samsung pay, or even the payment ap. I built into the ah, the many of the web browsers now, which i know you also support that. Not only do people check out faster, but just conversions higher. They have much of us abandonment, and so they literally make more money. Lachy: [7:23] Yeah, we receive that across a bunch of different uses where they're seeing typically double the conversion rates with when, when a consumer uses a method like apple pay, they don't need to go fetch that creditcard number. It's. Just ultimately, great for businesses and that's, an area that we try and focuses. How come we reduced the friction to improve the the conversion rate? Jason: [7:45] Yep, and so at the risk of alienating the apple pay team, which in all seriousness, i know our listeners of the show apple pay is awesome. The traditional knock on apple pay is, obviously the whole world doesn't use or have access to apple pay right like that, you know, ah, a minority of users are carrying an apple device and, you know as good as apple. Is it an upgrading everyone there's still a lot of deployed apple devices that aren't apple pay compatible and so it's like the traditional knock wass it's, a great conversion tool for this very affluent, high spending, ah, subset of the market but it's now feeling like even if it's not apple pay, but samson payer our microsoft pay or google pay or pin and a p i, you know, we're trying to get to a critical mass where the overwhelming majority of shoppers have access to one of those easier payment things, that's becoming much more you. Lachy: [8:42] Yeah, absolutely. And as you mentioned with the payment request a p i it's now really coming to browse isas well, with quick ways of checking out on dh. So now that i think pretty much every major phone manufacturer has, one of these methods were seeing it at least come to ubiquity in terms of the gaps that are adopting it. And now, it's, really just driving the consumeradoption and getting those cards into those wallets? Jason: [9:05] Yeah, and tell me about had this right like a if i built an e commerce experience and i used ah ah, an older school, more traditional payment gateway, i program my own check out flow. You know, i'm i'm doing some sort of interface to that. That payment gateway and then some new technology comes to the market like, ah, the payment, a p i ah, my developers have to go in and update my checkoutflow. And so, you know, that's got to get in the road map and it's competing with a bunch of other priorities, and it might take a while before i support it, but one of the benefits ah, to Stripe clients is, that they're they're actually using a Stripe check out follow. So when some new payment system becomes available and you guys jump on supporting it quickly, that propagates toe to a large part or all of your your users basically instantly do what do i have that right? Or am i over selling you? Lachy: [10:05] Yeah, you were gonna hire you on our honor and our team to describe it to our customers, so we have a bunch of tools and what we focus on his building tools to make it quick for much ensign developers to reactto these kinds of trends. Before apple pay existed, people didn't really imagine apple pay what would have existed, and so it wasn't is easy thing for them to comprehend, adding, and so what? Well, we're focused on building is things that they can effectively drag and drop in. One thing that we find is that margins are businesses they really liked to control their checkout experience, it's something they generally feel, ah, just a lot of protectiveness over, and so what we give them is the ability toadd that, really, seamlessly, there are options where they can they can effectively outsource that checkout experience to us, and we'll continuously update it with the with the latest payment methods that we see here if they'reexpanding the new countries payment methods of different countries. So we kind of have two pots, one is where you just want to drop in something like apple pay and then not need to do any other work beyond that, that little update and the other where will continuously update thecheckout experience. Jason: [11:11] Got it. And is it fair to say, like, in my mind, sort of the original market positioning, whether this was, ah, accidental or intentional, is, you've always been the really developer friendly option. And so it feels like, like you guys turned up in a lot of experiences because the product manager left it to the developer, toe comp something up. And you guys had this, you know, you know, great fbi examples on your website, and the developer would grab your sample code and get it implemented quickly. And and that that was probably, you know, sort of one ofyour original conquest strategies for getting a lot of customers. Lachy: [11:46] Yeah, that's, that's absolutely right. When when Stripe got started, there was no easy way to accept payments online. And it would be a developer that starting this company and they would be the one that pickedthe payment solution. And they would want the easiest one to get up and running. But increasingly, we're seeing larger companies come to us for the same. Where there, glad your company's heir increasingly recognizing the developer leverage that that they have the scarcity of engineering resource is and the importance to pick the solution that will allow them to move thequickest and react to trends like apple pay. And i think apple really is a great example that where if you're running on a legacy, stack may take months and months to get this this into the market. Where is that nimble start up competitor? Or, you know, even even a larger company that has ah, better engineering tools or developer tools can get it out in the market in time for launch. Jason: [12:39] Yeah, absolutely. And i'll fully say, i am, ah, still super disappointed in the percentage of e commerce sites that don't support the payment. Ap. Which, to me, seems like a big myth, sort of. But going your point about, you know how resource constrained for developers. So many of these sites are. Lachy: [12:58] Yeah, it just doesn't make any sense that that there, they're not adding these things. It's leaving conversions on the table. Top line revenue on so it's. It really holds customer companies back, not having. I think the best developer tools out there. It's, it's, similar trend with eight of us, where companies have gone from, on premise, hosting or building their own data centers, recognizing that if you have a provider like kws, he'll just be able to move so much foster it puts you on on equal footing. Jason: [13:27] Yeah, for sure and it's funny like at the moment. So we talked a lot about mobile e commerce on this show on dh. For years, we've been talking about this thing called the mobile gap, which still exists, which is essentially, ah hey, way more users are shifting from desktop browsers to mobile browsers, it's the majority of traffic on most big sites now, but the conversion rate on those mobile devices is is poor compared tto desktop. Maybe it used to be a third and now it's approaching ah half and like i look at that ah, apple pay, but certainly the payment fbi as ah as well hanging fruit. Ah, to improve that mobile gap and then i you don't now have this macro thing, which is admittedly more work and not necessarily ah exclusively, you guys. But progressive web aps is another huge tool in that arsenal, and a very small number of e commerce sites have successfully got in that stuff done yet, like, do you guys see those kind of mobile trends? And are there any other mobile trends that. Lachy: [14:30] Yep, we see the same thing. We we we continuously review the largest e comma sites on. We did a recent review of the top hundred commerce sites globally, and seventy two of them had greater than three, errors in there. Check out flows, things that could really easily be improved, to reduce friction for theirconsumers to pay them. And a lot of those areas were mobile related. One fifth of those sites made mobile check out significantly hotter by not having a numerical keypad for entering credit card numbers. Almost half of them didn't have order phil correctly. Setup it's little things like that, where you just you just give up, you try and you know, you decide. You'll wait until you're back on desktop, and then the punch is neverreally ends up happening. Jason: [15:16] Yeah, and it's and i have to admit, like being a practitioner in the space. It is like a huge pet peeve of mine. It's like nails on a chalkboard when, like developers, don't get their input masquerade and you get thewrong wrong wrong keyboard for input. I'm a big fan of them. Ah, predictive type ahead for address entry and stuff like that, and you know you still, ah, don't see that. Enough. So it's it's crazy, but it's. Ah, not surprising that you're you're seeing similar similar. Lachy: [15:46] These things, really on hard to build it's just it's, kind of crazy that everyone has to do it themselves, and so on. Area, we've focused, is how do we build the tools such that everyone is on equal footing. Everyone gets the lessons of the best practices and were positioned really well to know what converts well, what, what consumers like, and so that that's that's been a big area of focus for us in the past few years is, how do we take all the learnings we have developed from, from servicing millions of bill's businesses around the world and applying those toe aah, letting businesses have the right defaults from the get go. Scot: [16:23] I recall one thing i wanted to talk a little bit more about. I'm the marketplace guy on the show and there's been an explosion of marketplaces on and started with products. And now we're seeing a lot around what i would call on demand services. And i know that's an area where you guys do a ton, tell us about some of the things Stripe does around marketplaces. Lachy: [16:43] Yeah, we got we got started with marketplaces and number of a number of years ago ah and then, the way it happened is pretty interesting because before that Stripe was if you're accepting payments from customers on we didn't really focus on what you would then do with those funds, on we started to get some pretty interesting requests and one of them was from from lift its must've been five or so years ago, where they had this request to add multiple bank accounts to their Stripe account, and we're scratching our heads wondering what they were looking to do that we found out that they had this process of cutting checks to pay their drivers and they were wondering why khan strategist automate that potlike they do with with our our daily payout, on that seem to be a pretty common problem amongst a number of thie marketplaces that used Stripe at that point in time they had all these back office operations and they're all doing the exact same thing and it seemedlike a real opportunity for us tow, really simplify that providing a pea eye for it and. [17:42] Fundamentally automate it on so that was something we began doing about five years ago wade called that product Stripe connect and we internally we call that the payments platform for platforms it z, marketplaces and platforms you Stripe connect to accept money and then pay out to third parties and we provide everything in the middle. To do that compliant, lena. Handle the tax, reporting the identity, verification and onboard and compliance with the different regulatory laws. And ah, pretty much everything you need to do to manage a marketplace online as it relates to the movement of money. Scot: [18:22] Wrinkle. And then i couldn't help but notice your title now has card issuing in there. And, you know, one of the challenges you have in these kind of digital and physical marketplaces is if i send you mentionedinsta card earlier. If i send ah ten ninety nine shopper to go buy some groceries for a customer, i'm going to need to pay the grocery store. And you know that that quote, unquote, shopper is going to want to come out of pocket for that. Is that kind of what's going on with the card is sure thing. Lachy: [18:52] Yes, that's, exactly right there's a there's a bunch of different use cases that that Stripe issuing consult and fundamentally, it is infrastructure, like the rest of stripes products on its infrastructure that relates to money,movement, and so instant cult. To use that example, they have that store of funds that they have taken from from customers that they need to move to ah, grocery retailer that they don't necessarily have a contractual relationship with and and the bestway of doing that is with the credit card. And so what we're providing to companies like this is an a p i to issue cod's both physical and virtual, and then dynamically control the span. So, for example, insta kat would know exactly when a sort of a shopping session is taking place, and they would only want to authorize transactions in that window. They would know exactly which store it's happening out, and they're on. Lee wants approved transactions at that store, and so we give you or the customer complete flexibility on on how they use those cards and what what transactions can go through them, but again, fundamentally it'sinfrastructure and that's one use case of, of many that we could support. Jason: [19:59] That's. Awesome. And it feels like, ah, marketplaces air, really expanding, like, certainly internationally. But even here in the u s, we're getting more marketplaces and a wider set of use cases from marketplacesalmost every week. Are there any surprising trends or particular learnings that you would want to share with new entrepreneurs that are getting into the marketplace model? Lachy: [20:21] Yeah, there's, you know, obviously two sides to a market place, you've got your your bias and your cell is on. We focus on both sides on the on the bias building tools, tow service. Those customers, things like apple pay make the transaction experience incredibly easy on then on the cellars with that Stripe connect product is talking about but one one interesting thing way we've discovered recentlyfrom our data. We have thousands of market places that use us and, you know, obviously not all marketplaces grow at the same pace. We found that market places with higher seller retention rates generate much greater revenue than the others. This may sound obvious, but it's, in contrast, to buy our attention higher. Bio retention isn't really associate idfrom from our data with significant revenue increases. Way saw that increasing seller attention by one percentage point predicts ten x more revenue than the same one percentage point increase. Ah, in buyer attention, i thought this was a pretty fascinating stat. Jason: [21:21] Yeah, that's. Always a challenge for entrepreneurs. Is, is. How do you grow these marketplaces? And you put all your resource is on the the seller side or the the buyer side? Or ah, scott likes to advise, like you couldn't need to balance it, right? Lachy: [21:38] Right, right. But it's it's really highlights you need think about how you retain sellas and you know what, what to sell is care about. One thing that we've found they really care about is the speed of their payment, so they're they're delivering value on a marketplace and then they need to get paid on dso one one area we've focused there is, how can wereduce that payout cycle? No, i get paid every two weeks, but as a competitive advantage on one of these marketplace marketplaces, how can you bring that down? And so, with a partner like lift, we built a product called instant payouts on so they can get paid out right after they complete ah, right. And now, over fifty percent of of lifts drivers take advantage of that instant payout functionality on dh so that veterinary where we liked folks, is well, where the one of the ways in which we can help platformsdifferentiate, toe better service, they're they're cell is not just the bias. Scot: [22:32] Very cool, sir. Pivoting off marketplace is a little bit. You talk to the very early part about international on dh. You have, ah, cool international accent. So this ties in with your accent against what are some interesting international payment trends. You guys, we're seeing you read all about it, ali, pay and and what's going on there. And, you know, china has a lot of really interesting things, curious to see some of the the trends you're seeing internationally. Lachy: [22:57] I think one of the most interesting things just a top level is how hard it is for market places to expand internationally, there is there is a whole different regulatory environment different payment methods is your highlighting both on the acceptance side and on the pay outside on so it's, it's i honestly find a pretty impressive any market place that has managed to build infrastructure to take them from one country to many just because of all of the complexity involved in that expansion and i i think that's, that's just so hard to understate the power of that, on so it's it's you know it i love it is a consumer of something like uber where i can use it in the u s and then go to a different country and it just works out of the box the same app and so it's really impressive theinfrastructure that built, in the in the background but in terms of payment methods you know money is money is oddly cultural on dso we're seeing in every country we go too and we expand into, is an entirely new set of payment methods that we have tto have to deal with and soon in the us obviously everyone uses credit cards on dh in france it's the same over eighty percent of online purchases are credit cardsbut for, neighboring germany it's less than twenty five percent and they use something called sepa which is effectively just a bank transfer. So if each of these new countries, marketplaces or retailers have to think about how they accept money from their consumers, and and we can just take this. U s centric view of credit cards and debit cards dominate. Jason: [24:26] Very cool. A lot of companies, yourselves included, sort of started on the digital realm accepting payments online. But we've seen a number of them sort of extend to physical payments and sort of omni channeluse cases. Is that something you guys are doing as well? Lachy: [24:41] Yeah, and, you know, i think there's there's more than just a sort of the point of sale devices there we see a lot of, like when you think of something like lift, fundamentally, you're you're operating with a real world service, you're you're getting into a car, and so what is ah, on online payment, what is an offline payment anymore? And they've solved that by the having the payment experience just happened in the background. You don't even think about transacting there's no, no riel time exchange of information with each ride that takes place or transaction on so that's an area where we really try to push the businesses that air. Welcome with Stripe think about how to make payments fade into the background, but obviously with with retail transactions, and we work with companies like shopify and we'll be parka who have ah, store they'rethey're they're merchants have storefronts, and so, we power point of sale systems for them as well, but fundamentally it's about unifying those systems and so it's a single system with stripes, they can look at customers online looking customers offline ah, and make it asseamless as possible. Scot: [25:45] One thing that's kind of nursing as a sow, one of one of the atmosphere on fire and one of my companies was was kind of a platform play, if you will, are tools for developers, sometimes it's, hard to kind of, you know, ask you figure out when to stop, have you guys so, like on the marketplace example, you could go into helping marketplaces recruit sellers, you could go into you kind of hint, you know, said that you do a little bit of verification, you could even go into, like, background checking of drivers or something like that. How do you guys think about how deep you want to go? And then, like, no, we stop here, and this is kind of where this is the platform. Anything above it is not us. How do you guys think about that? Lachy: [26:23] It's a really good question on dh you know, i wish i had some framework i could just give it to you, but fundamentally we talk to our uses, what water, the common themes of problems that they're all having on,and, then we do our best to solve them. We generally don't go into super niche use cases on sort of solved just for one vertical. We like to look at the problems that pretty much all marketplaces were having or in the case of subscription business is pretty much all subscription businesses are having and then build software toe, to the extent that is useful for sort of the eighty percent and then where those nuances come in for maybe a very vertical ized business, they build that lost twenty percent that's really specific to their business or the needs of those customers. And this is where we try through the ap eyes that we build to make it generic enoughto handle that wide variety of use cases, and just really folks on the infrastructure is maybe that's. One way of thinking about what is infrastructural thus is sort of what sits on top of the infrastructure. Scot: [27:24] Cool one topic that's in the news. A lot lately is. Security is kind of interesting as an e commerce guy, i think it's interesting that, you know, the variety of hacks read about now are kind of happening out on the physical point of sale system. It seems like, but i know a full disclosure at my current companies. Fifty we use Stripe and one of the reasons we love it is on my previous company. We went out, we had to build out that whole pc. I stack ourselves. Andi, i i love that we could just use Stripe and, you know, we don't even see the credit cards. You guys take care of all that, and we just kind of, you know, we get pc i compliance, quote unquote, for free. What, you give us a little a little blurb about security in today's world, and you know how Stripe looks at that and any trends you're seeing there. Lachy: [28:10] Yeah i mean you've kind of set it all we really try and make security cool feature of the Stripe offering that again something folks don't need to think about it's just a strong default, on and there's all this talk of token ization in the payment schemes are the payments walled these days but it's something that Stripe did from the get go, i think a lot of people think about Stripe score innovation as developer tools i think of it, one of the really important ones that got us to where we are today is that that pc i shielding that you're highlighting there we had the concept of a token since, the beginning of Stripe where we would we would store there's card details and and the merchant or business owner wouldn't have tio, and that was that was about eight years ago that we started doing that and so security is court of the dna off Stripe it's something that we think about in each new product that we launch because it is your highlighting itsomething that distracts from delivering a product to your customers, building that pc i vote that isn't necessarily directly beneficial and if someone else khun solve that problem even better you can focus on unsolved ing the problem that they came. [29:20] I think very broadly hackers will often talked at the weakest link in a chain stitch together many providers in in a long chain so there's many weak links that you can possibly target on dso. We're focused on when folks use us, you've gotten and twin solution for, for all things security. You send the card numbers directly to Stripe. We only provide one time use tokens to ma agents, and i think that really reduces the surface area, especially in an online payments. Jason: [29:48] Yeah, it's. Funny. I talk a lot about trust and, like there's, a lot of evidence that consumers still have a huge trust. Graff gap with, with online experiences, even from very well established businesses. And it's. Always ironic to me that fewer customers trust typing that payment information into the token eyes encrypted browser than they do, handing it to the minimum wage clerk at the store that has a skimmerunderneath her death. Lachy: [30:16] Yeah, i mean, for good reason to a lot of folks not trust the retail is that they're paying not because of any bad intent, just because it could be so easy to to breach these legacy systems. As we saw, with many of the breaches that have come to light recently on so that's an area, well, we really just try and focus and make sure that their aunt ways of ah breaching Stripe much is by providing them the besttools possible. But it's it's, obviously so hot. And i think one of the really mind boggling things is. How can these small businesses have the kind of security that these large mega cops have? Ah, and even these large mega collapse air getting breached. And so the more we can do to democratize security tools are best practices. I think it's, a really worthwhile place for us to continue to focus. Jason: [31:06] Yeah, that is ah, on awesome area of opportunity and that's going to be a great place to leave it. Because it's happened again, we've used up all our allotted time. S o. We certainly appreciate having you on the show if listeners have any questions there, encouraged to go to our facebook page and posting comments there, and we can continue the dialogue, as always. If you enjoyed today's show, we sure would appreciate that. Five star review on itunes. Gosh, really appreciated you being on the show today. If wisner's wantto contact you directly, can they find you on twitter? Or lengthen or what's your preferred method of contact? Lachy: [31:46] Yeah, i'm pretty active on twitter it's, twitter, dot com slash laki groom on it's. My. Jason: [31:53] Perfect, and we'll put that in the show. Notes. Ah, and so, until next time, happy commercing.

EP139 - B8ta founder and CEO Vibhu Norby  Vibhu Norby is the founder and CEO of b8ta.  b8ta is a software-powered brick and mortar retailer designed to improve the customer and maker experience. They help people discover, try, and learn about new tech products while empowering makers with a simple retail-as-a-service model that puts them in control. In this interview, we cover Vibhu's background, how he came to the idea for B8ta, b8ta's retail partnerships (including Lowe's and Macy's), their unique marketplace dynamic, their experiential retail as a service offering, their recent fundraising success, and Vibhu's vision for the future of retail. Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 139 of the Jason & Scot show was recorded on Wednesday, August 1, 2018. http://jasonandscot.com Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.   Transcript Jason: [0:26] Welcome to the Jason and Scott show. This is episode 139 being recorded on Wednesday August 1st 2018. I'm your host Jason retail geek Goldberg. And as usual I'm here with your cohost Scott Winslow. Scot & Vibhu: [0:42] Jason and welcome back Jason's Ghosheh listeners. Jason I don't know about you but I've been on pins and needles this week no we have a special guest tonight. You and I are both probably the biggest gadget geek ever and we have a new favorite store and it's pretty exciting to have someone from that store on the podcast. There's a company that we have talked a lot about on the podcast so I'm hoping longtime listeners can kind of guess what we're talking about here. The company is beta and that's B the number T.A. Beta is such a unique company. I don't want to get in the middle of describing it to everybody. I want to kind of leave that for our guest who is the CEO and founder of b8ta, Vibhu Norby. Thanks for having me. I'm so excited I've been listening since the first episode. Jason: [1:37] We are we're thrilled to have you. And I do think Scott and I are the target market for your concepts. We'll get to that in a moment. But before we do normally we'd like to start interviews is get a little rundown from our guests on their career progression and what led them to their current role. And in your case. Beta is not your first cool gig. So definitely want to share that with the audience. Scot & Vibhu: [2:10] Yes so I I grew up programming, and fell in love with computers and software when I was an early teenager and sort of joined a series of startups and then end up leaving to do one of my own. And we got funded by Y Combinator and then raised a couple of million dollars from, some investors and that we were making a social network for the phone and back in 2011 when snap chat and a bunch of these guys got started and we didn't make snap chat. So the company didn't totally work and we we found a home at Nest a few years ago. [2:53] At the time when they had one product and were just starting to think about launching multiple products and so there I joined as an engineer and brought my whole team and company over. It was sort of an acquisition. And that was where I got introduced to retail for the first time really from the brand side. Nest was a really pioneering company. A lot of ways we were were really introducing the idea of smart home to the consumer not just the Nest Learning Thermostat and doing that was complicated. It was a complicatedproduct. We also really love retail because a lot of the team had come from Apple and understood the value of retail beyond sort of sales. And so we used we used retail as a as a place to store and make people aware of the product and get them hands on and that was what the genesis but actually I want to talk about the first time I talked to you Jasonbecause, it's kind of you know four years ago I actually didn't know very much about retail and so when I was trying to learn about the first thing I did was like you know basically typing like who who to follow about you knowin retail, and your name came up and I ended up falling on Twitter for a bit. And at a point when I wasn't sure if I should we should actually do beta. I called him LSU and is like hey can we get a call I want tell you the idea that working on and just get your feedback and so we got on the phone. Do you remember this. Jason: [4:20] I totally remember this. I wasn't sure you wanted to disclose it. Scot & Vibhu: [4:25] Yeah. So we we got on the call and I was like hey you know this is what we're thinking about doing. We don't know much about retail what we understand the problem. And I think you said you know this is like been done a lot, or it might work but you'd be much better off if you could solve this other problem that I have which is that people are not buying chewing gum anymore because they're looking at their phone and they're checking out atthe supermarket. And I was like oh that's that's interesting like I me think about they actually spent way too much time thinking about how to get people to buy chewing gum after that conversation. But I'm very thankful that we decided to move forward with this. Remember that. Jason: [5:05] Yeah I totally do. I might slightly I don't. I'm not sure I necessarily tried to completely pivot you. But I'm also glad you stuck to your guns. Scot & Vibhu: [5:17] If you ever saw the chewing gum problem I'm not sure what. Jason: [5:20] No no. I feel like there still is an opportunity as the world moves to auto replenishment for for you know all of those consumable items like you know impulse purchases are likely to go away. So if there's any entrepreneurs out there with a clever idea you know we've got to we've got to figure out how how we're going to do impulse purchases in all digital purchases path. Scot & Vibhu: [5:45] So spoiler alert but I think we should put a gum station in every beta Boom problem solved. Jason: [5:51] Yeah that that's one way to go. The part in conversation I remember us talking about though which I think we should come back to later is the role of other retailers in your concept. Scot & Vibhu: [6:09] Yeah. I mean you have I think if I remember you had suggested that we should talk to some other retailers who were pretty focused on building something for ourselves on the software side. But that opinion obviously change in the last 2 1/2 years. Jason: [6:25] Yeah I was gonna I mean that you probably got the sequence right. But I think I feel like I mentioned that, there would be potential interest in some established retailers and partnering with you or potentially funding the idea you had and at that time, as any entrepreneur you were you were laser focused on crushing all the traditional retailers and doing it all yourself. And so I think that's that's how you started that. You may have progressed since then. So one other thing before we jump into beta hardcore though is you were at Neste pre Google right so you were actually acquired by Google is that do have the timing right. Scot & Vibhu: [7:08] That's right. Yeah. Very shortly after I joined, and it was you know the acquisition was I think we learned about it like January 11 2015 14 and then it closed in February and I had joined just four months or five months prior to that. But it was the company was at an inflection point when I had joined and it made a lot of sense. Jason: [7:33] Yeah for sure. I feel like a super friendly product to everyone now but, if you go back to that Genesis you original concept was sort of, what with a smart thermostat look like if Apple were to design one and when you guys want that first product it was one of the original digitally native vertical brands right. Like you you made this product that you were predominant you were selling direct and partnering with retailers on it required a bunch of education because no consumer knew they needed it. And so I feel like there was a big retail education play in it which is of course interesting. Scot & Vibhu: [8:15] As funny. I mean we didn't see it that way at the time. And even it took even after we started the company I didn't realize that but every single Early Stage Harbor company was a DnD VB as you noticed, because they were selling the product direct and and that and the advantage that a lot of Harbor companies have relative to other types of, DNA BS is that they always have the users contact information because most of them have an account sign up as part of the onboarding process. And so it sort of they're sort of natively by default dnt Bebe's. Jason: [8:59] Absolutely. Scot & Vibhu: [9:02] Yes. Let's let's jump into beta so let's start at kind of the the origin story. Anything kind of tell us how you got that idea and maybe kind of tell folks what how you describe it today. [9:21] Sure. So I don't think any good idea is sort of, a singular eureka moment maybe it is but for us it was a lot of different kind of influences came together to create this. The the biggest the biggest thing for me was working at NASA and, understood and sort of seeing this disconnect between how we as a brand and as a supplier to stores thought about are the value of our presence in their stores versus the value that a retailer saw. And the presence in their stores and that disconnect is is incredibly fundamental and incredibly hard to fix. And so you know as a brand we wanted stores to be education point for customers. We needed a scalable way to get our product Nest thermostat in the hands of customers. And and we felt that you know when we came into a store we wanted to present the product in a beautiful manner kind of let it let it live like a hero product there. We never came into a store without uncap or display or you know something that was sort of taking the product out of the box. [10:45] And and in order to do that you know we end up spending a lot of capital a lot of time you know deploying a lot of people into the field to sort of ensure that like every time we had our product out there that cost. And when a customer saw that it was presented beautifully and and frankly retailers back then and it wasn't that long ago. But you know how fast things have changed in this industry. [11:10] This was not a totally common idea for them I think they had an Apple shop and shop and maybe a few of their large brand partners but to allow of any new company to come in and build a cool experience wasn'tnative to their business. And you know they their business model of retail is really set up to to be the end of the supply chain the store right. They've got a buyer they figured out that this is a product they want to bring in. This is how many units they want to get. They think they can sell and the store is sort of like this the warehouse with a pretty face as a retailer wants described to me and you know for us it was the start of the consumer journey. And so. [11:54] This basically what happened is I learned about this because I had asked our Head of Retail who's now my co-founder Philip RHA UB and he had a retail analyst. I asked him why we weren't in more stores. You know we were in Target. Apple Best Buy Home Depot Lowe's. And I was looking at our sales force. One of the bucket in sales force and I just noticed like hundreds of retailers from you know globally who are asking to get its products in their stores. And I was like This is a you know an amazing opportunity. And he said well because we don't see retail as a surprising pivot you want to make sure the products are presented well and so we just can't, give away it to anyone who asks and that was like you know that that gave me this aha moment that maybe there was, a way to fix that. At the fundamental level for a retailer. [12:53] But but you know we. You know I sort of sat on that kind of learning for a while and then I got more involved the retail team at NASA when they asked me to build a training system for associates inside of other people's stores. And you know when I started working with the customer support team on trying to figure out how to, address you know sort of this you know when a customer buys a product at a store but then they call, our support center and then you know where we said that customers should they return the product and I realize that like a retailer like a brand like Nasz never wants the customer to go back to the store. There's all these kind of weird things that I was finding out and I wondered if you know if we were having these issues that probably means that every other supplier in Best Buy. That is like us like GoPro for example or Fitbit at a similar stage was probably having a similar similar fundamental issues. And and you know if we were building sort of code bases and processes to solve this and they were as well that that's a very inefficient use of all of our resources. So beta was this idea to create a retail platform from the ground up that supported a customer experience as the primary use case for the store. [14:20] And supply chain as a secondary or test Cherry use case. And then we I mean it is really that simple honestly we just want to we didn't you know the business model kind of came around later. You know if you're if you're going to separate yourself from the supply chain use case of a store then you can't buy the product and so it kind of made sense to rent space to companies. But yeah the disconnect was the genesis. And as it turns out like you know now nowadays anytime we find a disconnect between, two parties that are doing business you know a customer brand or a brand and a retailer or a retailer and a customer we think there's an opportunity to deploy business new business models or software to fix it. There's but anyway that's that's a bit about the company but we can talk more. Yeah. So. [15:19] Maybe this is a good place to start. How big is speed of just kind of from a store footprint perspective. [15:27] So we have eighty two stores that we managed today and own operate 70 of those are inside of LOEs so we have a quite large partnership with them around smartphones. We've got a store with Macy's inside of their flagship store and we've got, 13 actually I think 12 owned like kind of flagship in line stores or kiosks inside of malls. And in terms of the scale of people we about 350 people that work inside of these stores and we're at our per post office call so I've been in Palo Alto is kind of what you would think of as the flagship store, flagship for us we have. We have a number of flagship. So we just we just mean any kind of any store that has our flag our logo on it that it was our first store. That's actually a very unique store none of our stores look like that today it was it was built on a budget in a woodworking shop. Beautifully done. But but definitely a one off. So the newer ones are fancier who's that Congressman. [16:42] Yeah we spend a lot more time in designing them. It's the series a store the Series B stores are much nicer. The Up series is this the series a sort of the best and then you start to realize that you've got to build a business and that every single thing that you see in the store has to be cut from a tree. Yeah. Jason: [17:02] Yet it's all the timbre turns in all the hardwood turns into a particleboard is basically what happens in other curves. Scot & Vibhu: [17:09] 100 percent is exactly exactly right cool. The way I've described it is it's kind of a you know Apple Store like kind of feel with seems like about 2000 square feet there. And but you know literally hundreds of different kinds of products you can interact with mostly in the kind of gadget electronic category. It's not fun because you come to the folks that work there are super helpful so if you had an idea of what you wanted they were ready to leave bailable. But I thought my experience was just kind of spinning like two or three hours and they're just kind of touching everything and trying it out and learning about it. Is that kind of how you think about the old experience at this point is that a decent description. Yeah. So each store is about 25 100 square feet features that are 120 different brands. You know maybe 130 different products. Every price out of the box and it's a real live working demo. Like we when we get a new product in a store we actually take like the first one out of the shipment and just take it out and set it up like we were a customer. [18:20] There's a lot of space between the products. It looks like an Apple store although that wasn't the intention it was really designed around actually or analytics system and how overhead cameras capture information. But you can definitely spend two to three hours in there because everything that you're seeing is kind of a one of a kind. Interesting thing that you probably haven't seen before and these are complet. You know the price to carry the tech products are complex and and they were hard time to understand. And so you know having really good staff is super important to us. I think two to three hours is definitely way above the average visit which is about 15 minutes. But the average customer only usually look at about a third of the assortment on a given at a given time. So but we have a tremendous amount of customers who kind of see it like a museum they come and they look at everything one by one and want to make sure they don't miss something. Jason: [19:25] And it's funny because in one way I would argue you're sort of the the opposite of an Apple store in that, there's not a lot of surprise and delight moments in an Apple store anymore. They actually used to carry more third party products than there was a little more variety but my sense today is you know exactly every single product you're going to discover in the Apple store before you walk in there.Right. So it's it's most people that walk into an Apple store are walking in with some kind of mission in mind. Like they're either coming for service on an existing product or they're coming to buy a product that they already know about and know that Apple has there or maybe they want to see it and make a final determination inin a big way. I would I sort of feel like your story is the opposite. I'm not likely to know. I know the kind of products you're going to have in your store but I'm not likely to know exactly what you have and I'm almost certain to discover some products I didn't know about. And so to me it feels much more like a sort of serendipitous discovery moment for the shopper versus a specific mission in mind a moment like I might have at Apple is that. Scot & Vibhu: [20:37] Yeah. So the data proves that out for sure. So 70 percent of the products at a average customer season are store they're discovering for the very first time. So and actually on the other side of that and Apple and Apple stores about 70 percent Apple products. [20:55] Oh you're probably 70 percent Sandras seeing something that you you definitely saw before. But we have two types of shoppers in our store. There is there is the shopper who kind of wanders into just be surprised and be delighted by everything that people are making in the world. But we definitely serve a use case for a lot of our brands of high quality demonstration. So a lot of the company and you can if you if you like google some of the companies that we have in our store you can see when you go to their website they have a store finder and the store finder is just pointingcustomers to us you know saying hey if you want to check this thing out in person. This is the place for you to do that and we love those kind of visitors because they come in for one thing and we give them that amazing demonstration experience that you know no one else could give except for beta. But of course while they're there they'll find a bunch of other things that maybe, they didn't know about and that's that in terms of a percentage of traffic about 40 percent of our traffic is driven by the brands that individually use case but in a mature store for us that that that tends to go up and up. So basically like if you lived in Palo Alto once you've been to the store once and you've seen everything are a couple times the next time you come, back is because you saw like a prophet on the Internet that you were interested in trying out first and then you'll come in for that specific thing and try it out. Jason: [22:21] Yes. That makes perfect sense. It's funny because I imagine as people get more familiar with this door that you definitely could have some sort of mission shoppers and it it sounds like one way, they might find you is through the product manufacturer's website. But you do now have your own Web site as well. And that's another discussion you and I had when you first launched you didn't have your inventory online. And I mentioned that like in the long run customers that became familiar with your store would want to be able to see what kind of products you were carrying before they made a visit. So now that you apparently took that advice and so now I'm going to ask a terrifying question. Has that had any value or are you finding that that you do have perhaps a subset of your shoppers that that shop your website and then decide oh cool you've got a new a new kind of product in stock that I want to go see. Scot & Vibhu: [23:18] Yes so funnily enough we I mean I think we specifically avoided doing an e-commerce site for a while because we wanted to stay focused on on stories which was our kind of unique value prop for brands. And we also didn't want to do e-commerce that we didn't have something to offer that was special and we act. We launched e-commerce in August officially last year. So it's been one year to date in that time period. It's gone from obviously zero percent of our sales volume of products to almost 20 percent today. [23:55] So we've had a lot of growth there. I think you know what we learned more than anything was that our associates in the store needed a place to, can point shoppers to who maybe wanted to do more consideration or you know had some kind of education like they were traveling and you know the product shipped somewhere you know. And and so it serves an essential function. Are our sales associates. I would say more so than customers. We don't like buying from beta dot com is not better than buying from Amazon. If you're a Prime member for example so we're not trying to compete for every single sale but it's been an effective tool on the store side of the business. I would say we built the entire platform in-house for a reason which is that we have a lot of really cool things coming down the pipe that, will give us at least some advantages over maybe shopping on Amazon or from the brand's website that we can uniquely do because we have a lot of stores. Jason: [25:04] Nice. And just a clarification. I like that to me is exactly why I was suggesting you have the inventory online was sort of as an adjunct to your sales process. Not so much that you'd capture a ton of sales via e-commerce but that people would wanna know what you had in stock before they visited the store or or people would want to do that final consideration after the store. So I'm glad to hear that. That's providing some benefit to you. I get that you're you know nobody wants to our Amazon Amazon so it probably doesn't make sense to just try to compete with their exact customer experience. But one of the things that I perceive is also true and I'd be curious to hear from you is I do think it's possible for you to be selling products before they're likely to show up on Amazon. So I do think there's some early stage new new products that you know where manufacturers reach out to you as early experience and they may not be distributing through Amazon yet. Is that true or does everyone go to Amazon Day one these days. Scot & Vibhu: [26:16] No that's totally true. And in fact it's not just that they come to us. You know before Amazon but they also come to us after Amazon a lot of brands that we work with. They start selling there and they don't necessarily get what they want out of that experience and it was a bit more control they want more data and they'll come back and you know will be sort of be one of the onlymultibrand experiences that can carry it. We also have a lot of international companies that don't have a, local distributor or as a Web site where you can you can buy from here and so there are a lot of cases where we are the only place you could buy that wasn't necessarily our strategy initially but, you know more and more I think that will be a focus for us. The other interesting thing is I think you know. [27:07] When you sign up with beta as a brand, your entire experience of managing your stores with us and deploying content and training and materials is all through our dashboard. And so we've found that companies don't want to have to sort of manage all these different silos of of you know information and marketing information. And so our our our system allows a company to sort of make a change once in it and that content reflects everywhere in-store online, in our accounting backend in our checkout you know everything all at the same time and that's for the right type of company at an early stage that's actually better than even selling on their own website. Jason: [27:52] Yeah. And I think that teases something that's unique about your model that we haven't totally covered yet which is you are not a pure traditional wholesaler where you just, go discover some product you want to sell the people you buy a thousand of them at a wholesale price you mark them up to retail and sell them to someone else. You're actually closer to Scott Wingels favorite thing a market marketplace right where you're essentially providing a platform and you're letting manufacturers, leverage your platform your drive you're generating traffic and then you're letting them sell to do that traffic through your platform. Do I have that right. Scot & Vibhu: [28:37] Yeah we're actually a two sided marketplace and it's it's hard to see from the outside because we look like a kind of technology store brand. But on the inside you know brands are subscribing to space in a store. But we also work really closely with landlords and on that side they're competing through lower rents or things like you know funding for store build outs or you know marketing. They're actually competing for these brands dollars and our store is sort of the glue that that brings those two together. And so you know across our every store of ours is different because companies that sign up with us they can choose where they want to be and they don't have to be in every everywhere if they don't want to. And they can also in every store sort of price differently and so you'll oftentimes you know you might see a company that is you know maybe moving from store to store or trying to figure out the right markets for themto be in. And what really makes their decision is how good the data is in that in that spot and what and what the economics look like and that's driven by the landlord in our case that you know we didn't. Again a lot of the stuff we didn't really see going into it we were just like we wanted to solve this really central problem that brands had. [30:00] But it's evolved to look more like a marketplace on the business model side than any other type of retailer today. And I think that you know just I can anticipate your next question but I think that's where we started getting interested in working with other retailers because you know there are effectively some of the largest landlordsin the country. And and I think as we export our model further we knew that square. Good square footage was going to be the thing that the supply side that sort of drove a lot of the demand. Jason: [30:37] Yeah and I want to come back to that in a bit. It's even it's good square footage with high buying content which is even more exciting. Scot & Vibhu: [30:44] Of yes. Yeah. Jason: [30:45] But the so one of the things that I'm always curious about. So a brand has to want to work with you. The economics have to work. They have to see the benefit. You know they likely they have to have a product that requires some storytelling or some demand. And so there's a bunch of factors that would make a brand want to work with you. But it probably wouldn't work for you to just accept any brand that wanted to work with you. Right. So you know you wouldn't want to end up with a bunch of brands that just were struggling to sell their crap. And so therefore were were willing to you know be a tenant in your store and sell their stuff. It does feel like you have a curated assortment of cool gadgets that people like Jason and Scott Wingo would like to buy. So like I guess I'm I'm curious how you work that curation in a in like a traditional retail model of curation is easy the merchant decides what they're going to carry and what they're not going to carry. It feels like your emergence if you even have a of merchant sort of has a harder job because they have to both decide what they want and then it has to be an appealing model for that stuff. Scot & Vibhu: [31:58] So we actually philosophically are anti-corruption. We think that a lot of the problems that brought that retailers have encountered over time is is because of their you know quote unquote curation process on the buying side. The way curation works. And the reason that that the products in the store are actually you know out to be really good is that their business model we chose. [32:29] Weeds out bad products extremely quickly in the same way that maybe you know an advertiser in an auction system like Google AdWords weeds out bad ads as well. Basically when you have a product that doesn't resonate with customers they don't want to spend money and so they leave. And when it comes when a product is resonate with the customers they never want to leave because they're making money. And in fact they start to expand with us and take over more space and more and more stores. And we've seen this effect really dramatically in three years of running this model where you know we've built up you know for every 10 companies and maybe you know two or three of those company turns out to begood. And we've built up a roster of you know the best brands in the world who again have great economics and would never want to go. But it's important for us to compete you need to bring in new things, because you know and we don't want to make the choice upfront all the time as to whether that product you know would sell because that you know frankly like you know maybe buyers have some some algorithmic helpand you know spreadsheets all kinds of stuff. But like you know a lot of decisions are made at the gut level and I can tell you from our kind of internal game of trying to guess what their product going to do well with us. We just get it wrong so often that it's not even worth trying to be honest with you. [33:55] I think where we have a couple of of sort of post launch with beta curation moments for example with a product return block and we have an algorithm for that. [34:06] We take it out. You know if the if the product doesn't have a you know a return policy that jives with ours. We oftentimes won't accept it but we're pretty open. I mean we I think to be honest that's what makes us really unique and. And the other thing is like I think for customers retail can be a decision making tool and sometimes that decision is a negative decision. This learning that that you don't want this product. Maybe you saw this thing in mind but you know after seeing it in person it's not for you. Disserve that kind of function you have to take things to that are kind of on the edge. So I don't know if you expected the answer but I we we we take this. I mean we've really thought a lot about this and it's it's a big part of our business. Yeah. I'm intrigued on the marketplace side of building a two sided marketplace. Seems easy but it's hard because I always tell folks that are starting on it is kind of like rowing if you row on one side of a canoe or a kayak or something like that too much then you just go in circles ChAFTA. There's a there's a balance you have to fall and there has been harder building this on the supply side which I think you call makers or on the demand side or tussle bit about it. Any interesting stories there. I'd love to. I think other marketplace people would love to hear. Yes the supply side for us is there a state side. On the demand side as the Brandts. [35:30] So it has been hard. And one of the reasons it's been hard is that we we have grown significantly faster than the category itself. And so you know we ended up finding a lot of opportunities on the supply side. You know really early on and so we've we've had to actually really control how many locations were launching every year and keep in lockstep with our best companies. But the thing is like there's enough there's enough brands out there that are launching every day every week that we've been able to. We've been able to open stores that are added and grow at a pretty good rate. [36:16] You know the I think there I think there will be a point in the future that where it's not clear that you know opening another store is best for all of the brands. But you know so far so far it's been working and it hasn't been as much of an issue as maybe you would think. [36:39] Another interesting challenges like where do you stop. We all kind of like as a soccer guy your practice. You know you like to solve customer problems. I have this problem of where stuff. So I imagine it's kind of interesting. So on the brand side you guys have done a really cool job of you know I can be in five stores in California and then I can kind of like you give me this life cycle that I can use right allthe way to. You know I think you call it store open concept flagship when I looked to your site you have this kind of like model that I could even see on the soccer side. You know if someone wanted to start selling on on Amazon there's no reason you couldn't like you know launch them there you know. So. So that's interesting and then you know maybe you can almost become their PM. You know there's there's because like you said earlier you've got their product data. They've started with You Can you be you know is that an interesting place to go or do you start there and then on the landlord side. I imagine you guys are you know generations ahead of a lot of these landlords on now to think about Dhara why are these things what's resonating with their customer. So I can see you going deep there too. How do you think about those aspects. [37:49] Yeah we we actually I mean we've we've talked about projects like that a lot. But we've I think the opportunity that we have stumbled upon is really in physical retail becoming. [38:07] Experiential rather than supply chain focused. And I often started to to think that you know experience for retail is a third channel. It's a new channel you know compared to maybe wholesale is the first one and an online as a second because it doesn't cannibalize your, or other channels you're the focus is different you're capturing customers at maybe a different part of the of their lifecycle. [38:40] And so. For us we think about growth really on three vectors I would say. One is on the contacts where one might find products. So today we have like you said we have owned stores and they come in different flavors. We have that flagship in line. We have the open air format and then we have this full store as a service product that we launched called built by beta. And then you know in other contexts there's Lowe's. We just added Macy's as a big partner for us. And maybe you can imagine others as well coming down the pipe. There's environments so these are the different ways that a brand might want to represent themselves in the physical world. So you know we started with a two foot display that was the only option that companies had. And then we we started adding more options you could take forefeet you could take a table you could take a room you could take half of the store you could take a TV, you know create a whole store and and then on the on the third vector you have, product categories and we've been really focused on tech for a long time but I think if you watch us closely especially if you watch our product assortment over time we started to to bring in other things like apparel andcosmetics and and so on. [40:04] I think those each of those three vectors is is is growing for us and we're we're exploring them as far as we can take it. But we've I mean I think you can. I think one day we we've imagined sort of building that that software distributions system that you're talking about, but the online experiential retail opportunities is such a fast growing category that, we'd be remiss not to to see how far we can take this. There. Jason: [40:38] Very cool. And you you mentioned something in that answer I want to drill into a little bit more of the built by beta program. Real quick you guys have like I mentioned that right from my perspective you guys have built a platform you engineered a lot of the pieces yourself like as opposed to a lot of retailers go out and buy, a POS from company eBay and they buy you know gondolas from Company B. You guys built the digital signage system for the stores and a content management system that the that the brands have access to to publish content to those digital signs you you build your POS you alluded earlier to thefact that you have. Scot & Vibhu: [41:18] Training system. Jason: [41:19] Yeah. Training for the sales staff. You alluded to that, detail the in-store analytics package that's not just purchase analytics but actual browse analytics so you're you're watching shoppers flow through the store. So you're using that in your own stores and obviously in your shop in shops in Macy's and was, built by beta is you selling that whole platform of tools to another brand that wants to have their own branded store is that right. Scot & Vibhu: [41:56] Yes so as I mentioned like experiential retail is a different channel and what we realize what we noticed you know in sort of trying to find the right tools to build the business. We notice that everything has been subtly architected around the store as a sales channel as a place to get a box out the door. And and and you know as it is as one example a lot of the companies that we work with don't see the first purchase from a customer as the as the last time they're going to make money from that customer. Right. They are thinking about it as a customer acquisition cost but they maybe have a subscription package or accessories other things that they are or are you know consumables that they think are going to drive longterm value from a customer. And the typical In fact every single point of sale system in the world today, does not support a customer or checking out and adding on a cloud subscription or does not support a customer or checking out and adding on accessories or or other sort of options like that. And so we we you know in order to serve the brands that we work with the best we had to we had to think about those challenges. And we ended up just sort of building a lot of the pieces ourselves. [43:17] But that that kind of example I mean that's just one of many many things where like the existing tools out there are just not good enough for this new channel thats being created. And so when we you know I think as Scott was mentioning before like this this continuum of like you know a company is the way we are. The ideal path for a brand with us is that they start with something small in a handful of stores that they think are really good. Maybe a display is two feet and as they find success though maybe take out a room and build something thats a, more custom and and a bit more of an experience and I think we started to hear from some of our our our best customers are especially our large customers that, maybe a room inside of our flagship store wasn't enough and they wanted, a much larger kind of representation. And so we said Well of course like why not like we can easily take a lot of the stuff that we built and help other companies. [44:18] But the store just like we have. And I think even the business model that we have was useful in thinking about this because, when you are a new brand opening a store and maybe your vertical brand and you sell a few products but you don't have that many. It's actually hard to figure out like what your store looked like and what other like should you bring other third party products in there like you know should you have like you know a product duplicated. You know 20times in the same space. So our business model actually helps companies who deploy stores with us, find other brands that that may want to participate in their ecosystem and so they in effect. The the people who consume our platform on that side also kind of plug into this marketplace as a supply supplier. And so it's a unique product I don't think anyone else has ever worked or built a turnkey storefront that has staffing and build out and all the things that you need included. It's I mean we launched in April it's super early but you know we've there's a couple of. [45:34] But you know definitely a lot of interest on that saw from companies across categories not just in tech. Jason: [45:39] Nice in my remembering right. So I feel like I read something about him. There was a TED store that may have permanently or temporarily opened using built by beta. And then I think you guys did a net gearcompany in stores right. Scot & Vibhu: [45:56] Yeah. So we. So we launched it at TED. TED had asked us to come in and build the store with them. So that was that was a really cool experience for us. But yeah the net net your flagship was the first one that we announced and is live today in San Jose at Santana Row. So basically it's it's a it is it's a Netgear store it has their signage. It's got you know their logo on the receipts it's got their logo on the bags and on the employee's shirts. But behind the scenes we've actually we're actually running the store so it's our people they're on our payroll. We designed the experience with them and then we worked with them to find other third party products that would be sort of merchandise around theirs. But it's the first time that they've ever done something like this before. They've typically I mean they're gigantic company but they've typically, you know a wholesaled to Best Buy and a lot of multi-brand retailers like that and like a lot of enterprise company a lot of large companies they had been thinking through, this transition that's happening from wholesale direct to consumer and they don't want to miss out. And so you know in in that when you become a direct to consumer brand you start to think about retail differently. And I think we were we really worked with them to define the first version of the beta to be honest with you. [47:18] But they're just one of many companies that are going through this right now. This transition very well girl. It's kind of like experiential retail as a service. So everyone you know you have to have as a as a service on your name these days that is exactly how we talk about it. [47:37] Very cool that is a good time to pivot. Fellow entrepeneur so I love to talk about the nuts and bolts. I was looking on base and it said that you guys have rates 38 million. So progress on that and you have some really good blue chip investors like Khosla Ventures Comcast and then some strategics like me. And there I imagine it was kind of fun. Two or three years ago when you started pitching VCs on a retail concept because you know every headline is about end of stores and mageddon and whatnot, but you've restarted it. So I'd love to hear a little bit about that journey there. [48:13] Yeah. Yeah. We've we've raised a lot and in a short time frame. So what I'm going to say it doesn't sound authentic but it's true. It wasn't easy to raise the money. I think we you know in our seed round we must have approached about 75 investors and a lot of them didn't even want to talk to us. They didn't believe in brick and mortar the kinds of things that we heard about stores were apt to be honest with you were ridiculous. We we you know I think retail is kind of interesting in the sense that like everyone thinks that they know it because they shop in stores but very few people actually understand the dynamics. And we definitely face that a lot. But as as time has gone on I would say each year of our company the environment has gotten easier and easier for brick and mortar are concepts. And you know in this year Larry you've seen a lot of direct consumer brands getting funded and a lot of that a lot of funding is going into opening stores. And so I think our business case has been validated increasingly so. But you know a couple of years ago when we started it was definitely like you said like the headlines were just not good and a lot of people based there in vestment decisions on how the group is thinking. And that was probably a mistake. Jason: [49:41] And we're coming up on time but I want to ask this question because you guys you know you guys have developed some interesting category leading experiences up to now. Do you have a vision for where experiential retail is going. Like if we jump in a time machine and move forward like five years what's awesome experiential retail environment going to feel like that as it is it just a slightly more polished version of, what we're doing a day or do you see some significant changes. Scot & Vibhu: [50:14] So we were not a gimmicky company. So I don't you know we don't think a lot about how the store experience itself is going to change. But I would say that if you look at a macro level every. I mean you know this as well as I do but every bad retailer is going to go out of business. Between now and like you know 2040. [50:34] And they're you know a lot of them are going to be replaced by these new brands who are you know getting to a point where stores start to make sense. You know brands that sort of online. And and I think when you walk into a mall in the future really five years from now, it will primarily be a bunch of kind of direct to consumer and vertical brands taking up the space there and, I think that's great for customers because those products are better. They resonate with a different audience than maybe the typical traditional retailers that today occupy a lot of square feet, and and frankly like the business model these companies are using kind of naturally lends itself to better customer experience in the store because there's certain no conflict of interest between you know what a customerwants and what what the brand wants like that. These brands don't care whether that customer buys the product right there and then they they think about the store for lots of thing for customer service for learning for for events all things that people love. [51:46] But yeah we don't have a lot of insight into what the store will look like but I can tell you that if we have something to do with it a lot of stores will be designed around analytics and data and data capture. And so they'll probably look a little bit more like our stores than than not. Jason: [52:05] Yeah I hope you're right on that one. I know you and in the show you know at the beginning of the year we do this prediction show. And I feel like I used to do a prediction every year that retailers would get more serious about their in-store analytics and I keep losing on that prediction. So I would I would love your help in making that one finally be true. Scot & Vibhu: [52:26] Well it will be true by NEC and by just by companies these retailers going out of business and being replaced by new ones like us. Jason: [52:34] Yes yes. Although that cooling takes a little bit of time. But it's happened again. We've used up our allotted time serve if listeners have any questions that they didn't get answered during the show. We encourage them to jump on Facebook and ask questions and we certainly feel free to reach out to you you know to the extent that any of them are, focused on your business and of course if this show is valuable to you we sure would appreciate if you jump on iTunes and give us their five star review. Scot & Vibhu: [53:08] Thanks for joining us. And where can folks follow you online if they want to learn more about either what you're up to or beta. [53:17] Site. I look at every e-mail I get. So definitely email me via B.H. You made a dot com or you can follow me on Twitter. But to be honest with you I just tweet about beta. So if you if you want that that's the best place for Beta news. Jason: [53:34] Nice and Until next time. Happy Commercing.

EP138 - Amazon Q2 2018 Earnings Hot Take  This episode is a hot take on Amazon Q2 2018 earnings Amazon Q2 Earnings Highlights $52.9B, which is a 39% y/y increase $2.98B in operating income $21.8B in Free cash flow, less $11.4B in capex, $6.2B in lease repayments = Net $4.1B Free Cash Flow AWS had a material acceleration up 48% y/y constant currency and profits were $1.4b Amazon Web Services – came in at $6.1b – 49% y/y growth (an acceleration from last quarters 48% growth) North America – $32.2B up 44% Y/Y, operating income of $1.84B International  – Revenue increased to $14.6B (+21% Y/Y) for a $0.494B loss Marketplace 53% 3P by Unit sales 3P Growing at 55% (constant currency) Wingo GMV estimate -> 1p – $37.6b/ 3p – $71b = $108.6b GMV Amazon Ad Business – grew 129% y/y  to $2.19B Cowen estimates $8.6BN in 2018  rising to ~$37BN in 2023 Amazon increasingly bypassing agencies to go directly to advertisers Increasing likely Amazon becomes first $1 trillion dollar company Jason & Scot will at eTail East in Boston next week. Don’t forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 138 of the Jason & Scot show was recorded on Monday, July 30th 2018. Join your hosts Jason “Retailgeek” Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. New beta feature – Google Automated Transcription of the show: Transcript Jason: [0:25] Welcome to the Jason and Scott show this is episode 138 being recorded on Monday July 30th 2018 I’m your host Jason retailgeek Goldberg and as usual I’m here with your Tahoe Scot Wingo. Scot: [0:40] Hey Jason are welcome back Jason Scott show listeners well last week the big news in e-commerce was Amazon 2nd quarter results but we didn’t get a chance to cover it live because you were down under. Jason: [0:55] That I was I was in the future in Australia. Scot: [0:58] I know he’s not wild you you cross the time zone when you go there and then you lose a day when you come back so yeah it’s very strange. Jason: [1:07] I assume I’m now even. Scot: [1:09] Yeah if you if you keep going though One Direction you’ll either turn time backwards like Superman to or I don’t know if you’ll arrive younger than when you left. Jason: [1:21] Yeah I can certainly use that but I’m not currently that’s not a nephew and I’m currently experiencing. Scot: [1:27] Cool before we jumped into Amazon’s second quarter deep dive give us some highlights of what you saw in Australia and you know since we’re theming on Amazon here let’s start there Amazon has launched in Australia and I imagine that the Aussies are really fired up about that. Jason: [1:44] Should I feel like that is the big change last disruption in the local retail Market I would also I also feel like the. The sort of recovery from the global financial crisis has changed circumstances in Australia a little bit but it said it’s an interesting Market. [2:04] For me it felt a little bit like a Time Warp like I was going back in time a couple years in retail. They’re they’re not as over stored as we are so malls are still like a pretty popular concept like they don’t have too many into the overwhelming majority of malls or sort of the equivalent of what we call in a mall here. And that’s a a growing in popularity shopping concept there in fact like there’s a premise that the. Traditional department stores in in Australia are suffering a little bit because people are choosing. Two shot multiple manufacturer stores in the mall versus going to a department store but overall. It’s a timer for two reasons number one is Scott and I think you already know it’s an odd Market in that a lot of international retailers. [2:57] Didn’t protect their IP rights in the early days until entrepreneurs from Australia would travel abroad they would see some interesting retail concept. And they would bring it an unlicensed version of it tossed really on their own so you’ll see lots of familiar brands for North American Choppers like Target and Kmart. Woolworths but they’re they’re not and The Branding may even feel very similar to what you would expect in the US. But they’re not in any way related to or associated with the North American companies and in some ways it’s a Bizarro world so. Like you know Kmart is probably more vibrant in Australia than Target for example. [3:40] Which feels a little bizarre for anyone that you used to North America where that’s that’s definitively not the case so to the retail Brands it takes a little bit of time to get your head around because they’re familiar and yet for him and then you know I think it’s dorkly the market just hasn’t had a lot of competition like most of the Australian retailers have had to compete with each other but there’s not a huge number of them so they. They don’t have direct overlap like you don’t tend to have two or three brands with the same product assortment in the same price point so i q no U tend to have. [4:13] A retailer in every price point or a category killer in the in the category so you have like an office works. As the category killer for Office Products but they don’t have. A direct competitor like like Office Depot OfficeMax have a Staples here for example and then until recently the the currency exchange rate really sucked in so you didn’t you also didn’t have Australian consumers. Shopping internationally via e-commerce and so really those consumers were kind of locked in the to the local choice there’s no they’re not a lot of international retailers in Market there’s a lot of international Brands and Market but not a lot of. Wholesalers of other people stuff inside so I would argue that the market just didn’t involve really fast and now you got Amazon coming in there I’m which is a big disruption and you have much more favorable exchange rate so you have. Australian consumer shopping tomorrow in Hong Kong and and shopping pesos in in the UK and doing cross-border Commerce and things like that so suddenly there’s a lot of competition suddenly they’re all getting much more heavily disrupted and they’re all trying to figure out a lot of the digital things and Omni Channel things that retard you know we’re more likely to be struggling with you know 2 to 5 years ago here in North America so it’s it’s it’s going to be interesting. Scot: [5:36] Yeah so Channel advisor full disclosure we have an office in Melbourne and it’s a good region for us Amazon coming has been great for us the one thing we’ve seen a ton of is there’s a lot of Chinese Imports and Australia and it frustrates Australians because they have this weird kind of this is kind of topical because the news did this weird thing where you can sell anything and Australia for $1,000 and under and there’s no tariff but then Aussies can’t sell the China without Tara so there’s like this huge disadvantage and it really always frustrates the third-party sellers I know they’re that anything can come into the country for under $1,000 without any kind of a there’s just some guy text benefit almost like they don’t pay Australian tax on it or something and but then they always had a hard time exporting out of Australia so did you hear anything about that or. Jason: [6:29] Yeah so I feel like there’s a number of those sorts of things and and you know I was really really is part of Asia is it is you know there’s it’s very International population and so there there’s a lot of Asian expats in Australia and said there’s there’s it you know it’s it’s not just proximity to the good deals like there’s a lot of Asian brands did it appeal to a big chunk to the local market in Australia, alright are multi-generations in Australia there is this strong sort of national pride thing so I always feel like. They’re they’re very there they’re more opposed to Outsourcing jobs and their there more favorable to. Meeting RC Brands and products then some other markets in all markets we see. That that does kind of stated preferences you no go away when. When there’s economic pressure so I’m not saying Australians won’t buy cheap goods from China but I’m just saying, they maybe put a little more weight on the local stuff then do Americans for exam. Scot: [7:44] Call the other thing I’ve noticed in Australia is pretty much everything will kill you did you run into that at all. Jason: [7:49] I was aware of that but I did not run into that I did not see any vocals boxing with kangaroos. They’re made they’re probably were venomous spiders but I’m happy to report I didn’t see them which is all I care about like I just want to die in my sleep and not be scared the bejesus beforehand. And I was I was mostly in Melbourne and Sydney which are you know big Metropolitan City so I I imagine the density of things that can kill you is more skewed towards public transportation in Alaska Critters. Scot: [8:23] House on the Gold Coast in like a I thought I’ll go to the beach for half an hour or something and it like every other sign was like no warning Riptides warning sharks warning life threatening jellyfish poison manowar’s warning piranhas like ever in Australia. Jason: [8:43] No I think it I think it was Jim that fact that there are there are like more deadly species in Australia than anywhere else and I think that’s particularly like the snakes in the venomous spiders and then is you mentioned a lot of the The Aquatic Life. Scot: [8:56] Yeah they couldn’t tell hundred percent if they’re yanking my chain but the folks in the office for telling me there’s a venomous spider that hangs out in toilets and like all Australians when they go to the toilet they will actually do a visual inspection for this spider because it will actually bite you in the bum and it can kill you if which is like a terrible way to got. Jason: [9:14] That’s why I don’t know the weather know this but either they were totally yanking your chain or my house were much more happy for me to die. I was not worried about that although I did Quinton Henley I did look in every toilet because I was I was constantly making videos trying to get some that were flush and counterclockwise in it yeah. Scot: [9:33] Nice but still have to put those on the action. Jason: [9:38] Exactly yeah the toilet videos yeah I’m pretty sure it’s like cow tipping. Scot: [9:43] Cool any other exciting Australia highlights. Jason: [9:48] Nope I mean people are super nice I had a ton of great conversations with retailers and I do think they care a lot about the customer experience and they care about winning in this certavite in competitive market that there now in butt you know just circumstances they they haven’t had the impetus to change quite as quickly as as some other market so. Scot: [10:11] Well let’s jump right into the big amazon news with the Q2 Deep dive. Amazon news your margin is there. [10:34] Also serves a lot to go through so we’re going to contact what I call a peel the onion approach and start at the macro-level and then look at the different lines of business with an Amazon we’re going to look at the cloud segment the add business and then the US and international retail businesses as well as the third party Marketplace that’s a lot to cover so let’s jump in from a macro standpoint the big story of Q2 was the bottom line. And in fact the top line was a little bit below and the analyst estimates and part of that was due to there’s a lot of rule changes going on in the world of accounting. Which is causing every company a lot of Heartache intimate with this unfortunately there’s this new accounting principles 606 which is making a. We visit how they look at their different things so Amazon had to move some stuff from 1 P to 3 p which creates a revenue headwind because in 3p they only count about 10% of the revenue because it’s their Commission CNN 1p the count a hundred percent so in fact Amazon actually missed the top line so usually if that happens you see this whole you know crater going to stock but then that didn’t happen here because what happened is operating income blueway expectations so it came in at. [11:52] 2.98 billion so that’s the third quarter that operating income was over 2 billion and it was just too shy close at 3 billion you know what would that be 2 million short short of that. That’s a 375% year-over-year increase in operating income and then every segment Amazon reports on improved their profitability as well and will cover that as we get in that represents a 5.6% margin and expectations was for 1.7 billion so this was 77% above expectations which of these numbers is you know 1.2 billion dollars more than while she was expecting in his truck that is meant. Amazon is I kind of caught this stair step effect so Amazon will. [12:39] You know don’t don’t climb the stair and profits will go down and what they’re doing is this business is very capital expenditure heavy right so you have the big capex is fulfillment centers which are not cheap and data centers which are also not cheap so Amazon and Fortune asked both because derp derp those are the two core pieces of what they’re building so you can imagine the phase where they’ll build like 24 filament centers in 20 distribution centers and the look massively unprofitable but then as those come online and they optimize them and they get capacity then Revenue starts to kind of the the capex stair goes sideways and profit starts to climb and then Amazon will kind of go through another phase of of harvesting. [13:28] Prophets and then after that they’ll say oh we need more data centers and fulfillment centers and I’ll have to kind of keep chewing away at it so we’re one of those Cycles now I’m that that we’re kind of harvesting investment and what’s interesting is as they’re climbing the stairs every time they take a breather the possibility is going up pretty materially and they’re doing it again such a big number you had so you normally people would scoff at a 5.6% total margin but they’re doing it against a top-line that. [13:56] Massively large so 3 billion dollars works out of the bottom of that equation which is which is pretty incredible so so that was kind of everyone was pretty kitty about that to see if they know they haven’t level in a very long time. And then there was there’s a nursing backdrop that happened you were not show you sounded like you picked up on this but there’s this this whole kind of thing that’s been out there called Fame search Facebook Amazon Netflix and Google and Google had pretty good results obviously Amazon did and then Netflix kind of had a little bit of a bad results at there they miss their subscriber growth number and then Facebook had a really really really bad week last week so they they had that kind of guy on their conference call so their revenue and profits missed an egg on a conference call and it essentially said look we’re going to reset expectations of Skyway on Washington caught kitchen sink order the stock was immediately down 20% and unfortunate that kind of held there so there was this whole thing coming in so it’s kind of interesting to see Amazon really kind of printer. A quarter and blow errands expectations. Jason: [15:11] Boxer to put the F into Fang if you will. Scot: [15:14] Absolutely yes Google kind of mess it up cuz they change their name to alphabet but everyone still calls it thing but it’s it should be either fan or whatever. Santa hat the another kind of interesting tidbit here subscription Services which is where Prime lives are there’s a couple other subscriptions on there that you can buy but that is primarily Prime Revenue. That accelerated to 55% year-over-year growth which was good and then longtime listeners the show will no operating income and revenue are the measuring sticks that most other companies use but Amazon really uses. Cancel that is a lagging indicator and what they really focus on is as more of a Ford indicator and it kind of has to do with the stair step. I love you and I’ll G I introduced that’s free cash flow and what free cash flow does is it it kind of is an earlier way. To the counting rules to kind of predict where. [16:12] Profitability is going to come in so let’s let me kind of walk you through that I’m going to try that this always gets a little confusing so I think I’ve tried to boil it down here so when you when you just take what I would call. [16:23] You got to go to this waterfall right so the top of the waterfall you have just pure free cash flow and that was about 22 billion dollars massive amounts free cash flow. Then they go and they invest more Catholics right because Amazon is Never Off This treadmill of investing in capax just the. So this quarter they invested only 11.4 billion and capex just hilarious because that’s probably more than. People are spending in like last 10 years for like most retailers but that’s that’s so is a light investment quarter. Do only 11.4 billion that leaves you with kind of 10.4 billion in free cash flow after the capex Investments then they’ve gone out and they have you know some of these things that they buy they buy outright and other ones they leased land and what not to try to smooth out. Cash outlay for data centers in fulfillment centers along with more with Revenue comes in so they have 6.3 billion of that they paid back in the quarter so really when you get all that out the cord which is free cash flow without lease. When you take out least principal repayments was 4.1 billion so those are kind of the end of the metrics Amazon spends a lot of time thinking about what you could argue is. That biggest number I gave you that 21 billion is really what Amazon focuses on because you know if you kind of go to this. [17:45] Take a region like the United States there there’s they’re getting to the point where they really don’t have to go that many more fulfillment centers in it and in fact the profitability of the North America really kind of pop this quarter will talk about it because of this they’re essentially it saturation so when you get saturation with some of these things that free cash phone number. The top of that waterfall becomes the number because you pay off the cappex pay off at Lisa’s now you’ve got all these fulfillment centers they’re producing Pan the free cash flow flows all the way to the bottom line so over the long-term you should see that gap between about the three billion dollar operating income in the $22 free cash. 12 close as a market matures that’s what gets Wall Street so. [18:28] Not terribly excited about Amazon is these free cash flow numbers are are pretty amazing and Amazon while they’re investing yeah I started that 21.8 billion + free cash flow and ended up with 4 there’s a lot of investment in there like 17 billion dollars with an investment when there’s a day where they’re not making those Investments this is just going to eat a massively kind of cash generating business which was funny we talked about it a lot on the show there still this overwhelming belief out there. That either a olive Amazon is a profitable or that be the retail business is sustained just by the cloud business none of that’s true the retail business on its own as profitable. Especially in North America and international it’s still losing money but that’s because certain markets specifically India Scot amount but I think it’s pretty safe to assume there’s markets like the UK and Europe for their probably look a lot like the US they’re pretty mature but then there’s a lot of markets and I including Australia even yeah I bet Amazon isn’t profitable in Australia so. Just want to make sure we just spelled the you know that that whole incorrect urban legend at Amazon or its retail business are not profit. Jason: [19:40] Yeah for sure and Scott correct me if I’m wrong in this but. Even if they wanted to keep investing at this same Pace like they’re there is a scale problem right like it is you keep growing that Top Line cash flow that fast like there comes a point when you just can’t make. The capex Investments at that same. At that same growth scale if you well some people would even say like the stair-step isn’t necessarily intentionally that they’re taking profits but just that it it takes them more time to retool and and scale the Investments at the same Pace that they’re there their top line revenue is scaling. Scot: [20:19] Absolutely let me have some you know so the most exciting line-of-business we’ll talk about is ads and you and I both there are in this world the nice thing about ads is it it doesn’t require any cat that’s right so it’s. It actually possibly could be the most profit line of business that Amazon has and I I think. Even though Amazon is closing are showing Dollar business I think there’s probably the could be a joined our business there that a lot of people haven’t woken up to because unlike all the Amazon other businesses it doesn’t need data centers that doesn’t need for Film It Centers and it rides on top of those so it gets this kind of triple flywheel effect. I’m from those Investments That Amazon’s making. Jason: [21:04] Death of though this last reporting. You probably didn’t want ads to be the the dominant source of income you had cuz that that probably dancer Facebook Super Bowl. Scot: [21:14] Yen one one sidebar is a kind of thinking there’s been a lot of interesting writing about this if your Facebook and Twitter is also in the same bucket Netflix will go in and it sits on it stop living subscribers I don’t think those big deal but but the Twitter and Facebook their core bottle is under attack right because you have this whole attention to swinging very far away very far towards privacy with gdpr the whole Cambridge analytica and you know so they’re core model is kind of under attack were there since Lee saying give us your data for free and we’ll monetize it by selling it to other people which which sounds weird when I say it like that that’s perfect what you been doing all this time and you know so you have to I have to imagine somewhere in those boardrooms people like we really need to find an e-commerce leg you know kind of a of Revenue here so I wouldn’t be surprised if we saw Facebooking and Twitter got a lot more serious about e-commerce Revenue because transactional review is way cleaner from political economy misgivings than than address. Jason: [22:22] Yeah for sure and I mean a ton was written about Facebook but I don’t know if you follow John Oliver he has the Last Week Tonight Show on HBO and he did a hysterical honest version of the Facebook app. That. Can’t completely describe an RPG rated podcast but you can find it all over the internet and it’s it’s definitely worth the watch is pretty funny. But the punchline of the lad is Facebook we own Who You Are. [23:02] So at the very top line for Amazon the growth was pretty big RightSource 37% year-over-year growth. On the revenue and you don’t remember remedy for for for Amazon doesn’t exactly equate to e-commerce DMV because they they do have some other businesses and in the revenues a mix of one p m 3 p but 37% growth. You know for a company they’re sized you know we always highlight on the show that that the Department of Commerce in comscore sort of estimate all e-commerce growth in North America at about. A 15% growth rate so you you have the the biggest company in the space that represents more than half of all the activity in the space and they’re still growing at more than twice the the average growth rate which is pretty scary. Scot: [23:57] Yeah a lot of people are starting to kind of wake up to this and you you pricing all the headlines that you know Amazon what’s half of e-commerce and that kind of thing would which is true but if he Commerce is growing it fit. 15% and Amazon phone at 37% then you know next stop 65% $0.75 85% 95% so we will later we’ll see you know eBay group pretty decently like eight 9% but then we’ll always here from Walmart and Target those kind of guys that they’re growing 30% shopify’s gmv is going 30% and it always becomes this kind of question of who is who is growing at negative. And e-commerce to kind of generate this 15% I always come back to that when I when I when I start to hear all these things come out of the quarterly reports I don’t have a great answer for that we’ve talked to folks. Animal I believe the numbers are wrong out there and they don’t trust at 15% so we’ll leave that two listeners kind of decide. [25:03] The glass little thing on the top level here is at Wall Street. [25:11] You’re very quickly says wow that was great cue to tell me about Q3 so it’s very much a show me show me kind of a world there I am the do that through guidance so Amazon’s guidance for Q3 was a little light on revenue and I think that this again was due to this kind of Optical news from stuff from 1 P to 3 p but then the prophet guy that gave to Wall Street was wildly ahead of their estimates and this is why you see that world of Wall Street you called us a beat and raised quarter that’s essentially what Amazon did is they not only did they being cute too but they all the analysts had to scramble and go out and say the whole world of profitability Amazon has changed what does that do for our bottles and minute is models are built off of operating income and free cash flow so you know I saw I saw price targets out there 2020 120 200 I think the highest I saw was 2300 I remember right around 2000 is when Amazon it’s $10 so yeah this is the kind of momentum here that that’s pretty interesting to see if this is what catapults Amazon there I don’t think I quite get there but you know when Q3 comes out I think Amazon all indications are from third parties out there that they had a Blow Away Prime day. [26:33] That could be if they were kind of being raised and 2/3 on top of this and especially on the bottom line then we could get that $20 by Lucy will have to July. So probably be. August 28th 23 or October 22-23 is probably when they’ll announce Q3 and I bet that maybe when we kind of see the first trying to our company. Jason: [27:01] Yeah and that’s a great reminder to me that we need to get started on the trillion-dollar sound effect that will need for the podcast from them. Scot: [27:08] Yeah yeah I’ll have Jeff on he’ll be a big celebration party. Jason: [27:12] Exactly I know he keeps asking but that maybe would be the occasion to finally let him on the show. So one of the businesses in this number is of course the Amazon web services and you know if e-commerce is doing pretty well against its competition amazon-web-services is doing even better right and is you is you mentioned you know one of the two common myths is that this is the only profitable part of Amazon that’s her to carries the retail part as a reminder like this service want and really had like a 7-year Head Start before they developed any serious competition and today you have. Microsoft and Google in particular you know fighting hard to catch up. Spencer literally 7 years behind and I think there’s a Warren Buffett quote you know something to the effect of you really don’t want to spot Jeff Bezos so 7 years head start on anything. Scot: [28:06] Yes all that was great. Jason: [28:07] Which is a pretty good quote so you know again the circumstance going into this is. [28:14] That Amazon web services is way larger than all of their competition combined and so normally you’d expect. That’s great but it should probably be harder for them to keep growing at this pace and the bad news for the competitors is they did keep growing at that pace and in fact there their rate of growth is still slightly accelerating so so they had like 6.1 billion in in revenue for AWS that’s a 49% year-over-year growth. Which is an acceleration of of 100 basis points from q1 and you know that puts them at like at 24 billion dollar. [28:55] Run rate. And the operating margins are getting better so so operating margins for the quarter went up like a hundred 20 basis points you know so you got margins improving on a big growth when you’re already like the. The huge market leader in so that’s that’s you know pretty impressive and for sure those profit margins. Are much higher than you typically see you in any kind of retail and certainly higher than we see an e-commerce or or Amazon so you know they’ve there pretty consistently in the 20 to 25% operating margins for the for the last three years on on Amazon web services which is much more healthy Marge and then you’re going to see you in a in a retail bit. Scot: [29:45] Yeah as a is a super geeky a fellow Super Geek guy I saw one analyst it did this kind of cool kind of. Thinking on this Amazon discloses some of the work load data so work load and growing at 49% workloads I think we’re going at like 60 70% so what’s happening is they are getting better at optimizing the data centers and handling those workloads with less capex imagine some that’s Morris law that kind of kicks in their butt yeah I’m sure there’s some technology to I’m sure they’re getting good at your how do you spread these things across the field data centers you know how do you buy more commodity Hardware there’s a lot of rumors that they were going to compete with Cisco because they build your own network they do software kind of networking Stratus infrastructure instead of Hardware so they were so they they were able to handle a tremendous amount of workload growth convert that into Revenue but then increase margins more efficient inside of the data center layer there in end of cloud services they’re providing they’re also seeing really good you know there’s this whole family of things people can use an and you know on the conference call they talked about they don’t get specifics but they said they were very pleased which means. [31:08] Yeah it kind of Amazon body language must have been more than 10% kind of a thing you know of cloud customers expanding into some of these new Services they have so they have a lot of new scheme was database Technologies bi. Call center Technologies and machine learning and Ai and they still seeing a lot of customers expand into those things which is which is new needs more Revenue per customer as well. I bet they don’t really totally disclose that. On your Warren Buffett quote one analyst had a clever thing it’s not funny they run out of superlatives here so he essentially kind of said I mean dang they they added an Azure I would just Microsoft clouds and a Google Cloud platform just in the last year so they you know they’re just like every quarter they had like four or five JCPenney’s on on the GMC side there they’re laughing those guys so bad that they’re yep there you go over your number added kind of just you know the year of your growth exceeded the two top competitors which is crazy. Jason: [32:12] Yeah yes it it’s pretty scary. And I hesitate to even call it a stumble the one slight bit of negative PR I’ve seen lately has to do with one of those AI Services they have a facial recognition service and there was a little bit of a stir somebody use the Amazon facial recognition search service and ran it against Congress and it said Miss identified like a hundred and fifty of the congressman as. Criminals and like I’m not sure anyone did the fact-checking like it’s possible that that just true it sounds like to me but. [32:49] I’m assuming from the articles that that was a mistake like that really has nothing to do with Amazon web services it’s kind of the state of the. The technology in the databases that all these guys used to train facial recognition. But I did see them get some slightly negative Buzz there and then of course it is interesting retailers the one segment where you would expect. Ews to have a little bit of head winds because Amazon is such a successful retailer if you are another big retailer that’s fine cloud services. It wouldn’t be surprising to see them you know Skip Amazon even though they are the dominant player and we are starting to see that a little bit like it was more of a press release than. Then any actual activity but on Friday this year Walmart announced a big partnership with Microsoft Azure for data services and I you know I presume that was designed to. Somehow take some of the steam out of prime day which. Unite I would argue wasn’t wasn’t very successful and then I know Google Cloud platform Services just had their annual conference and one of the big announcement today or was that that apparently for some time Target has been. One of the main tenants on Google Cloud platform services so so it is too we’re starting to see some of the big retailers adopt some of the other class but your point like. And not in the overall economic picture it’s it’s not making you in that tiny little dent. [34:18] So moving on to another business that’s not as big as Amazon web services but pretty interesting is the emerging advertising business on Amazon and so you know what is regular listener I don’t know there’s a bunch of different formats of of marketing opportunities that sellers can buy on the Amazon platform to improve visibility for their product in so that that generates advertising revenue for Amazon in Scot keep me honest here but they they want that Revenue into a kind of miscellaneous bucket they call other revenue and I I think we’re all. Largely assuming that the bulk of of quote-unquote other revenue is this ad business but it but there are some other pieces of. Of Revenue in that bucket as well do I have that right. Scot: [35:09] You do and it’s kind of confusing so they they give you some tidbits on revenue and break out ads inside of other and then like I mentioned subscription services but because those things aren’t going quote material part of Amazon’s business the SEC doesn’t require to break him out and that in their entirety so ads end up being in North American International but AWS is all the way out because it’s pulled out as its own kind of operating its own p&l if you also unlike line business ads we only know the Top Line we don’t know the profitability I think we all assume it’s probably. Jason: [35:43] It’s hard for it not to be very profitable yeah. Scot: [35:46] What is the extent there is no expenses psych are there are you at the traffic in the it just kind of like almost pure profit I would imagine so so yeah you’re right. Jason: [35:56] So that so the number for that other Revenue grew a hundred and 29% so so she use year-over-year growth and I think cow and came out and said that their estimate for the annual revenue from this advertising service is now 8.6 billion in for 2018 and you know when they start a forecast that out there there forecast says forecasting that that could be a 37 billion dollar business by 2023 which is the acceleration over. Over their previous estimate from just a couple months ago. Scot: [36:35] Yeah that’s a Facebook so this business will grow to be a Facebook by 2023 in 5 years and he had to nudge their numbers up because it’s outperforming what what they’re saying they’re so. Jason: [36:46] Now we used to say. Scot: [36:48] An Amazon fashion day could pull that in a year you know someone for years they could have added a Facebook. Jason: [36:52] Yeah now generally when people tell that story they remind you that that that’s a 2017 or 2018 Facebook and the 2023 Facebook will probably also be a lot larger but that’s may be less obvious this this week than it was last week so that is certainly interesting not really related to their their announcement that there is other data out there to just sort of highlight. What at what an interesting business this is you know if you’re doing a search on Amazon platform. By definition you have really high purchase intent so the ads on that platform. Are are likely to have a directors are much more likely to have a direct response then adds on almost any other other advertising vehicle. And so you know Merkel consolidate the data from other clients. Every quarter and they publish this this great compendium of a marketing stats and they would they were talking a little bit about the efficacy of like one of those signature ad formats on Amazon which is the Amazon headline search ads there’s an ad. It shows up at the top of a search and they’re saying that like comparing that to a Google pla which is one of the the most Commerce friendly. Appointments on Google that Amazon headline search get 42% more clicks and convert 3 1/2 times better than Google play so that’s. [38:18] You know partly a definition of the of the shopping traffic than Amazon gets versus the more you know browsing and in general information traffic that the Google gets butt. You know if if their revenue gets anywhere like Amazon or Facebook’s advertising Revenue it’s. Its Revenue that has a much clearer Roi for the ad purchaser. Then some of that that the ads that are purchased on the other platforms where you have to believe that influences eventually going to translate to purchases. So I think that’s that’s super interesting, and then you know somewhat in line with the other digital ad platforms like Google and Facebook is becoming increasingly clear that Amazon’s very interested in fostering a direct relationship with the big ass fenders and they’re really trying to bypass the traditional agencies so you know I work for one of those agencies like that’s you know definitely not good news for that sort of old app Revenue stream for the big big digital agencies as it increasingly seems obvious that you know if there’s only a handful of these big digital advertising platforms they make themselves really friendly today advertisers that you know they can make it difficult for the for middleman to add much value. Scot: [39:38] Free Colts those are the that’s the cloud in the ad highlights Witcher are in a driving substantial beats here and then let’s dig in the retail side 2 on the third-party side revenue from third-party seller Services grew 36% year-over-year which is down slightly from which it was about 40% of year ago so you know just kind of scale kind of slowing down I think but again you have third parties are growing 36% year-over-year is not too shabby in a world of 15% and in fact when you think about it if third prettiest girl. [40:15] That fast then overall online sales for Amazon were about 18% first party is growing for a bit slower so the third party part of Amazon is growing substantially Amazon does report the unit volume mix and the unit volume mix hit a new high water mark and Q2 of 53% it was interesting it it kind of when you look at it overtime at q117 and it kind of this equilibrium of 50% and it stayed in that range all the way through 2017 and then here and 2018 it’s really kind of started to ramp up I think some of that was a couple things so I think Amazon always loves for 3p to go through FBA if possible cuz that’s the best user experience and it so I think Amazon and in 17 had vastly underestimated the the popularity of FBA with third parties so they built a lot of fulfillment centers globally in Parsippany us to kind of catch up so it feels to me it didn’t seem time they had some policies to kind of help drain some of the slower moving stuff out of a PA so I feel like the kind of used 2017 as a catch-up to get. [41:27] APA right sized again counties in that stair step method ology profits took a hit from that and now we’re really seeing creepy ramp up because I think there’s a lot more room in that PA to drive things I do my own proprietary analysis of this and one I kind of peel apart the quarter I end up with first party at 37.6 billion 71 billion for third-party so third-party is getting to be almost as twice as big as first party so it’s your time looking at. 6030 Castle Cliff there I mean 6535 and I have three pgmp growing at 27% and 1p growing at 12% so this move between one p3p delete this a little bit but adding those together to get 108 billion dollars of gmv for the quarter which I think is the right way to think of Amazon and that puts them at a you know north of a 400 billion gmv run rate. Which is essentially the size of Walmart we can compare Amazon’s GMB to Walmart retail sales which I think is the right comparison there. On the US side to side Jason or you want me to jump into that. Jason: [42:43] Sure I’ll hit the top on and you can add any any color but North American revenues continue to be really strong so that there were 32.2 billion for the quarter that’s a 44% year-over-year increase and I I think that basically hit the Wall Street expectation but they you know again you don’t improve the operating margin I think they beat their. Their consensus estimates for the operating margin so again fast expected grossing growth in North America and North America has been properly 17 consecutive quarters or. Scot: [43:31] Yeah but I’ve lost track to being sweet. Jason: [43:34] Yes but so it’s something something in that range. Where you at we’re going to call it a 12 consecutive quarters of profitable growth in North America so going back to positive profit in North America so that’s you know going back to the the sort of old wives tale that they’re not profitable the retail business in North America on its own is a profitable business it’s growing robustly it’s not super high margin as. You know most most retail is not super high margin but there’s not very many retards in North America that it wouldn’t take the last the last 11 quarters for for Amazon’s business so North America is a very robust retail business. Scot: [44:28] Yeah and if you look at the operating margin for that segment again operating margin is really a trailing indicator free free cash flow would be better but they don’t break it out by a segment cuz you’re not required to file SEC but it improved from 3.7% bottom line profitability 5.7 in Washi parlance that’s a 200 basis point increase which is pretty material on a quarter to quarter so you’re really starting to see them. Squeeze some some benefit there. Some of that is coming from the ad Revenue so that again the ad revenue does getting mixed into this North America piano AWS isn’t cuz it said separate Simon so it is in their hind it’s helping but it’s maybe a third of the profit comes from that business. But I don’t think it’s fair to separate that because those two things are very much more intimately connected than AWS is essentially. Jason: [45:24] Yeah and that I mean reminder that the ad business wouldn’t exist if they weren’t retailer driving a bunch of traffic to that site to shop for Stuff. Scot: [45:35] You want to do International. Jason: [45:37] No I’m going to toss it to you for the cool accent. Scot: [45:41] Yeah yeah thanks crikey so. On the international side if there’s any kind of blemish on this quarter it was International and then maybe the Top Line kind of being a little light but I think people kind of get the Top Line being of 1 Peter 3 p move and it is. Truck drives Rockville police they’re okay with it so he International Group 21% year-over-year was largely due. [46:08] A launch last year sometime that there anyways I’m so they had a tough comp in in a Wall Street. ABS line but so is a little bit of white on the top line from what people were expecting it again on the bottom line it was good it was pretty strong so International has a loss so it is she won the last was 4.2% and then this quarter it was 3.4% so again kind of a really nice quarter-on-quarter Improvement but this is clearly a part of Amazon that’s losing money and yeah for those folks that really want to find a piece of you found it so the international business of Amazon’s losing money right now it is improving its profitability pretty dramatically quarter-on-quarter so and Q4 it was down 5% in a lost 5% and then yeah back in the 2017 it lost as much as 7% so it’s really kind of cut the losses and half in less than a year and you know I think we’ll see this at this kind of pace you could see International get profitable. If you stretch get there in 18 but maybe by mid 1990 you know if Amazon opens up Brazil in a more serious way there’s a lot of countries that are not in and or they do some Acquisitions so they’ve added some things like sukur that. Could make it kind of go negative again they they will do that because I see it is as such a big opportunity. Jason: [47:30] Yeah and I would just remind people of your thinking about this in terms of a traditional retailer very few retailers that are wholesalers of other people’s stuff that sell third-party product had been very successful at expanding internationally so lots of retailers have success in their home Market they say hey what time you getting getting saturation here we should expand in some other markets to grow our our total addressable market and they start opening stores in other markets and more often than not they fail utterly or at the very least aren’t profitable and so like I would argue if you pull Brandon manufactures out that sell their own stuff the the majority of retailers International operations are unprofitable and some much more wildly so than Amazon right I think an Amazon case what we’re still seeing is is an investment that hasn’t paid off yet but there’s you know every reason to believe that it could just be early in the investment cycle and I I think that compares favorably to a lot of traditional retail competitors. Scot: [48:35] Yeah and the last thing here you know what Amazon is really good at is seeing something work in one market and rolling it out rap play the others I don’t know I haven’t tracked person where they are on the ad but I’m sure like in Australia they don’t have the ad platform active yet because they’re trying to get third parties ramped up but you know what you can Dad is there seeing the ad platform work really well in North America I’m pretty sure it’s it’s. Parody Future parody in England but I don’t think the rest of Europe is really been aggressively sold that and then countries like India you know where the the type of a model this kind of hybrid ad and Marketplace model is is much more prevalent in Asian Alibaba really kind of I read this whole concept you can see you know you can see International almost getting prop on the back of rolling that ad platform out in a in an aggressive way and getting it into all these countries where it’s not and then getting it penetrated more intended the countries where it already is an English and whatnot so that’ll be interesting to watch. It could even further because they don’t kind of tell us the breakdown of of that other line you’re my bet be it’s probably 80 or 90% North America and very small International and I would imagine the international side to be as big as a North America side just kind of just naturally so that ad business we could be vastly under sizing that add business even that kind of like that’s Facebook scale that the people are saying. Jason: [50:04] Yeah and I I mean I would argue that the ad business is as robust as it’s getting it’s still pretty immature even in North America so there’s there’s certainly lots of room there but you know this this whole metaphor of a flywheel like the one downside of a flywheel is it’s hard to start pedaling in the beginning until you get the momentum right and. Why can’t a lot of these markets they’re still doing that initial pedaling like in Australia they really just want Prime so you know a lot of the synergies that that all of these different systems than Amazon launches that ultimately turn into this you know Juggernaut platform ekosistem. You know aren’t in play as much in some of these new international countries as have already played out in North America and so like overtime. [50:50] They look those things could get fired up you know they can pour gas on Prime sign ups and in Australia for example. And Scot it’s going to shock you but it does happen again and we have used up all of our allotted time we are at minute 50 of our 30-minute highlight show if you want to continue but it was all valuable stuff and I know all the Whismur stuck with us so if you want to continue the conversation or do you want to know what Scott would have talked about it I gave him 10 more minutes you can jump over to Facebook and drop us a question and we’re happy to have a dialogue there as always Aviv that this episode was helpful to you we sure would appreciate it if you jump on iTunes and give us that 5-star review. Scot: [51:35] Next to join us are one we are going to be at Etail and Boston ETL East sews drop us a message to Vitas Facebook as whatever your preferred method of communioncation isn’t would love to meet up with some are there. Jason: [51:49] That would be awesome and until next time happy commercing.

Industry News NRFTech Peter Schwartz GetSpiffy Fund Raise Google Express Traction Amazon Prime Day Amazon Press Release  USA Today Recap Target results on Prime Day Listener Questions Joan Abrams asks: How important are progressive web apps going to be for retailers? Any retailers doing this really well yet? West Elm Example: https://mobile-beta.westelm.com/ Julie Acosta asks: Any updates on multi-touch attribution models/partners - who’s doing online/offline (brick & mortar) right? Upcoming Events Jason is doing retail visits in Australia July 21 - 29.  Ping him on twitter if you’re there. Jason and Scot will be doing shows from eTail East (8/6 - 8/9 in Boston) Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 137 of the Jason & Scot show was recorded on Thursday, July 19th 2018. http://jasonandscot.com Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Transcript Jason: [0:25] Welcome to the Jason and Scott show this is episode 137 being recorded on Thursday July 19th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scott Wingo. Scot: [0:40] Hey Jason and welcome back Jason Scott show listeners Jason how is your summer going. Jason: [0:48] It is going traffic I am just starting sort of a. A heavy travel session for me so I just got back from San Francisco and I leave on another trip tomorrow but I I feel like the big news this week is I read that spiffy got some new fun thing so congratulations. Scot: [1:08] Thanks yeah so for listeners that may not know so I started Channel advisor 2001 move to exact chairman in 2015 moved over 250 full-time I kind of, experiment with it in 2014 and overlap there and yeah it's been fun so we are on demand Car Care started with car wash with added oil change and now even have some products on the market so we have a cool iot device called spiffy blue that you plug into your vehicle and there's a companion app that tells you all that's going on with your car. A passionate about Digital Services I think that's kind of where the future is going so decided to put my money in time where my mouth is and we just raised our second round this week so it's good to get that behind us so we can keep servicing customers. Jason: [2:03] That's awesome and you keep expanding in the cities to right right right you where are you now. Scot: [2:09] Get 1/5 we're holding firm at 5 right now cuz we have this explosion of Fleet business so e we started out really with optispark with consumers at office parks and Residences and then we added oil change it unlocked Fleet so we we've been kind of adjusting as much Fleet as we get on our plate and it will be adding more City suit store in Raleigh Charlotte Dallas Atlanta and Los Angeles now. Jason: [2:35] Awesome I'm kind of sad because I am assuming that the climate in Chicago means I'm not going to be next on your list. Scot: [2:42] Yeah we've identified our first 50 cities and unfortunately Chicago is not in the first 25 but will eventually get to you. Jason: [2:51] Not I will be waiting or I'll just move I'll just get so frustrated at my lack of spiffy then I'll move. Scot: [2:56] Yeah yeah there's stairs five markets for you to retire to that maybe we'll get you there. Jason: [3:02] Nice I like the thought of retirement. Scot: [3:06] Couldn't you just in San Francisco at the NRF retail Tech any interesting things you want to give us a trip report on there. Jason: [3:14] Yeah you'd be happy too so there's an interesting show interruptus had this show for a number of years and it's mainly been focused on the CIO and CTO. So they sort of had a private party for a number of years I think for a long time it was. Permanently located in Half Moon Bay then it may have moved around a little bit so it may have gone to Laguna Niguel one year and San Diego last year. But there was also a digital merchandising show that that that shop.org put on, MN that shows been retired and see what they kind of done with interests Tech is they've expanded the temp to include all the, the digital Business Leaders and have more more overlapping content for cio's and business leader so I would, I'm not sure if that interests agrees with this definition exactly that I would characterize this is sort of the second year. [4:10] Where this the show has a broader scope in and I think it was interesting content and I think I think all of us that attended. Got a lot out of it so it was two and a half days. In San Francisco of pretty jam-packed content and it's a you know it's a smaller venue with smaller group so it's much more intimate like you basically have an opportunity and network with everyone else that attends and. You know it's it's it's more what I would call a a conference then like a big exhibition show it. Scot: [4:47] What were some of the key takeaways. Jason: [4:49] Yeah it's a different number different topics that they're too many speakers to go over everyone one that I was practically looking forward to is Katie Finnegan, so she runs a store 8 for Walmart which is Walmart's incubation lab and. She I think she she was the founder of the couple startups that Walmart Acquired and she kind of laid out their methodology and it's it's interesting to me because they're there been a bunch of retailers that I've had internally incubation labs in. I think it's fair to say on the aggregate that they haven't actually been that successful. And the Walmart one you know is is these are wholly-owned LLC so if you Walmart is essentially going to acquire you and then incubate you and sit in there all kinds of. You know questions that come out you know what is the exit look like for the the founders in the management team and you know how to define answers work and what are the success criteria and all those sorts of things so it's kinda interesting. I think Katie is like pretty realistic about the track record of retail incubation Labs insert you know she she was pretty candid about. [6:06] Where where they felt like they had the problem solved and where they thought like you know they're still open questions to be answered and she she kind of painted this maturity model and you know she highlighted several several. Companies that are in the story labs and where they are in that maturity model and so the. [6:27] If they're six stages of maturity you know, the most mature thing they have is this jet black which is kind of at the third stage of maturity. Which is this kind of um concierge personal shopping service and delivery service in New York City and some most of what they have is even earlier than that. So that was interesting was interesting to hear her thoughts about incubation in general and then some of the specific initiatives Walmart had. You know a bunch of gas from the show we're speaking they're so so Billy May who's the the CEOs or the table was on. A panel talking about. How how to prioritize technical initiatives within the company Rob Schmaltz who's been on the show from Talbots did a did a couple of channels. [7:25] The John Nord Mark has been on the show for his iterate. Incubation lab he brought in a couple of the companies in in his lab to kind of talk about new. New companies and there was also some the VCU that had some of their companies and so. There is kind of some interesting startups that we got to hear from and chat box there's a company called Shadow research. And there's a ton of newer Marketplace aggregator called hinge to which you may be more familiar with I wasn't super familiar with them. [8:09] As you well know you know tons of interest in traction in the in the marketplace space going on. And in the very last speaker sound pretty interesting and. I think I think we need to get him on the show so it's a it's a guy named Peter Schwartz who's a futurist. And I think he's got like a boondoggle job for salesforce.com so he's the head futurist for salesforce.com. [8:40] The listeners may be more familiar with Peter Schwartz his work he's the main character that the Matthew Broderick character was based on in the movie War Games. So he was like literally a young hacker that broke into some government databases and he was a consultant on the movie War games and several years later he as a futurist he partnered with Steven Spielberg to do. Paint a picture of what the future would look like for the movie Minority Report so all those famous scenes of. You know facial recognition triggering customer have ads inside the Gap in The Minority Report where ideas that that he put together. It's got a ton of fascinating stories he said when we were brainstorming Minority Report we thought we were, we are thinking about what the future would look like in 2040 or 2050, and he's like basically everything that we had in that movie like is now here and it's 2018 so he's like you know we may have gotten some of the ideas right but we were way wrong on the. On the timer iser. Scot: [9:48] I love those two movies Joshua spoiler. Jason: [9:54] Exactly exactly so he was interesting and it was silly but he's like. He's an older gentleman and he's like I'm 72 years old on the oldest employee at Salesforce and the irony is not lost on me that the oldest guy tells horses responsible for the future. Scot: [10:12] What did he predict. Jason: [10:18] Yes so he we talked about a bunch of things. We talked about Ai and that's an interesting one because I feel like there's kind of two camps I think there's people and maybe Elon Musk is in this Camp to think. The AI is super dangerous and that the Killer Robots are coming and Peter Schwartz was like that's not what's happening with the AI that we have now and heat you know he made his Arguments for why. We we like we really aren't making very fast progress on General AI that has sort of generalized intelligence that could become sentient. [10:52] But he did talk about a bunch of the risks with the kind of AI that is emerging and he talked about like, you know in the near future when all these AI, algorithms are deciding like what medicine what Medical Treatments we qualify for and whether or not we get credit and all these things you know will there be. Transparency about all those decisions and what rights are we having and things like that so is his POV on on. Hey I was a little less like. Daunting and then some folks and we talked about the future of work you had a lot of folks that think that like all the jobs are going to get eliminated by all this Automation and that you know we're all going to be sitting around without anything to do and again he kind of felt like that. That wasn't likely to be the case cuz he kind of talked about how hey you may not have a lot of people sitting in truck driving trucks around that he envisions is future we're just like we have all the Air Force drone pilot sitting in Las Vegas. [11:53] Fly the planes over Afghanistan and then go home to their families in Las Vegas that you could have a ton of. Truck drivers that are moving trucks on it you know through the commercial residential streets and then getting them on the highway where they drive autonomous way and you know it. Some some data points to support his his hypothesis is that. Lots of New Jersey jobs emerge to replace the jobs that tend to go away. Scot: [12:20] Nursing school any other highlights. Jason: [12:24] Those were some of the stuff that they jumped out to me there are a lot of like sort of topic-specific stuff so you know topics about Big Data topics about how. To hire how to structure Innovation and companies you know so there there was a little something for everyone in their butt butt. I feel like those are those are some good highlights and I was a little distracted through the whole thing because I feel like there's some other e-commerce stuff going on at the same time. Scot: [12:57] Yeah it's been a busy week in the world of e-commerce and and since we're coming off Prime Day 2018 we thought we'd jump in the news and start off with. [13:25] Yes let's start off with the prime day got off to a rough start with I know you were tracking that and I saw you at least quoted two or three times out there in the Press what what did you make of that. Jason: [13:36] Yeah so I mean I'll start out by saying I was completely surprised and caught off guard I feel like Amazon has had a shockingly good record of reliability on all these peak days and so if you would have asked me up front to like make a bed on, on which retailers were likely to suffer an outage during up a peak event I would not have picked Amazon so I was, someone surprised that they had this outage right off the bat while to talk about like what the impacted the outage was and forms of hurting, the revenue hurting their Prime subscriber is hurting sales of there their first party products. Marker 01 Scot: [14:16] Yeah what when does Herzing is it on Twitter Marker 02 [14:21] people discovered that if you use the smile you no interface where you anything you buy donates money to a charity and I had previously set that up and I was able to go through smile I was are down for are the first four hour but I was able to go to smiling and get it to work which to be made it feel more like a networking thing I never know what happened but it was unusual to me that there were were little slices that were working. Marker 04 Jason: [14:46] Yeah for listeners that haven't been responsible for sort of peekaboo ability like I'll highlights. Prime day is is perfectly designed to be the worst case scenario for a i t system standpoint right like you're number one we have, all of this traffic coming at the same hour right like so you had this huge Peak which if you're really worried about up time you would try to do something to spread out that demand more but even worse. With all of these short-lasting deals and all the personalization on the Amazon site very little of the of the Amazon Prime day experience can be cashed, so you know they're all these things that you like where you would kind of compromise the customer experience. To make it easier to load on the servers if you were really worried about availability and and Prime day is a perfect storm of like all the all the best customer experience practices that are you know. Extra challenging for the it guys and so so obviously you know it it did come to bite them somehow this year. Scot: [15:54] Yeah well we'll see if they'll get better that's the thing you weren't about Amazon this when they take on the stuff that they learn a lot and then they they get better. Jason: [16:02] So I'm one thing that I'll be curious about him hopefully some of some of our friends that are. Marketplace hours on the site maintenance may be able to share some insight here but if you were a prime deal that had one of those early slots and you were disrupted. Like I'll be curious to see if Amazon does any kind of make good for for those vendors or they just missed their window or or how they're handling that. Scot: [16:27] I tried it with three or four people not specifically about this outage thing and they had deals going at that time and they said that there are deals sold out in, but even faster than I thought they would so so it's weird it does seem to be and I saw a heat map that showed there was only certain cities were impacted so it's it's kind of an anomaly to me, to my knowledge AWS itself wasn't down so, yeah it's definitely specific to Amazon's phone usage of their infrastructure which kind of points do your data thing or some kind of an internal just their Network just there their slice of the whole AWS Network it is kind of a mystery. Jason: [17:07] It'll be interesting to see if any more info weeks. A side note I think we're also some reports from Amazon Flex drivers that the flex app was down which I like also sort of boron my my theory that maybe there is some product data problem. Scot: [17:25] So despite all that they estimates are out that they did about 3.5 billion and I believe that's up from 2.4 last year Amazon doesn't release date the Allies frustratingly give you like little clues of how the day went, I'll talk in terms of growth in unit numbers ish kind of things so those are all estimates of how big it was it was 6 hour first longer this year social apples and oranges and that comparison and then you and I were kind of talking in the pre-show in The Green Room the virtual Green Room that it's in more countries this year for sure Australia is its first year at Prime day so hopefully they had an exciting time down under you can go so I report cuz you're going to Australia soon settle be exciting you can kind of tell us how they felt about prime day. Jason: [18:14] Exactly just to answer your question I booked a trip tomorrow. Scot: [18:18] Good good thinking my advice is to make sure you download a lot of movies. And then yeah did you happen I know you like live on top of a Whole Foods or something like that did you happen to go into a whole foods during the prime day excitement I know a lot of people were we're trying to take advantage of some deals are there something where you could on Prime day you got $10 off in the store and online if you wanted that day. Jason: [18:44] Yeah yeah so I did not get to take advantage of myself I do live in very close proximity to A Whole Foods but I was of course down in. In San Francisco so I didn't get to experience it first-hand but all the reports that I've seen is, it probably was very favorable in the whole foods that like you know the the month leading up to it that they had really like done a good job is starting to roll out Prime benefits and so they kind of trained a bunch of the. The whole food choppers that would also Prime members till I get the Whole Foods app for Eddie and you know arguably some of the best financial deals that they offered work you know you you if you gamified everything at Whole Foods you essentially could get $30 in extra. Extra cash which is you know on I'm not significant amount of purchase it so that you know that that was pretty substantial. Scot: [19:35] It's like 2% off my average Whole Foods check out. A couple of observations from my side on Prime day. You know that the sales every noise focuses on the sales but I've kind of come to believe that that yeah that's part of what Amazon is going for there but they're real benefit you know they're probably out ways so it say it is three and a half billion the real benefit comes from the the juice that flows into the ecosystem elements that Amazon has because of. [20:08] Prime day so it's the first of all you have a bunch of prime sign up so they don't reveal that obviously but they in the past they said things like you know tens of millions of sign-ups for Prime day in those kinds of kinds of numbers this year there, as you point out leveraging that Whole Foods intersection so so if she reports that say prior to that position there's only 40% overlap there between Whole Food Shoppers and Prime members so that that's like a huge audience that they can get over in the prime they're obviously focused on that I also saw a report that they they announced a million connected home devices were sold on the show here a week then I would. [20:47] Pat ourselves on the back with an early on this that we felt like, Echo and all of its Associated devices Alexa power devices that were really big opportunity for Amazon and now they're selling a million units in one day 36 hours is pretty amazing another one that we've been pretty early on it is talking about the ads that that we think, Amazon ads are going to be pretty big and we're seeing you have cpgs and Brands really spend a lot of money there everyone I talk to at a brand head really dialed up their ad spend during Prime day so so that's a really, kind of cool Catalyst that Amazon has for getting people to really come on to that platform experience it on a day that's pretty crazy and hopefully you know from the Amazon site at least get addicted kind of tangentially do that before Prime day one of the when I think the smartest Wall Street guys on this is John Blackledge accountant he has raised his ad number for Amazon just add number 236 billion in Revenue over the next five years. [21:53] So that that's almost like the quote on Facebook I am a size scale business that he believes Amazon will be building over the next five years obviously that's Facebook today in 5 years Facebook will be bigger but just trying to get a little scale to it because that's a just kind of insanely big number. [22:11] There is some last couple things kind of around this idea of the ecosystem the benefits and aside from the sales third-party sales were reported to grow 89% this from cnbc's numbers and orders were up 69% so how it was you know it in some years we seen Amazon, Prime day the traffic gets absorbed by kind of the Amazon first party and owns products and private labels and that kind of stuff this year they did a really good job of splashing it all through the marketplace so so we saw anecdotally talk to a fair number third-party sellers that just had a very robust Prime day and there's that CNBC data and then singing Brands it was interesting to see the brands that participated so you had by participating. [23:00] Spotlight on that home page of deals so you saw a lot of this around why is offline so it was Under Armour Wrangler Champion Columbia Calvin Klein Adidas and Reebok and then interesting Lee it's also who didn't, play so Nike to my knowledge I never saw them and I've read a lot of the the reports of folks that track this pretty closely they did not participate in Prime day in a meaningful way Skechers Haynes Converse and Ralph Lauren so so those are some other interesting kind of aspects of prime day to think about is yeah the sales are good and you can't sneeze it over 3 billion dollars but I think they're real benefit it was probably another 5 or 6 billion comes from these ecosystem impacts. Jason: [23:48] Yeah for sure and I don't know if you saw it I thought it was actually from the Amazon press release but one of the things that they did claim is that it was the biggest day, single day ever for Prime signups so they added more people on Prime day than they ever had before which isn't surprising. Scot: [24:06] Yeah so your guess the last highest was last Prime day. Jason: [24:09] Oh I think they did say that again that last year so I think they they exceeded last year's already good numbers on Prime signups just sort of highlight in your point. Another thing that they put in the press release it's also kind of fun is they like, the Highlight the best selling on Amazon products and every country which hours I think it's always interesting to just look at the trends there, so I think I'm almost across the board in every country that the prime products the Amazon products are the best seller or so the fire in the. The echo stuff but not on Amazon stuff in the US and Canada the instapot is the the best selling item, and there's a bunch of other countries where, the best selling item is kind of high ticket consumer good so you know there's some countries were TV sold particularly well the video game platforms were really good sellers in a bunch of countries. [25:13] Yes I'm like. Expensive SD memory cards were big sellers in a bunch of countries but then what's interesting is there's another whole set of countries, that have like 3 different shopping behaviors and you see like. Everyday essential consumer consumer packaged Goods being the big sellers right so so like you know some some food item or something like cleaning soap or something like that right and so you know there is kind of bifurcation of the countries where where I feel like you know their grocery shopping is still predominantly. Brick-and-mortar and they use e-commerce for all these these high-ticket items and then there's you know countries where all the shopping is it shifted to e-commerce until you see things like laundry detergent being the, the best prime day item in Japan for. Scot: [26:09] Yeah they sold over 300,000 of those were they called cooking pots that's crazy. Jason: [26:14] Yeah the instapot is a crazy phenomenon in and of itself online and offline but but yeah it's up it's a fast mover on Amazon. Scot: [26:24] It was also interesting to see what other retailers John Prime day there I think it's kind of funny Amazon has them kind of Anna a check kind of a medium Checkmate kind of position do they ignore it or do they participate do they mention Amazon what what did you see there. Jason: [26:40] So tender retailers have sales and to me it's a no-brainer that you should have a sale on Prime day like I think it's it's so in the ethos of e-commerce Shoppers now that it's a shopping day that you really missed out if you didn't have some promotions to push people over the edge and I would argue especially since that first hour had this outage if you went to Amazon and you had a glitch, you're one click away from buying something somewhere else and so you know I think other retailers could definitely, not to the same level as Amazon but you know there definitely is a halo effect for the whole whole e-commerce industry and you know without naming any names I can tell you, I had probably half a dozen clients that had their their top sales day of the year on Prime day and so. It is absolutely a big shopping day that has a broader effect than just Amazon I think the interesting strategy is. Do you call the back to school sale do you call it you know Cyber Monday into like you know do you just have it be a promotional day or do you overtly. Yum Soda counter program. The Amazon and call it Prime day like you know that potentially could help you from an SEO standpoint but you know you're also sort of. [28:03] Promoting your competitor and acknowledging their success in and you know psychologically you're celebrating their birthday ironically enough. So I think we saw some retail delivery over it we had prime Day sales and some details though it'll more more subtle about it. And then when the outage happened I think you know what's going around on Twitter that like Office Depot sent out sort of. A smart aleck email you to telling Shoppers that is. They're tired of looking at pictures of dogs that they could come shop on on Office Depot and I have to be honest that just feels like tempting fate and in sort of kicking a monster that you don't want to kick. Scot: [28:47] Yeah yeah it's like doing live demos it just Murphy's Law is just begging begging for attention when you do that. Call any other Amazon things you want to cover before I move on. Jason: [29:02] No I think those were all the sort of big things that jumped out at me. Scot: [29:11] Cool so it was a couple of weeks dominated by Amazon but in the anonymous on side you know one thing I wanted to talk about is kind of the biggest news and marketplaces that's really gone unnoticed we talked about a little bit on the show but I wanted to try to Circle back is in you know some confusing marketing but the Google within the Google Express system they have this new offering called a c I forget about it shopping action and it's essentially where you can buy things so to mobile kind of AD unit. [29:46] We're supposed to be at Marketplace we can check out right on the Google page so so that's interesting and you know they are adding a ton of retailers to the program and I guess it's a little self-promotional but but side of the channel visors are partner of theirs and a large number of those folks are coming through our connections into that new market place so I know Google is Steve always been flirting with the marketplaces and she feels like they've got a little more religion on it this time I kind of feel it this is the time of year one everyone's really kind of ramping into you know Q3 obviously but then you know here as we get into the end of Q3 will be Full Throttle talk about holiday so that's going to be I think one of them interesting things to watch this holiday is how serious does Google get about this plus we seen some retailers like Urban Outfitter has launched the marketplace you know there's there's a bunch of other things that are going on out there so why really interesting things going on under the radar in the rotor marketplaces that I think they're just getting hot not not like covered or talked about because of all the exciting stuff Amazon's doing with things I promise. Jason: [31:00] Yeah yeah for sure and I do think the Google offerings are there still is a little confusion out there because there are kind of a couple different Commerce statuses that you can have with Google so so obviously you know Google still has this Google Express system where they at where you get they'll accept orders from. A bunch of retailers and then like a Google employee will actually pick up that order from that retailer and deliver it to you and I think as you pointed out there's been some recent traction with new retailers joining ecosystem. Like separate from that other they can they can be married together is this Google shopping actions which is like. The most low-friction way Google has ever had to actually buy a product out of a Google promotional spot right and so you know I think. Originally launched as a pilot and and you know it was kind of hard to get in the program now they've opened it up. And I think we're seeing lots of people for certain types of products. Take advantage of those Google shopping actions I still feel like the industry needs a little more expertise around that. Offering um I'm always surprised how unfamiliar people are with it and then there's this even weirder status there are. [32:21] Unique Partnerships from retailers with Google to be able to sell products through the Google home device and so Walmart and Target for example, are not in Google Express at the moment but they are selling their products through the Google home Echo System until. You know between all that your you know I think there's more Commerce activity in the Google echo system than we've ever seen before. Scot: [32:47] Yeah yeah it's largely not getting talk about Skylanders I guess in some ways it actually gives Google some space to go and experimenting and I have like a thousand spotlights on them well well all this Amazon stuff happening so we had what we have been I had a very busy summer so we are a little delinquent and getting to some listener questions so we have a little bit of time here on the podcast and want to jump into a couple of them that have been lingering out there and Jason I get to kick back and relax on these cuz they're both for you so first we have Joan Abrams and Joan ask how important are progressive web apps going to be for retailers are there any retailers doing this really well yet so maybe, let's make sure we started the Top Gear what's the progressive web app how does that differ from a native web app or a responsive site and all that kind of stuff and then you can jump into the importance and then any retailers that they are doing a great job. Jason: [33:47] So great question so Progressive web app is a slightly unfortunate name cuz it makes it sound like. This is an alternative to a traditional Native app. And well it potentially can be that I would argue that it's much more than that essentially it's a set of standards for a way to build a mobile web experience that runs natively through the web browser. [34:14] And they been supported by by Google Chrome which is very important mobile browser for some time. But they were very poorly supported or not at all supported in Mobile Safari which is the next usually important mobile browser, and so what exciting is as of the last iOS released there's now. Port for Progressive web apps in both Chrome and Safari, which is essentially the bulk of Shoppers on mobile and so there's a bunch of. Tools that you can use to build a website and then there's this feature called remote workers which essentially gives you, the capability to add. Native app like functionality to the web experience and have it even function offline so have it work even if you don't have, I'm connectivity so for example. [35:19] Google can have a Google Maps or Gmail experience that lets you, you know. Calculate directions in in Google Maps or or you know reading compose emails even if you're in airplane mode, by leveraging use these remote workers and what's super important and unique about Progressive web apps is, did the really designed to be performance efficient and so by following the the the the pwa standards you end up with a mobile web experience, it's much faster and much more responsive than. [36:04] Traditional responsive mobile web designs were into the site performs much faster and it can have a richer future set it can essentially have, almost all the features that you can have in a native app and so one thing you could do with it is build a native app that didn't require the App Store and that. That is a huge thing because a lot of customers don't know how to download apps from the app store or they have app fatigue and if your retailer and your bill all these cool functions in your amp, Nobody ends up using them because apps have such a small reach but you have you put the same features in your mobile web experience using pwa, you know anyone that goes to your url like instantly has access to all those things and so it's a great alternative to spending a fortune on building a native app, but it's also just the best way to build a mobile web experience and because the performance is so much better. We're seeing that the early retailers that have adopted Progressive web apps are are really killing at their their mobile site so much faster they're getting much higher conversion rates. [37:13] And so it's I would highly encourage any retailer to put on the road map right now that they should be. Redoing their mobile experience as a progressive web app and I have to be honest because most is building a proper response to. Mobile site and they feel like they did a bunch of work and they want to feel like they're done now and not too many of them are thrilled to hear that they need to start a new project to build it over using a new set of Technologies, but the but the retailer the early retailers that are, are are getting really good results and so you know it it really should be kind of high on your on your your roadmap particularly as all your customers are shifting the mobile. Scot: [38:05] How do you, so I know we obviously write a lot of this stuff at spiffy so we have you know you have Swift and Objective C for a native app and then there's a lot of interesting JavaScript, turn based libraries for writing kind of a responsive sites that were even app so I react in those kinds of things what what do you write a progressive web app. Jason: [38:31] Yeah. So it is a JavaScript like framework, much more constrained and specific set of libraries so so often when you're you're jumping JavaScript you can you can pick you know all these different development Library sets and only you know small subset that have been Highway optimized not allowed to be used in npwa is but it's it's mostly sort of JavaScript style development environments. Scot: [39:03] Are there any retailers doing a really awesome job at it that you want to highlight. Jason: [39:09] So there are they like again, it it hasn't for the most part been the huge retailers that have completely embraced. The pwa jet like there have been some retailers that have done a pwa, like as a separate stand-alone site in a in a replace an app in addition to a mobile website but says some of the retailers that have gone full pwa and got some really good results one of the biggest retailers out there to my knowledge this done it is is West Elm and then there's some in a smaller specialty retailers I think Tommy Bahama I think Snapdeal is full Progressive web app now, I think Payless has a progressive web app some of these are fixed it Sweet Frog so they never had a good mobile site before and this is the first one Willie Pulitzer Lancome, some some folks like that and so if anyone any of the listeners have a favorite Progressive web app retail site I would love to hear about it as well. Scot: [40:17] Yeah so what's up pic on West Arm so just to be clear you don't just download their app right you just go to their website and you're going to have a much more responses or how much more mobile friendly experience then then if you there previously shipped is at. Jason: [40:35] Exactly you go to westelm.com right interview go to West Elm, dot-com on a desktop browser you're getting a desktop experience if you go to that same URL in the mobile site you're getting a mobile version of that experience in the mobile version you'll get from West Allen is a progressive web app and I, I'm compelled since you're calling me out on it to highlight that. The West Elm one may not be in full deployment yet so I think there's some may be testing going on so if you go to westelm.com you may or may not get the progressive web app version. There's a different URL you can do to guarantee that you get the the West on the pwa version which is I'll put the link in the show notes but it's. Mobile - beta. Westelm.com and that kind of bypasses the testing guarantee you get the pwa version but they shared some some public data from there, they're beta version that that's in this A B test and the. That the folks getting the pwa version of The Experience are spending 15% more time on the site and there are spending 9% more Revenue than them folks that are. On the traditional responsive-design version of the site so so pretty meaningful. [41:53] Non retail sites there's a ton of of big sites that have moved to Progressive web app, and across-the-board the performance metrics though the page weight and the load times and the time the interaction are wildly better for Progressive web apps and whenever we see those performance numbers go up, bounce rate goes way down and engagement goes way up so you know I think there's both. A big lesson about performance from the General market and I think you know we're now starting to see some some pretty tangible retail results. Scot: [42:27] Colt Express or some super-secret Insider information there what do you when you go to a Retailer's site on mobile is there some kind of way that you're seeing its Progressive web app is there is there some tell her or are you just speak he's going to have to know. Jason: [42:41] Not a very convenient one like I mean the old but you literally have to either go view the source and you could there some Telltale headers that would tell you that it's a progressive web app. Or there are now a set of tools on their companies like ghostery and built with their frankly not that convenient to use on mobile that they're much more convenient on desktop Adele sort of, scan the site you're on and give you a report of the the underlying technologies that are being used for that side and they'll both tell you if you're if you're on a pwa site like the only the big user experience tell, is if you're not in an app and your your get your given like a full interactive site even without, activity then it's a pretty safe bet that you're that you're benefiting from the pwa site. Scot: [43:35] Coop's so last question in this comes from. Julie Acosta and the question is a two-parter any updates on multi-touch attribution model Sim partners and who's doing online offline right. Gold attribution question. Jason: [43:53] Yeah I do love a good attribution conversation so so pretty like there are you know and ever increasing number of, specialized tools that that do multi-touch attribution models, but what has me most excited is much better tools for doing multi-touch attribution are, starting to evolve in our standard analytics packages so I to my mind I apologize to my friends that I've met him in a w I feel like the, Google analytics implementation of multi-touch attribution is maybe a little further ahead but, IBM Adobe and Google all have multi attribution models built in in Google's case that used to only be available in their expensive premium paid product and now it's, it's made its way down to the free version and the big evolution in these multi-touch attribution models is, you used to have to come to pick a model so you can say. [44:55] Hey I'm interested in a weighted model and this is how it works or I'm interested in first touch or I'm interested in last touch or I'm interested in that decay model where every subsequent touch gets less weight. And you had to kind of manually specify model and then you could use the Analytics tool to look through the data with that lens now multi-touch has become sort of machine learning enabled, into a century the two will tell you which multi-touch model from which amongst the the. [45:30] The pool of multi-touch models the name given to a support, best fits the data set that you have so you can actually use machine learning to sort of refine the multi touch model that you use for your particular data, and you know you can you can Embrace that for your Enterprise and so that's pretty cool. [45:51] Multi-touch is a slightly complicated word because I would argue there's kind of three versions there's there's online to offline which is. You know hey I saw some digital ads on Facebook and Google and then I walked into a store and bought something so how do I you know attribute that in-store purchase to those those digital touch, I'll call that multichannel, there's multi-touch like a I saw an ad in Facebook and then I saw an ad in Google and then I saw add-on, Abercrombie & Fitch and then I bought the shirt like how you know which which of those three marketing Vehicles gets all the credit or most of the Creditor how do you do that that's kind of. The most traditional version of a multi-touch that the tools are designed to support. And then there's Multi-Device like hey I started on a tablet and then I moved to a phone and then I will definitely made the purchase on a laptop. How do I do a tribution across those devices and So my answer before it was mostly based on. [46:55] Digital multi-touch for multi device we're starting to see some interesting Solutions. Adobe in particular has this interesting Co-op model where they they're building a shared database amongst all the people that use Google Analytics. Of all the device ID that they ever see and when you have a user on a particular device you can go to The Coop and say what other devices does that same user use and so you can use this kind of share. To identify the same user across multiple devices historically only the. The digital tools that are most likely to have the user authenticated can kind of recognize the same user across devices and so Google and Facebook have a huge advantage over the rest of the world. In Multi-Device attribution. And then online offline we're also starting to see so much better tools interesting Lee both Facebook and Google that want to you to spend more money on digital advertising. [47:56] It's very important to them that you be able to understand online and offline attribution because, a lot of the purchases that you make after seeing or digital ads are in a store and so they've actually built some pretty good tools that you can upload your offline data into, and then do online offline attribution so we're starting to see that a lot more commonly but when you ask which retailers are. Are the kind of best-in-class doing it right it's the retailers with an unfair advantage. And so it's REI that has 95% of their purchases coming from Members so they have. Capture of that that email address of that member number every time you do a transaction online or, in-store it's Sephora where 95% of their customers are in that customer Affinity program, and they're able to do very effective online and offline attribution it Starbucks where we high percentage of the transactions are being done with their Mobile payment at go system, they're doing the best job of online to offline, and you know that the more traditional retailers wear a lot of the in-store purchases are not Animas you know that they're all getting better at doing online offline attribution but they're only able to do it for a much smaller set of their data. Scot: [49:11] Well thanks to John and Julie for asking those questions I think we're caught up on listener questions we we regularly post he's over on our Facebook page so just go to Facebook and search for Jason and Scott show or go to Jason and Scott. Calm and you'll see a direct over to there yeah. Jason: [49:30] Awesome I got before we sign I did want to highlight a couple upcoming opportunities to meet some listeners. So we we looted to it earlier in the show but I am leaving Saturday for a week of retail visits in Australia. So I have a bunch of meetings booked with retailers in Sydney and Melbourne but if you're a listener that happens me in Australia be sure to ping me on Twitter sometime in the next weekend if it's schedules permit I would. Love to meet up but I'm I'm really looking forward to learning a lot more about that market and sharing some of. The warnings that we've had in some some more mature Amazon markets that maybe we can share with. With Australia which is the newest Amazon market so I'm looking forward to that trip that's going to be fun and I know my family is looking even more forward to having me be gone for a week. And then early next month August 6th through the 9th you and I are going to be live and in person together at the eat a least show in Boston. Scot: [50:40] Yeah it's going to be a lot of fun we will go and I plan on wearing since we'll be in the the the Founding Father home well I'm going to wear a white wig for that one side of the exhaust. Jason: [50:52] Yeah and it's and it's made me a person knows I just wear a white wig anyway so that'll be the normal for me. Scot: [50:56] Look for the two founding father type of sport or triangle hats to. Jason: [51:03] Exactly and with that it's it's happen again we've used up our a lot of time, but if you have any further questions or we got something wrong on this week show we'd love to hear about it so, let's keep the conversation going on Facebook or Twitter and as always if you got any value out of this show and you want to reward us the best thing you can do is go to iTunes and give us that 5-star review, if you really didn't enjoy the show the best way to do that is visit Scott in person at his home and give him your feedback that's appreciated as well. Scot: [51:36] Yeah absolutely will thanks for joining star Buy. Jason: [51:39] Until next time happy commercing.

Amazon News Amazon Prime Day this year has leaked and will be July 16-17  Amazon today announced the acquisition of Pillpack for $1b Amazon recruits small businesses, to deliver packages Amazon was fourth-largest advertiser in the US ahead of Walmart, GM and Ford. Amazon is merging 1P and 3P and the robots are winning vs merchants - "hands off the wheel" Industry News Supreme court rules in favor of South Dakota in South Dakota v. Wayfair, Inc., et al.  The ruling effectively overturns the previous Quill Corp. v. North Dakota precedent and opens the door for all states to require e-commerce sites to collect and remit sales taxes to states. Amazon stands to be the biggest winner in the ruling.  Amazon already collects sales tax on all 1P sales.  Amazon will now be able to charge 3P merchants 2.9% to collect tax for them.  Amazon 1P will be more competitive with 3P and other e-commerce sites (eBay, NewEgg, etc..). Small E-Commerce sites and marketplace sellers are the biggest losers, as they will now need to collect sales tax (and likely pay a 3rd party to do it on their behalf), and navigate a multitude of complex out of state sales tax laws that are likely to emerge. All eyes turn now turn to Congress, to see if they will pass a law to clarify/simplify the sales tax collection issue on behalf of small businesses. Listener Questions Alex Volakis asks: Should others try the Warby Parker school bus store concept. Who do you think would benefit most from it? Amit Agarwal asks: Do customers like bundled products or do they like to create their own bundles? What are different merchandising tactics used to sell a collection of products? Jill Dvorak asks: Any leadership or managing through change tactics. at the corporate level to infuse more nimbleness in established brands? "The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail (Management of Innovation and Change)" by Clayton M. Christensen "The Lean Startup" by Eric Ries Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 136 of the Jason & Scot show was recorded on Thursday, June 28th 2018. http://jasonandscot.com Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Transcript Jason: [0:25] Welcome to the Jason and Scott show this is episode 136 being recorded on Thursday June 28th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scot Wingo. Scot: [0:40] Hey Jason welcome back Jason and Scott show listeners. Well Jason listeners that are paying very close attention will notice we took a little bit of summer vacation off so we haven't really podcast for last couple weeks but it's exciting to get back to it and we have a lot of news report on and some analysis of some big things that happened in e-commerce of the last couple of weeks plus we've had some listeners very patiently waiting some for with some questions that they wanted to ask us so that's going to be rude the real focus of the show tonight. So let's start off with some. Amazon news your margin is there. It wouldn't be a Jason Scott show without some Amazon news and there is no shortage today we're going to go through kind of the cream of the crop here so that the big one is and I know you've been on pins and needles Jason like I am is when is Amazon Prime day well it has leaks and it looks like it's going to be July 16th to 17th and like last year they're going to do kind of the day of the half of deals so I'm pretty excited I've been saving some of my Gadget money on the side and I'm going to be watching carefully to see what's offered this year. Jason: [2:04] Yeah I am right there with you it's it feels like as the as it gets more and more in French do not do the deals and stuff get better every year and I think there's been some interesting evidence that it's now starting to have a meaningful impact on back-to-school that people are literally. Like planning their back-to-school spend around Sunday. Scot: [2:25] Yeah any gadgets on your wishlist or I think you already have every flavor of the Amazon Echo if it's cracked but anything not that you don't have. Jason: [2:35] So to be honest of the stuff that's currently available I there's nothing on my wishlist so I'll be. Curious to hear if there's some deal that usually it'll be a deal on something that entices me or something that's relatively new released there are some new fire products that I don't have but I'm not sure I really need to add him to my repertoire. Scot: [2:58] Got it I I save all year for my little accessory cables so I'll probably be buying like 20 iOS cables and USB C use and we go to those like crazy at my house so this is my time of year when I stock up on all that good stuff. Jason: [3:14] My wife thinks I have a hoarding problem with those things and I like but I'm not smart enough to wait for the deal so I you know I get my eyes I would be the one customer that would do the subscription service from anchor. Scot: [3:26] Yes I Do by a lot of anchor product on Prime day that's like there the juicy stuff I keep an eye out for. Jason: [3:32] Yes and I'm a little OCD about it I like I have much cooked my cables color coded so I got all my lightning cables are red and All Nite Nite my USB or black so I can. Easily visually identify what I need. Scot: [3:50] Brickell there was a big acquisition today I know that you're probably excited about cuz we've talked about this category on the show did you see that one. Jason: [3:56] I did I did and I have to go back and check our predictions but I think this is even one of my predictions for the air which I'm so excited about. Scot: [4:05] Darn it. Jason: [4:07] Yes I I thought you might not have considered that but there today Amazon announced that they acquired a company called pillpack and this is a 1 billion dollar acquisition which is not the biggest obviously with with Whole Foods but on the bigger side of the Acquisitions for Amazon and pillpack is a male fulfillment Pharmacy. They specialize in custom packaging so their primary customer are. Dogs that have chronic conditions and have to take multiple prescriptions daily and pill pack make these. Custom packages of their particular caplet so you get this right you know nicely old. Baggy of the pills you're supposed to take everyday and so that simplifies life for a lot of people that have to take a lot of medications. And it is a good customer experience and arguably. [5:04] It is in and of itself a nice way to reduce friction and improve the. The prescription processed but I think the reason most people are are super interested in the Amazon acquisition is less because of their unique Twist on mail-order prescriptions and more the fact that. This is Amazon buying a licensed Pharmacy and jumping into the pharmacy space with two feet. We've seen them sort of toad it before course they they made an investment in drugstore.com many years ago and last year they got a bunch of. Medical equipment pharmaceutical licenses in a bunch of states which allowed them to sell like. [5:47] Oxygen dispensing equipment and gloves and a lot of the the medical equipment but this is now giving them access to actually fill. Prescription medications and so you know a lot of us have been speculating that this would be another industry that Amazon would attack. And you're as usually happens with these things with Amazon. That you know I think they're market cap went up by you had ate the investment a billion dollars their market cap went up by like 15 or 20 billion today depending on what time you looked, and the big pharmaceutical companies Walgreens and CVS lost about 15 billion dollars in market cap today and it was kind of funny I think Walgreens had an investor call today and and that you know that. That the Walgreens CEO at you know actually other the phrase that we we make fun of on the show all the time, that he's not very worried about Amazon that pharmaceutical Pharmacy is much more complicated than all the other categories Amazon's tackled and it'll be much different. Scot: [6:50] I'll never figure it out just like a apparel and what Macy's said there they can't figure it out return. Jason: [6:55] Exactly return Macy's is positive the returns are too complicated and all the apparel companies are positive that everyone wants to try clothes on before they order on them. And not excetera excetera usually a Bad Bet there are complications to the pharmacy but I would argue that that Amazon is very good at solving for complications. And then just a couple other sort of interesting Snippets around the acquisition there are rumors that that. Walmart was the primary acquire of pill pack and the Amazon swooped in at the last minute with a higher offer and sort of. Stole pill pack out from under Walmart. Scot: [7:40] Do you know if I know Amazon with myself registering in a bunch of States just go back to them into all the us or you know. Jason: [7:51] I don't think so but I think he'll pack has only certain states that they had access to and there still is a pretty big bear you're like like still having the pharmaceutical licenses one thing but really, be a hundred percent in the pharmacy space you also need all the insurers. To agree to partner with you and light accept your. Your claims against all the various insurance companies and so what would a lot of the traditional pharmacies think is the big barrier to Amazon is the Amazon doesn't have those. There's deals with all the insurers and so you know. Not sayings on can't cut all those deals and they probably will but that's potentially a multi-year process and so a lot of people are speculating that the day 1 Amazon would focus on the subset of the pharmaceutical Market that's paying out-of-pocket for for medication either because they're under uninsured or because the. Because they have some limitations or restrictions on the insurance that make them want to pay out of pocket and then you know there's. I got some speculation that Amazon would would even acquire an insurer which would then of course let them be the Fulfillment partner for that right and there's. There's that you know there's a separate initiative the Amazon is doing with Warren Buffett. [9:19] Yeah around revamping Healthcare and and you know one of the the speculated outcomes of that is a potential new insurance product that could potentially partner with and with Amazon Pharmacy. Scot: [9:30] Yeah they just announced the CEO for that energy so seems like it's getting some momentum there for those who didn't listen to kind of our predictions for the year maybe you know what what's this mean for a CVS or Walgreens near us a Amazon successfully can compete on the pharmacy side at least the pill dispensing are those things convenient enough still or do you think that this is a problem. Jason: [9:57] Yep so here's what's interesting so that the traditional drug stores that are Walgreens and CVS is. Their whole business is predicated on foot traffic coming in to fill prescriptions in so the. Like they they don't tend to be super price competitive on all the over-the-counter products that they sell in the store and they don't tend to be a destination for any of those products for very many consumers but what happens is you going to get your Lipitor and you realize. That you need some snacks or you need some tissue paper or you need some Advil or whatever the case is while you're in the store. And so have a significant number of customers no longer need to visit Walgreens to pick up their prescription. The Walgreens brick-and-mortar model literally doesn't work like there is not a like another compelling reason for traffic to go in those stores. [10:56] And so you know either that would you know put Walgreens in huge distress or Walgreens would have to sort of find some way to reinvent their their retail space. And you know most most of that analysts look at those retailers and say hey the big Investments those guys are making these are in insurance companies and they're really their their plan is to sort of pivot from being a brick-and-mortar retailer to being a. A healthcare provider that's not tied to brick and mortar. And you knows we talk about a few times on the show Amazon doesn't have to capture 50% of the pharmacy market or anything like it you know if they can take a a 10% or 15% and in the traffic of those stores. [11:38] Like that probably put them over a Tipping Point that makes those doors not profitable and so it's. A very material threat to traditional drug stores. Whether Amazon successful or not if a bunch of consumers just decide that it's better to have their Pharmaceuticals delivered to home. I'm in there many companies trying to do that then you know that puts that same stress on those drug stores, it's been interesting the kind of traditional mail order pharmacy hasn't really gained a lot of momentum so there's a insurers insurance companies drive people to mail order pharmacy and there's a percentage of. Consumers there get their stuff VIA mail order at the percentage of people that use my order has actually shrunk a little bit in the last couple of years and so it'll be interesting if. Amazon can come up with a new enough experience or these custom pill packs are a big enough value-add that they, you know permanently change that that consumer Behavior which will you know really put a challenge in the drugstores and I I would expect to see a ton of drug stores close. Scot: [12:44] It just sounds so slow mail delivery. Jason: [12:47] Yeah and maybe mail is the wrong word right like I mean you know you can imagine all kinds of same-day fulfillment centers like at the moment. You know people tend to get get the home delivery of prescriptions when they're tronic things that you take you around right and when you you know God forbid you're sick and the doctor calls in a prescription or you go see a doctor and they call in a prescription that you pick up like those are the things you're more likely to walk in and and get that but of course there's no reason that pharmacies couldn't. Prepare those those meds or Amazon you don't own pharmacies couldn't prepare those meds and deliver on in 1 hour to your house. Scot: [13:26] Yeah yes so it could be a cool Prime thing like Prime Pharmacy where yeah Auto refills the pharmacies I deal with like they never called the doctor and do stuff right so Amazon consult a lot of that stuff so. Jason: [13:41] There's a ton of friction in current experience that like we as consumers are just learn to deal with that that you can imagine someone like Amazon taking out of the experience and and make it game changing like in the in the same way that Uber disrupted the taxi industry. Scot: [13:57] Cope well that was one of your predictions of one of mine was about Amazon delivery and today there was an announcement about that sort kind of kind of even on this I guess Amazon sent out this really interesting effectively up a call to on chores to build delivery capability that that Amazon will then leverage there as we've covered on the show a lot there the really worried about the capacity out there in the network they're building their own direct this is really what I would consider a call to arms for entrepreneurs to build a 1099 kind of delivery Network yeah I talked about going out starting a business for a minimum of 10K wish you the vans that are Amazon branded uniforms and then they talk about how and their models of doing this. [14:43] You can make up to $300,000 in profit a year that's pretty interesting in. A little unknown thing is FedEx Ground did this they had they had a lot of 1099s their individuals and then there was some kind of a court thing that happened where that was deemed did they should be employees so they world all that up into businesses so when you see FedEx Ground delivery out there it is a it is a 1099 Network it'll frequently say you know FedEx Ground operated by and they'll be some little LLC brand they're kind of small down by the door. Doubt they have built a similar, Network so this is going to be interesting to see how Amazon build this out if they're certain areas they're targeting and then also what this means for the flex drivers which is more of an Uber individual kind of a thing there's a lot of work a lot of people believe the Uber 1099 model is at risk that that same kind of litigation will happen that they're actually should be treated as employees this would Guild Amazon another kind of an option on delivery if that were to happen to the flex driver thing too so so kind of covers several basis I thought that was pretty interesting. Jason: [15:55] Yeah and I in my mind I could imagine. That it's easier for Amazon to enforce and Achieve certain service levels with these. Individual with his business operators over the 1099s i e you know it's like you can require these businesses to buy these Amazon branded trucks into wear Amazon uniforms and things that are like, less convenient and economically viable to impose on individual 1099 work. Scot: [16:32] Yeah I should have mentioned it but one of the things they're going to provide is the software so there, I can give you all the software needed to run a business like this I think it's from an acquisition they did that they have kind of been using internally or maybe as part of flex and now they've there they're part of this whole deal is they will give you the software which is kind of a clever way for them to have visibility into the SLA is right they can kind of see if your using their software in the cloud presumably they be able to see you know how you're doing against LA's the required to use their software because they didn't want to be able to see them. Jason: [17:08] Yeah I mean I read through the whole program and to me it feels exactly like franchisee model like I mean they've they've completely template eyes the whole business they they give you all the processes and software like they literally have like. The Dead training program down in the hiring recommendations for these businesses and they have the whole economic model is it like they essentially say that like hey you know depending on how quickly you scale you're going to make between you're going to net between 70k and 300K a year in this business. [17:48] Anything else about the Amazon do it by the way what I just found someone interesting the Amazon delivery was this big plans PR thing and they had a bunch of media to Seattle and they you know gave the media all the story under embargo and so you know today was the big announced a and they got a bunch of press over that over all that and then it it feels like I kind of got stepped on when they announce the pillpack acquisition you know which they did none of this pre-press planning for. Scot: [18:20] Yeah yes sometimes the best plans going to get Crush by that the dip The Pride react to Walmart into that position was on its own timetable that they couldn't control and it just kind of unfortunately probably landed on the same day happen sometimes. Jason: [18:36] Another interesting thing that came out last week is at age does this evaluation of all the top advertisers every year and a surprise, appearance on the top 10 list was Amazon as the fourth largest Advertiser in the United States so they're spending more on Advertising then folks like for GM and they're the retailer that spending a listen advertising so they're actually spending more and advertising than Walmart it. Scot: [19:10] Yep that's interesting it's funny because it's for you know for the longest time basil said they would never really do marketing cuz they prefer to put all that money into shipping fee and you know that that word of mouse with mouth was the best marketing but then once they came out. With Kindle they had to really kind of start doing some marketing In and Out imagine if you looked up the bulk of that is going to be around Alexa. Jason: [19:34] Yeah no I think that's I think that's why Fair they develop a bunch of owned Brands and they've they've had the market to support those owned brands. But I do think you know that and they've kind of had them float on this they are also investing a lot more in Performance Marketing for just a core retail business at the moment then they. They have it in the recent past said so you know you leveraging Google products and things like that to drive more traffic to Amazon. Scot: [20:03] Another interesting Amazon news piece this is kind of more internal facing but I think listeners will find it pretty fascinating it was a little bit of clickbait so that you know the article came out of Bloomberg and it it showed one of the the Kiva warehouse robots and it said you know Amazon's robots are moving for the warehouse to headquarters which kind of you like what are they going to deliver pencils or what's going on what's really happening is as we've reported on the show we had to Andrea lay on and she was telling us about some projects they had internally where an AI World very frequently negotiate with indoors and they call it this whole hands off the wheel initiative, there's several layers so that there's there's vendor negotiations but then there's also you know on the first party side. [20:52] Putting machines against humans to see who can piss pick the best products to put on Amazon and buy. [21:00] And at the same time you also have the marketplace side of Amazon so what's happening is it looks like they're squishing all this together now the guy that ran the third-party marketplaces moved over to a new project that's on an ounce Peter Pharisee so they wrapped up the marketplace and the 1pt mused to be very despair teams you I would go to Amazon in in meetings and introduce people across his team so it was funny and it looks like the Common Thread there is less peep so more machines can imagine these categories because they effectively do a better job more machines doing negotiations and less people and then this kind of integration of 1p and 3p I think this is good because we found a lot of vendors get really confused and mixed messaging from Amazon where they'll go to one team in Amazon the go to the marketplace apparel team and say hey we want to do X Y and Z in those say you know oh no you have to do this that the other and then the one p team will get a whole different answer so I think this ultimately be good and you're the 3p team the three-piece cider Amazon bigger than the one piece side so I think it'll be great to have a lot of that DNA kind of mixed in there and you know there's a downside this Automation and can be pretty frustrating to companies that are used to the old school you know having going to. [22:23] Bendle and chicken someone's hand and showing them the products and those kinds of things this is essentially you can stay home and chat robot and have the same outcome of the Amazon now so you know it'll be interesting to see how vendors net out on this change but it did pretty interesting the automation you know what they at least according to Amazon's data has beat out people is as it comes to merchandising and negotiating with Thunders. Jason: [22:50] Yeah for sure who the things are interesting to me about that merger I do feel like there's a way when they were more siloed in which sellers could potentially take advantage of this I was so I do think they're brands that, wanted to sell 3p on Amazon didn't want to be one piece hours because they wanted to control their own pricing like in in principle, if you're going to be a three-piece seller on Amazon Amazon has the right to like also be a one piece seller but a lot of, Brie and seemingly fell between the cracks there and we're able to be pure 3-piece hours without being bothered by the 1p guys and there's a lot of speculation that now that one p m 3 p r kind of merging that like you know that Aunt Amazon going to be a lot more purposeful about who can be a 3p seller without without Amazon having the option to be a one piece hour. [23:46] So it'll be interesting to see how that plays out, and then that's the thing that I chuckle at with the hands off the wheel I think it's a super app metaphor if you're a very big seller on Amazon you do have a a human contact and you have this personal relationship and I think what's funny about that is it's exactly like the the safety driver in the autonomous vehicles like you know it maybe makes you feel better that there's a guy sitting in the driver seat but he actually isn't touching the steering wheel and so you can have all the good conversations and take him to dinner and do other relationship building you want. But at the end of the day it's the computer that's deciding you know what the the terms of your your trade relationship are with Amazon. Scot: [24:35] Summary of some of the Amazon highlights over the last couple of weeks biggest news item is our very own Supreme Court in the United States got involved in e-commerce and I know you have a lot of interesting insights on this one so I'm anxious to hear your thoughts about what happened there. Jason: [24:57] So this is a case that the Supreme Court heard several months ago and they they ruled I guess this would be the last week now. The actual case the Supreme Court ruled on is called South Dakota vs Wayfair Overstock and do egg and a lot of people sort of shorten it to South Dakota vs Wayfair. And essentially South Dakota passed a law that said we're going to require sell sellers. To collect sales tax when people in South Dakota buy goods from them even if the seller doesn't have. A presence in South Dakota and that there's actually a precedent. Based on a ruling the Supreme Court ruled on in 1992 that South Dakota can't do that right like there's this. President called quill which was confusingly enough it was actually quill vs North Dakota. That the Supreme Court ruled on a 1992 that essentially said. [26:03] In order for a seller to be required to collect sales tax for a given State they had to have a physical presence in that state to establish Nexus and so a lot of. Pure play online retailers. Based on that rule like avoided having a presence in big populated states so that they didn't have to charge sales tax in those States. And it actually determined where Amazon's corporate headquarters would be when Jeff Bezos was starting the company that. President was already in place and so they they pick Seattle because it was a good techhub that didn't have a huge population and wouldn't be a huge customer base and avoided. Having a presence in States like California that would be huge customer bases and in the early days of Amazon. Amazon was super restricted with their employees they wouldn't let their employees you know do business travel to the states they wouldn't let the campus recruiters like go to the the job fairs in the college dates because they were there being super careful too. Avoid establishing a physical presence so they could have avoided paying taxes. [27:11] Into this this the Supreme Court in this ruling essentially reverses that quill precedents and so so so now it's going to be possible for states to pass a law that essentially require. I'm all us out of state sellers to collect sales tax and remitted to the the states. [27:34] And you know there's a couple of interesting things in that first of all. You are a ton of the media you know I was writing about how what a big win for Mainstreet this was and you know how was a blow to Amazon and. You know that the national retail Federation you know kind of claim though it was a victory for retailers and in tax fairness and all these things. The reality is in my mind the biggest winner in this deal is Amazon and the reason I say that is because. Amazon is already collecting tax Amazon gave up avoiding that Nexus a number of years ago. They're collecting tax in every state that has attacks and the reason they do that is they wanted to put distribution centers everywhere and they wanted to put Prime now centers everywhere and they just found it. Was better for them to collect the taxes then to have all these impediments on where they could have a physical presence. So this actually makes Amazon more competitive with other online pure plays right so it it it actually makes Amazon more competitive with Overstock and Newegg and and like all these. Visa vertical specialty retailers like a faucet that you know specialize in plumbing fixtures in our aren't collecting tax. So it helps Amazon's 1p business be more competitive. [28:52] That detect the sales tax that Amazon isn't collecting is from 3-piece hours who have the option to collect the tax or not and most don't. And so this ruling is going to require all of Amazon's 3p sellers to collect tax which is actually going to make Amazon's 1p business more competitive with the 3p business so that's a win. Also Amazon charges a 2.9% fee on all sales. In order to calculate and collect tax for those 3p seller so this is a huge new service fee that Amazon is going to start collecting from all their Marketplace vendors so that's a. A big win. This ruling makes Amazon more competitive with everyone else and really doesn't hurt Amazon's competitiveness. In any meaningful way. [29:47] Which is which is interesting and I would argue a lot of the the the media and info Scott wrong when they when they first heard about this announcement. Who's probably getting hurt by this is a lot of the small sellers right if you are a a a small business that's primarily selling via 3p on Amazon and eBay. You know your your cost just went up and potentially. There are about 12,000 tax jurisdictions in the US and so every one of those jurisdictions in theory could now pass a law that says you have to collect their tax and they can each have their own rules for the tax. And So It Goes could be a huge burden to the sellers. [30:32] Track and calculate these 12,000 different tax laws and so you're not allowed to have to cut the tax but you have to pay a bunch of money to collect the tax. Properly and that is a potential big burden for the small sellers. I would argue there's very few small brick-and-mortar retailers that aren't also trying to sell online and aren't also trying to ship out of state. So you know when people talk about this benefiting Main Street it's only benefiting the dinosaurs on Main Street that haven't figured out how to launch a Shopify site yet right. And so so it is going to be a potential burden on a new small businesses. And what's going to be most interesting to watch now is that the South Dakota version of the tax law is a very mild version of the law. It essentially says that all the different cities in South Dakota can't charge their own individual taxes that that dumb. We're going to have a Statewide system that's easier for businesses to comply with. And it'll also says that the state can't collect taxes retroactively so no one's going to be on the hook for their sales over the last 5 years but. [31:44] Any new state could now pass out a more aggressive version of the law it has more burdens for the the small business and that even tries to retroactively collect taxes for The Last 5 Years and it's it's unclear based on the Supreme Court ruling weather whether the states will be able to get away with the more aggressive version of this wall so that it's it's kind of going to the tech e-commerce taxes into a little bit of chaos while this all plays out and you know I think. [32:15] Everyone's hope which seems like a long shot is that what what could really simplify all this is it Congress sort of enacted a a lot the clarified what what how State should treat the taxes and Congress could pass a national law that essentially say is all the states have to, you know follow the same system in charge the same rate and there's lots of draft of these kind of laws there was one that was drafted a couple years ago called The Marketplace Fairness Act and it could allow all the states to collect sales tax but dramatically simplify the process of collecting those taxes for all the the online Sellers and protect all the online Sellers from retroactive taxes and things like that so like the right thing to do for our economy would be for Congress to pass a law but it you know it seems like there's a lot of partisan stuff going on in Congress and you know doesn't seem like there their they're passing a heck of a lot of common sense legislation at the moment. Scot: [33:19] Another interesting win for Amazon is there's a fair number of people that don't use at ba because Amazon just parked around an FBI and if you're one of these companies that's really you know of a carefully watching where your Nexus is you can't say to Amazon you can't say two things you can't say I only want my product Cindy's FBA facilities you also can't say you know where is my product right now so I can make sure that I'm tracking where I kind of I could have Nexus or not so presumably this get rid of that both objection and now you might as well just use that Paso another win for Amazon is FBA if we're going to go to a world pretty quickly here which seems like what you're predicting where every state is charging some form of tax. The NFPA is another enough was going to get more users because it's going to be enough there are no negatives for for doing that around Nexus. How do you say so if I may say I'ma an eBay or an Amazon Seller today what do I do do I need to start, cutting taxes out there one should start that right now like what's the action item on. Jason: [34:30] Yeah so at the moment you're only on the hook for the state you have a physical Nexus and and South Dakota. The each state has to pass an out-of-state tax collection law in order for them to then put this burden on on sellers and there are a number of states that have laws going through their state legislature right now and so you like your your immediate action is that you you do need to start you do not have a tax liability in South Dakota based on this ruling but you can anticipate didn't very short order all the states are desperate for money so of course they're all going to pass along some of the legislators are in a position to do it real fast summer going to be slow and and complicated the burden is going to keep going up and almost you know certainly the the way that most sellers are going to have to do this is you're going to have to pay a third party to calculate and remit all these taxes on your behalf and so that's another big winner in this is companies like taxjar and vertex and Olvera and those those companies that help businesses calculate and remit sale. Scot: [35:44] Yeah now, physical stores the taxes get down to you know literally the municipality so you could be in you know Secaucus New Jersey and they have a different apparel tax there's a tax on shipping but then certain there's no food tax or something that you cross into another area and the taxes are all different do you think this is going to get that complex or are you to the municipalities going to try to take there local tax structure in Buckhannon National kind of for that City kind of. Jason: [36:16] So here is going to be the balancing act all the municipalities would have like to pass their own laws so Secaucus would definitely like to have their own tax collection law and have their there sales tax laws imposed on all out of the jurisdiction Cellars the thing that's going to keep them all from doing that is that there's a a clause in the the the. [36:45] Though the prevailing tax laws that says States cannot put an undue burden on cross-state Commerce. And so the argument is going to be that it every municipality have their own set of laws and Secaucus has a tax holiday on this particular day and doesn't text food and all these different things the bat is going to trigger the Commerce Clause and and put an undue burden right and so part of the reason that the Supreme Court said they ruled in favor of South Dakota is because the law is was very carefully written to try to minimize that the the bird and right inside they don't date the it explicitly does not allow individual municipalities in South Dakota to have their own tax laws like they are there there's a Statewide tax system for out-of-state Sellers and so it knows. Supreme Court rule on any other than the South Dakota version so if Secaucus now pass is a really you know burdensome law and again Secaucus could also say and you owe is taxes for The Last 5 Years of sales. [37:58] Then you know someone's going to be able to litigate that and say it's a violation of the Commerce Clause and that potentially could make it back to the Supreme Court and you you know, the Supreme Court could choose to hear it or not and they could you know essentially say hey the South Dakota version is we going to bed the more you know arduous Secaucus version is not legal and so you know every States going to have to balance how aggressive they want to be you know with with how much we go Jeopardy they they they want to assume you know in case these things get where to get it. Scot: [38:36] Yes it feels like it's going to take like 5 to 10 years for this all the sort out and it's kind of a kind of a boring Plumbing topic but I think it's important for listeners cuz a lot of articles I read we're super confusing and I think you did a good job of summarizing. Jason: [38:50] One last point that just was kind of sad I give you actually listen to the the oral arguments in the case like the justices were asking really good questions how expensive is it for a small business to calculate their tax liability if this if we rule in favor of South Dakota how you know how much is incremental cost is is that going to impose on Wayfair bright and. It was really embarrassing, how little tangible information the lawyers in both side of this case had and how e-commerce works and I I say that like. If your lawyer like arguing a case before The Supreme Court that is like the Superbowl of litigation right and you'd expect like the most prepared best teams and yet you know it it's felt like the the level of preparation in knowledge about how digital Commerce work you know was was pretty pretty lacking in the justices openly expressed frustration that they couldn't get. You know clear answers to who you know some some reasonable questions about this so it you know it's further further evidence that, you know the economy and Technology are way way way ahead of the legal system. Scot: [40:08] Oh I nominate you to be a expert for the next to supreme court hearing on this. Jason: [40:13] Yeah I would make myself available that would be a pretty awesome gig. Scot: [40:19] Yeah and you get to wear a suit how fun is that. Jason: [40:21] I I have done some federal expert witness stuff in the you know I am willing to wear a suit for the the fees that you're able to charge as an expert witness. Scot: [40:31] Cool that that kind of wraps up the news section of the show and let's transition into some listener questions. [40:44] Question question question question question. Alright get the echo turned way up on that one our first question is pretty Technical and it comes from a friend of the show Scott Silverman this one goes back you mentioned this kind of in a phrase recently sniffing the tires Scott wants to know what do you recommend is the best technique for sniffing tires. Jason: [41:15] Hey Scott I totally appreciate the question sort of two-party answer if you are a casual Tire sniffer I think what you want to do is just you know get down on the ground get your nose is close to the tires as possible and you know really just sort of in intake the the fumes but if you're going to be a serious professional Tire sniffer what you really want to do is get the hydraulic jack and raise the car up to nose level because that actually allows a lot more oxygen under the tires which which you know helps more molecules get in your nose and really get you the whole bouquet of the tire. Scot: [41:56] And of course it's important to take the vehicle for a spin before you do this you get that like nice fresh smell. Jason: [42:03] Yeah you do want the rubber warmed up absolutely great point. Scot: [42:06] Our second questions comes from and I'll do a blanket apology there's some last names in here that may be a little tricky but I'll do my best this is from Alex Velasquez and he asks should others try the Warby Parker school bus tour concept and who do you think would benefit most from it I had no idea what this was so I figured this was a good question for you. Jason: [42:27] Yep so this is one of the early marketing tactics at Warby Parker did I think they actually did this before they open the formal store I'm so they I think they may be were using their corporate headquarters is a showroom but essentially what they did is they bought an old school bus decked it out and started driving to events and venues and things and letting people try on their glasses and it was a super effective marketing vehicle it's sort of a mobile pop-up store if you will and so in general I would say those kinds of things are a great tactic particularly for e-commerce business is what you know you feel like you'd benefit from a physical presence so I got a pop-up store avoids a lot of the costs of permanent rent you know which a lot of the times of the year the traffic in that that store is going to be low so you can do a pop-up just around Peak times and instead of it being fixed to one location the idea behind this bus is you could send the bus to a lot of different locations so there you know what be purchased per ticket clever and they've done a bunch of versions of since the school bus so they continue to use that tactic I do think it's a good customer acquisition and brand building tactic. [43:45] The there's actually a retailer that's been doing it much longer LL Bean literally have a. A bus built in the shape of their iconic rubber boot that they drive around and let people try on boots and kind of build their brand. Do that and they send it to outdoor festivals and stuff where where people might be interested in the boots so I think it's a good tactic. A lot of Brands could potentially benefit from it but the brands that would most benefit from it. Is if there's a a physical a or experiential element to the kind of products you're selling, so that it's not only are you building your brand awareness but you're also helping people you don't get that tactical experience so if you're selling. You know food and and you going to give people a chance to try it or you're selling apparel that gives people a chance to try sizes or. I feel the textiles are or you know things like that are particularly going to benefit from these kind of mobile pop-up store. Scot: [44:51] Cool and thanks for the question Alex. Jason: [44:59] So I think the next question is from vomit. A gyro and thanks God for just claiming that were massacring names do customers like bundled products or do they like to create their own bundles what are different merchandising tactics used to sell collections of product. Scot: [45:19] Yeah this is this is a good one you know it it kind of depends so. I like a system where the consumer has the you know a fair amount of power and convenience and they can choose to either buy a core product and its Associated add-ons and you have any Commerce system that is smart enough to kind of recommend the right things you know so it's not kind of recommending these things that are kind of random but they're frequently bought together. Which is a feature that you see on Amazon all the time now one tactic where this comes up a lot is in the world of marketplaces where. Frequently you'll be selling where you see this the most is in digital cameras this is kind of case study of this so what you see is you go to Amazon and you search for you know a Canon D40 which is a common camera and you know the tops quc is that core camera body SKU. [46:18] But then what a lot of people do is they will create a new skew by creating unique bundle. And I'll take a camera a memory card a set of lenses and a bag and a variety of things and I'll create a new skew a new Ace in in Amazon parlance and that is you can kind of a. You should have separate from the competitors for that Coeur Camera. [46:43] The be there for you know when consumer searches for Canon D40 if you've done this right you should have a pretty good shot at showing up higher level and then see you can effectively have a price that is much just submitted Lee discounted for that bundle and you're effectively hiding you know the discount in the margin by obfuscating it to the consumer making it harder for them to price compare so some things now you know this whole truth holds true for other marketplaces like eBay and Walmart eye center now the downside of this is Marketplace in her wise to the store frequently kind of challenging these things and saying you know does a bundle really make sense what are you doing here are you kind of ruining the customer experience. [47:33] So I've seen that used in it as a merchandising tactic there on your own website to I don't think I've seen as we have a child as we have this very clever skateboard a Cellar and they've come up with a couple private labels like their own wheels and things like that so when they they take a deck and skateboarding you have the deck which is just sold without wheels and and the the other pieces there and then they they take some private label stuff or owned brands do use Jason's language and it does create this kind of unique bundle that then isn't available anywhere else, and they can do a lot of relaxing things with pricing on that because they can't really change do the map the price but when they put their wheels on there they can offer this bundle that that is never more competitive anything else out there because they have got a known brand on the wheels and they have more margin and they can pass it on to the consumer so those are some of the things that come to mind for me Jason anything you want to add on bundling. Jason: [48:31] Yeah I would just say like the there are two similar but different things in my expenses, in different circumstances consumers want both so so every e-commerce platform uses a different vernacular but, binocular would be bundles versus kits right and so in this scenario a bundle could be. [48:56] A set of things that are recommended to go together right so shop the look you you one quick button and you add the blouse the pants the belt and shoes. But all four things get separately added to your cart and then you could edit the cart you could get two pair of the the blouses if you wanted and you could delete the shoes if you already had two shoes for example so it's, a shopping convenience to put related items together you know in and apparel is a common version of that like in crafting it could be a kit or project I got all the. All the items you need to make a sweater or something like that in food it could be by the recipe to get all the ingredients for a particular dish. But you know of course the customer might already have salt so you you know the customer could take salt out of the cart after they. They bought that bundle in a kids are often. Hard coded things that have to go together so it's one skew it shows up as one line item in the car you can't edit it. If any of the items in that cat are unavailable then the itin. The kid is unavailable in the order we get back ordered and things like that and so there are certain types of products. That lend themselves to kits and to your point. If you're going to have a special price on the the multiple item configuration than you probably want that to be a kid because you wouldn't want customers to. [50:25] Then delete three of the four items and still get a special price. But in some cases you just want to make it easier for people to buy multiple things and have a higher overall cart and then there's. A lot of nuances in the kits are they. Hard-coated manual kits what you would often cause static it where you know the skews are permanently tied together are there Dynamic kits that are built by recommendation engines or things like that are there customizable kids you know that have different options that customers can pick via VIA attribute type selections and and so it is super complicated thing and it is one of the things that can differentiate some of the e-commerce platforms from the others is their support for a broad range of these different options vary wildly and then when you throw in the ability to offer promotions on top of these bundles or kits that can get super complicated and so that you know if you know that that's a core part of your business that might drive you to select one one eCommerce platform versus another because it might have better support for the that the particular model year use. Scot: [51:35] Is anyone using AI to solve this like. Yeah I think I need Amazon's is kind of a group thing I'm sure there's gotta be like 10 AI vendors out there trying to solve this kind of Phoenix recommended product. Jason: [51:51] Yeah and I mean this man takes get tricky like I would argue that the the Panic recommendation vendors that have been around for 12 years like they're rich relevance in a certain is like they're there heavily AI base solution so it's almost like. Saying it AI recommendations versus not as kind of a difficult distinction to make the, that most of the product recommendation product that I'm aware of the you know are going to be closer to you. The most common model is they're going to recommend other products and you have to click each product separately to add it to the car they may offer bundles which is one-click ordering right in in Amazon does bundle the recommendations the right so right below the main product information on the product detail page there's always going to be up by these bring three things together which is you know it's the AI base recommendation engine is putting the three things that you most want together and you can choose to add one two or three of those things to your cart so that just that S Mart Convenience that Amazon's done to try to get the aov up that's the company that's the best example of using AI to actually create schitt's if you will is probably going to be Stitch fix right because they send one skew to your house which is a fixed with five items in it and they're primarily using AI to select which five items they send to your app. Scot: [53:18] Wrinkled her next question comes from jeweled work and she a skinny leadership or managing through change tactics and then over on the Facebook group I asked for clarification on that if I gave her a couple choices there and she said you're more at the corporate level so let's assume you're one of these Brands that's been around for a hundred years this is very much in the news right now where allottees activists are going into the established Brands and brand houses and shaking them up and you know really getting agitated they're not doing enough direct-to-consumer you seen folks like Campbell's down 30 40% due to all these changes happening and you know I heard your question is essentially how did these companies become more Nimble you know you've had this guy a hundred year plus world where the consumer didn't change very much and now they're changing constantly. What what do you recommend a brand do to get more nipple. Jason: [54:13] Yeah it's a great question Jill and the real answers if I had a perfect recommendation I probably wouldn't be bothering to do this podcast cuz it would make my job so much easier that I'd be you know waiting on an island somewhere because it is a huge challenge in general you see digital native companies are much better at being agile and nimble then big established Brands and it just so happens in my practice I mainly work with big established Brands and they all struggle with being at a a speed disadvantage TD small companies and the one exception is you know that the giant company Amazon is annoyingly. Add jolyn and Innovative despite their their size in the fact that they're you know now 20 years old. So two things to think about here the first is like a big question always comes up is. [55:07] Ivory Tower Innovation versus Grassroots Innovation right so you know Ivory Tower would be, let's set up an innovation lab right you know your target let's set up an innovation lab you know your Minneapolis wet set up at univation lab in San Mateo California and let's hire a bunch of people whose only job is to be Innovative and let them come up with all the new ideas. And if you're a store manager in Minnesota you know it's not your job to be Innovative right and so I having a dedicated focus on Innovation the hope his bees Innovation labs. Can can be more efficient you know there was a huge Trend in retail towards these labs and. Target Nordstrom Zappos Walmart you know all we're opening opening these stand-alone labs. [55:56] While some retailers definitely still have these Labs I would argue the trend is a little bit against the stand-alone lab so we've seen a lot of the retailers including Target Nordstrom. And a post move away from the dedicated Innovation lab model and so the alternative is. Create the ability for Innovation to come from the the main line Grassroots employees right into the the Marquee example of this is not a retail for me it's it's a Doe B and they had this clever product called. [56:29] Process called the Adobe Redbox and essentially any employee at Adobe that thinks they have a good idea for a new. Product or process or or service at Adobe can apply for this thing called in Adobe red box and it's a Innovation kit. And it's all the tools you need to sort of prototype your idea and get it to a level where you can present it. 288 sort of jury of Senior Management at the. Add Adobe and so it you know it's pretty clever it has things like a debit card in it that you can use to buy you don't web hosting services and it has. You know I'm feeling codes you can get to you know provide to some of your colleagues have them help you with certain things. And said that the idea is to make it easy for anybody with a good idea anywhere across the the organization to pursue that idea. [57:30] And so it the moment I see more retailers trying to Foster Innovation through. Providing processes and tools to their main line employees than I do the Ivory Tower but I certainly seen both work and I've seen both fail. The biggest advice I give to Legacy clients. To succeed in Innovation is not so much where that Innovation sits in the organization it's how The Innovation is approached and here like I highly recommend. Serta imitating the Amazon model right so you know Amazon famous we have this to Pizza teen model in the the premise behind that is. Hey any project we do we're going to narrow the scope such that it can be performed by you know a team no larger than could be fed by two pizzas. So that could be you no one four digit software developer or you know it might be six or seven people in your department. [58:31] But the idea being. The way to do Innovation is not to do some Grand pilot that has to integrate with 37 Legacy systems and has to get approval from 18 different departments and requires a team of 40. And you know by the time you you get an experience to live you will spend so much money and effort that you know if if the experience isn't successful. You know you you passed your company of Fortune and even if it is successful like the the business probably you know shifted from the time you started to the time you finish. The most successful Innovations are when you can you know find gorilla ways to do things scale at and make the the. Hiwot as independent and distinct from the rest of the organization as possible right and so to me the great example of that is. [59:23] Amazon Prime now, you know when they said like hey we want to deliver stuff in one hour they didn't say all right let's get a meeting together with the leaders of the Fulfillment center and figure out how we carve off some space in the Fulfillment center and figure it out we, change all our software in the Fulfillment center to support this one hour delivery and do all these things they they got some guys that said hey we're going to buy our own you know even though we own all this stuff, we're going to buy our own building for this pilot and we're going to write our own software and we're going to just keep things as simple and independent as possible get the experience out there in front of the customer as quickly as possible and learn from the customer, which elements of our idea are valuable and value by the customer and which ones aren't then we're going to refine it from there and only after we've. Proven The Innovation and unrefined it are we going to figure out how to integrate it into the rest of the Enterprise so I really like that sort of. Independence and you know we highly encourage a lot of these big Legacy Brands to sort of adopt a more agile. Business process so we talked about ad Joel a lot as a development technique technique but it really can be a a business process and you know sort of isolate these these projects as much as possible and make an independent initiative. Scot: [1:00:40] That's awesome so I'm up I come out at from a startup bad guy perspective I'm on my 4th company I started and like you have worked with a lot of Brands and I think the step a lot of them get wrong is what I would call buying soda I'll start doing something kind of innovative like selling director something and then the VP of sales will say woohoo oh hey wait a minute what are we doing I've gotten upset Channel partner that's upset wrestling direct and then doll the panic in the unwind the whole thing so before you go down some of the steps you recommended you know I think. [1:01:17] The key is got to get complete buy-in from the whole management team that this is going to be something they're there once committed to a book that I I now that kind of started this discussion is the innovator's Dilemma. This is kind of a must-read for people interest in this topic in this by Clayton Christensen I will put a link in the show notes and you know what does essentially does it talks about, how do companies get in this position and why and then it has some cases of the very few companies that have gotten out of this position so it's really important to get that buying from everybody because if everyone's not bought in you'll get this whole failure cycle of trying to do something really Innovative as a brand and then it gets squashed by people that really aren't bought in and then you know there nothing too happens and companies that are large and older is a lot of ideas get squished because what I call exception base management where you come up with this idea and then to what is start to happen to edge cases well you know what if you know a you know what if this isn't profitable what if this and that the other and that. [1:02:25] Becomes you just get kind of stuck in tar with that you have to have to get everyone bought into taking some risk that the company's also not used to Basil's has a really good letter on this stuff about it Amazon where they have commit to disagree is kind of thing you know so so you know we disagree but let's try it and see what happens like why not try it. Go try something and to that and there's really good book Jason mention you're taking some of these ads all kind of Concepts out of software development putting them in your company one of my favorites is called Lean Startup sat is geared towards when you're starting a company but I think big companies can learn a lot there and it kind of educate you on the languages start upset you know Facebook kind of famously has said go fast and break stuff and that's really kind of craving orientation towards not worrying about the exceptions and guessing put something out there and take a little risk and then see how customers react to it and then course-correct quickly so the answer to you know what is what you know maybe not and. [1:03:30] We won't know until you try so you got to kind of get your culture oriented towards trying stuff rapidly, iterating versus kind of a 18 month cycle of planning and hand-wringing and getting every little detail done and then putting something out to be agile yet to be able to put something out and fail I go over and over again the case study there for Amazon that's classic is the fire phone you know they they put a phone out there there's a million reasons that would fail and it failed Jason I think they're the only people that have one but if they didn't fail at that Fire Phone they would have never done Echo because they really wanted to be in the platform World they realized the failure the phone that that was going to be at and then they went all in on Echo and. That is part of the culture they have is it's okay to fail just going to do it quickly and inner eight and learn you can't just kind of like digging infinitely deep hole. Jason: [1:04:23] Yeah that's great advice. Scot we have a few more a great listener questions but I actually think we are going to have to hold them for our next show because it has happened again we've used up the an hour of our listeners very valuable time. And so if you enjoy the show we certainly would appreciate that that five star review on iTunes if you have anymore questions or follow-ups on these questions please do jump on her Facebook page and drop us a line or hit either of us up on Twitter because we will pick up the remainder of these questions and any new ones in the next show. Scot: [1:05:03] Thanks for joining server buddy. Jason: [1:05:05] Until next time happy commercing.

Chuck Davis is the CEO of Prodege (Swagbucks, MyPoints, and Shopathome), a leading rewards discovery site.  Chuck was the first President of E-Commerce for the Walt Disney Company, former CEO for ShopZilla, former CEO of Fandango, and is a former Shop.org board member. Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 135 of the Jason & Scot show was recorded on Tuesday, June 5th, 2018. http://jasonandscot.com Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Transcript Jason: [0:25] Welcome to the Jason and Scott show this is episode 135 being recorded on Tuesday June 5th 2018 I'm your host Jason retailgeek Goldberg and as always I'm here with your Tahoe Scott Wingo. Scot & Chuck: [0:40] Hey Jason in welcome back Jason Scott show listeners, Jason will real fortunate to have with us this week would I consider to be one of the Statesman of digital and e-commerce truck Davis, Chuck and I overlapped on the shop.org board for a little bit there and get to know each other and we've been trying to get him on the show for a while and finally all the moons and stars aligned and where, excited to have Chuck on the show today welcome Chuck thank you I'm glad to be here thanks for having me. Jason: [1:09] Entirely our pleasure, so usually won't have gas on I like to sort of memorize the the key digital places they've work so that I can you introduce your background of the audience but in your case that was impossible I couldn't remember all the cool places you had work. Scot & Chuck: [1:25] Yeah I don't know about that but I am you want me to jump in on that. [1:32] Okay well I'm 22 years in digital following a publishing career so the 22 years of digital. You know I think it's better to start off in the beginning I started at time Inc and I I was, on the life monthly magazine that was briefly alive after the weekly went out of business and it was very important part of my career because, weekly life Saturday evening post look all went out of business because they had one Revenue stream they really had two but one they gave away in that would circulation maybe they were getting $0.10 a week but they were getting a dollar a week and add Revenue, and when television came those Publications went away cuz he Advertiser switch to TV so on my first job at life, I learned there had to be two revenue streams they should be 50/50 and I went on a Sports Illustrated next. And you'll remember that from the football phones and sneaker phones and helping with Michael Jordan videos who was the first big, video purchase at the NBA at ever seen 400,000 I think on my first phone call they had to create a video to Vision the next day and then moved on a TV Guide, in Radnor Pennsylvania which was the biggest magazine in the country at the time it was 14 million circulation, and while I was there Netscape went public and all of a sudden that man it was opening day for a new industry called the internet. [3:03] And other than AOL CompuServe in Prodigy there were no employees in this new industry so as soon as there was a browser I I had five. Offers in the internet within 90 days of. Netscape going public and I called 1 800 Gateway in ordered my first computer, I mean things were moving very fast then and and I think the logic was will Chuck and get eyeballs to a publication that no one really needs maybe he can get eyeballs to my website. So there were a bunch of startups in Northern Cal and I landed a Disney in Southern Cal to start their e-commerce and that word e-commerce had not been invented yet. So a Michael Ovitz was President he had been there 11. I was only there is present for 11 months and he says Chuck who knows if this internet thing as a fat or not but if it's a fad will find you another job of the Walt Disney Company, so I hopped on a plane went back to Radnor Pennsylvania told my wife while we could do the start up north or we could go to Southern Cal and we could. Get a job at Disney and if the internet's a fad will have another you know will still stay they'll be something else there. So that's why I started my internet 22 years ago and my first job and. Launch Disney Store we lunch Disney Travel ESPN came into the fold 6 months after I got there so I launched an ESPN store in NASCAR Store. [4:35] Then infoseek I bought by Disney and we had all these go product I got to eat product groups and my concept was learn from a big company. And then. [4:46] I should do that smaller company thing but when I jump off I should know more about technology so 40 years after Disney I went to bizrate which became Shopzilla. And that's where you know me from Scott because I was on the shop.org board there and that was an interesting time because the industry was building up from the o. [5:10] Oak rash and that took a few years to build up and all of our companies of the board members were suffering at the same time. At the same time the industry was including shop.org and which was a not-for-profit that went significantly negative at that time but. What we found with bizrate after a series of cuts. Are their business started hockey sticking and it became a comparison shopping site and did really well in the ew Scripps company bought that in 05. [5:44] For over 500 million dollars so that we were working with all the retailers we had research that helped guide the shopping decisions for the consumer to know who to trust to buy online cuz at the beginning of the internet. No one trusted. Anyone online and Dad the credit card wasn't deemed to be safe I'm not even sure if purchases online recovered at the beginning of the internet anyway after Scripps bought Shopzilla. [6:14] I went to Fandango which was in the same building and West LA Fandango have 35 employees it was. It was kind of paused wasn't clear where it was going to go and quickly we scale back company and. Comcast bought it and I stayed on and. For another 40 years or so and that all worked out really well that was backed by tcv in Palo Alto. And I became a venture partner with tcv and I eventually found the founder Joseph Garlits of Swagbucks. And the parent company is called Protege with Addy Protege and. And Joseph and I became good friends and I became his chair Herman and. He said he wanted me to be the CEO and you never raised outside money and it was already a big company without money and I said you you don't have to have outside money you've already gone through the hardest part. And he wanted to do it and so tcv came in on that deal to that's our only investor that is the company of that today that's what we're going to talk about, so I presume we're going to talk about it a little so Protege is a reward consumer rewards platform. Where consumers have learned about 250 million dollars on the Swagbucks site and almost 550 million on the three protists. [7:45] Dating sites in free gift cards and we do this on our site from consumer shopping. Where I'll learn a commission and I'll share that commission with the consumer who will get points and redeem those points from free gift cards from basically all the Merchants Online plus PayPal. [8:08] Also from filling out surveys and sharing their opinion and from watching short-form videos that have ads on them. So those are three main businesses and we have 3 brand Swagbucks. Shop at home in my points the last two Brands we acquired over the last that's a couple years is that what you wanted to hear. Perfect yet I wanted to just take a little bit in the past just cuz I'm curious I'm I'm I'm a huge user of Fandango. Tulsa Lil Bit about that stint in. I love the little ad with the paper bag people just that was that created during your tenure it was but let me tell you the best story for Fandango so I started there as chairman. And I was chairman of Shopzilla and they were same building as take the elevator up and down, I was facing myself out of one company and phasing myself into the next company and about 1/2 year later I became the CEO and on my, first day is a CEO again we only have 35 employees at Fandango but a couple guys fat me down. Are they came to my office to Tech Guys and they go Chuck they're only like 5 of us who write code and we just and we know you have lots of things you want to test. But we also know that we need you to know that we're also here part-time really because we're working on a secret project with Apple. And I go well I don't understand am I paying For You full time but I'm getting you half time and they go that is correct and I go on that quite sure. [9:43] This is a good idea is it a good ideas it's a good project you're working on does Fandango benefit from this they go what we're not quite sure and. [9:53] And I said was it a bad project cuz I'll get our lawyer and I'll get you out of this and they go well we're not quite sure about that either now pause that thought for six months so that was July of 06 January of 07. My Blackberry is is vibrating so much. I figured someone was calling me and there was no one on the phone it was I was getting so many bbm's remember that that was a text message before we had text and and. They were saying Chuck turn on. [10:27] Turn on CNBC Steve Jobs is presenting at macworld he's showing this new product called an iPhone and he's buying movie tickets on Fandango. Tell my team built the first app for the first iPhone and a CEO I didn't even know it was coming that's how secretive apple apple is and that did help Propel Fandango new excited we're all using very much. [10:53] Brickell. [10:54] Is it also in your background you did a stint kind of with TCB which stands for tech technology crossover Ventures they're one of the story to VC firms out there in the Bay Area and I know that they are involved in your current company, are you still active with those guys so what's that relationship like. PCV is a great company and has great funds and I've known them for a long time I was fortunate enough to Jay Hogue found me he was on the board of Fandango and brought me in, to be his partner on that. And then that Pat a happy outcome and and then afterwards he asked if I would be a venture partner with tcv that helps sit in sourcing deals and coaching current Founders Inn, and just helping in the industry it did Girardi are all around and having someone on the inside is in a bad thing to do having a great. Growth Equity company like tcv has been fabulous for me, we brought them into Protege and they are the only investor in this company so I'm thrilled Jay Hogue and and. Maiorano board were thrilled to have them both and it's been a great relationship both ways. Well Jason I know is chomping at the bit to talk loyalty so I'll turn it over to him on that side. Jason: [12:20] Scot is fascinating and. [12:26] But you just got matching loyalty but I'm not sure why I think of Swagbucks first and foremost as a loyalty program right like you're you're really. [12:35] A traffic generation program for for a retail site right like you I would partner with you. Predominantly to get more new Shoppers to my site that that are already cut in the Swagbucks a ecosystem do I do I have that right. Scot & Chuck: [12:52] That is right and that's not dissimilar from what you know from my days at bizrate Shopzilla that there's a lot of lead generation that that comes from our shopping channel we. Transacted or LED two transactions of over 500 million dollars last year in our shop Channel. Jason: [13:16] Wow that's that's awesome and when I think about that like traffic jam versus loyalty like you know most people in they say loyalty they think of this traditional. Sir points for purchase program and in the hope is. You know if I get a bunch of points with Best Buy that that's going to let you know Anchorage people to want to use those points at Best Buy so that you know Best Buy will keep keep that customer loyal and it. [13:41] Like there's a lot of talk in the industry like these days there's a lot of fatigue with those kind of programs because. Consumers have so many are members of so many of these different programs that that none of them necessarily Drive loyalty but in your case. They're those customers are building value that they can use anywhere they want right so that it doesn't have that same fatigue Dynamic that. A Retailer's branded Welty program might have. Scot & Chuck: [14:09] One of the highlights of our whole platform is we have a horizontal platform versus a vertical so not only can you shop. Are any of the e-commerce sites out there but you can fill out surveys and watch videos and earn points from that. And redeem those points for shopping at your favorite retailers too so I think you have to look at it like an ecosystem. That everyone put something in a wreath, Taylor gets listed here they wait to see which customers come points are earned those points are usually redeemed to go back to that same retail or sometimes I'll go to other retailers. In the end everyone's happy cuz everyone's getting a good mix of incremental orders. Jason: [14:59] That that makes total sense and I I feel like even when we were looking at single retailer Affinity programs. [15:06] Like one of the characteristics of the best ones is they always. [15:10] Rewarded orange insanitized behaviors in addition to shopping so you might get you no points for buying but you might also get points for you know being a loyal. [15:20] Customer and wearing their clothes out in public and sharing them on Instagram or introducing new customers to the brand or things like that ends in so it feels like Swagbucks has many of those same, same characteristics and I'm assuming behind-the-scenes that that means like to other constituencies you have RR. [15:39] Clients that want to do market research and are willing to pay. [15:42] To get your your user base to answer those surveys and and clients that want to find eyeballs for their advertisements and are willing to pay to have have your your users watch those videos is that is that right I do swear to have. [15:55] Three can sit you and seizes its customers the retailers the the the researchers in the advertisers. Scot & Chuck: [16:03] We have at least three we we. [16:07] Transactive it on 25 million surveys last year and we had six billion video views so those areas are very large also but we also have, just your run-of-the-mill everyday search powered by Yahoo on our site. So when you do a search result every end sample you got a reward for that also we also have games on our site on channel in our play area. [16:36] So yeah there are many ways to earn what I think separates us from other sites that might only work on shopping is where a fun place to go. You you're going to be surprised with something new everyday. And we take a lot of pride in that we want to be fun we want to be rewarding we wanted to be a place you want to go and you want to be rewarded for your time. Your engagement is worth something and we want to make sure you get rewarded for it. Jason: [17:06] That that makes perfect sense it now I think I understand hopefully the listeners understand the ecosystem you know I'm always curious to ask all the entrepreneurs on the show is how do you get. What is your customer acquisition strategy how do you get customers into that echo system for the first time. Scot & Chuck: [17:26] And one of the unique things we do is we've got a referral program or a member can introduce another member. And we will give the introducer 10% of the points from their friend for life. [17:43] So if I introduce you and you start playing and then shopping and filling out surveys and watching videos and you earn points. The company is going to give me 10% on top of what you earned as a reward for life. For that introduction I made so there's almost a buddy system built in, where I'm going to keep track of you and let you know of new areas that I liked on the site and vice-versa you're going to close that loop with me and tell me tell me how much fun you had and how much you learned in the past month. [18:17] So that's one way we bring people in another really Innovative way. [18:22] That is fairly new is we launched a trivia app called swag IQ and this is. This was created I'd say in March April and we get. Tens of thousands of people coming on every day 8 p.m. eastern Time 5 p.m. Pacific and we have a 10 question game and what's unique about Swagbucks. Is we have our own currency is called SB and one point equals one penny it's $0.01. So we can give points out or sbe's out every time you got a question correct on our 10-question nightly trivia game. You don't have to just be the grand prize winner to win $2,500 or whatever that days for word is you're getting rewards all along the way and that has a strong following that. Introduces people to our currency who then come to the site to shop. Fill out surveys and share their opinions watch videos and search through Yahoo so it's all related so yeah we've got interesting lead-gen. Opportunities and an execution across our platform. Brickell and this is interesting to on the last episode that Jason I had we are going to the Mary Meeker deck and she had a section about China and you're a big thing in China right now is this intersection of kind of shopping and entertainment it sounds like you guys are. [19:58] We're kind of bringing some of that to the US any other interesting kind of, bottles you seen at that intersection especially on the how do you how do you bring entertainment into the e-commerce and shopping piece. You know you brought up that's by the other the other question ago and we did a whole swag IQ episode last week. That had to do with that spy that Best Buy had an electronic circular. On our site of different promotions going on in their in their store, and we had an entire game to tie in Best Buy two to the survey rewarding our customers for, for looking at the circular and getting familiar with the different specials going on in the store so there's many new innovative ways to cross-promote e-commerce, to cross-promote customer acquisition and to be engaged in a fun way. It's interesting at a theoretical level because you know we're as consumers were giving our quote-unquote R-value away for free till I use social media companies and you guys are kind of. Actually paying for it which is you know which is interesting because you you're obviously seeing you know the the government come in and got, a look at what's happening there and in a lot of consumers are upset they didn't realize what they're giving away and you know how much how much is kind of going along with that data where is you guys are making a much more clear kind of value proposition I think. [21:36] Well we like to think so too but the real. The real rubber meets the road moment is when we have a live screen in our lobby of our office here in El Segundo which is by. LAX to the Los Angeles airport and our lives screen shows. [21:56] Depiction of the United States and shows who's redeeming a card in which city at that moment for which retailer and how much money it is. Do we have done something like this at Fandango or people are buying movie tickets but what this does is it shows the total number of cards card value it's been redeemed since Inception. And when I came in this morning we were at 541 million dollars of cards that have been redeemed, and just watching that grow everyday is a heck of a lot more fun than seeing the billboard in Times Square showing how many people have died of cancer or in the more current way. What the national debt is per person in the US, this is fun people like earning rewards and the rewards just power the whole system of e-commerce, cool it was switch gears a little bit when we talk to retailers a lot of them have kind of had their quote on quote mobile moment which means more than half the traffic's kind of coming from mobile and Buy Mobile I mean smartphones imagine with an interactive platform like yours you you kind of crossed over that, how many books are in writing to you guys to the extent you can disclose things through mobile vs. desktop and any other interesting mobiletrans you guys are seen. [23:15] You know we've got very different channels on our sites as some work better on mobile than a mother's friend since the video channel called watch. Watching videos remotely like that or odor or in a mobile way is very good but a lot of people like that stop to so-so for surveys or answer channel does very well on mobile. [23:43] People get to see me, get a bigger picture online on the desktop so it's the same thing with e-commerce some things can be transacted quickly on mobile and others are better on desktop so I can't give you numbers but I can tell you that. Many fat most consumers migrate back and forth and were there in all areas. [24:07] The swag IQ game is is it mobile. Is basically a mobile game and that allows me to play anywhere I couldn't play last night we had two games last night I played the first game and made it to the 8th question before I got tripped up. I think it was a nice I got ripped out that was the furthest I'd ever gotten and we had a second Flash game 45 minutes later and I. I want to make sure I didn't have a car accidents I had that running in the car on the way home but I did not play it to dangerous but I'm at least able to hear it and hear the question. Jason: [24:44] Yeah I almost want to suggest that you use the GPS to disable the the the trivia game win when the phone is moving it auto speeds. Scot & Chuck: [24:56] You just log off I do just log off so I can focus on the road in California that's an important thing. Jason: [25:03] Yeah for sure and are you finding like so I like a lot of. [25:07] That the activities you have are sort of endemically mobilelite what is you mentioned are you finding that that's primarily the. The platform that new customers are coming into on like the majority of the new customer acquisition on the mobile platform is that growing faster for you than the the desktop. Scot & Chuck: [25:28] Now that's a good question and you could steer what users you get if your sophisticated in your in your customer acquisition efforts you can buy for Kate, your mobile customer acquisition efforts and give them a mobile experience and your desktop, customer acquisition efforts and give them a desktop experience and the N acknowledge that there's going to be migration across the two, but the primary way that someone comes in it's probably a good predictor and the economics as you know are different from Mobile in four. stop so I can just tell you that we play in both and we mark it to both and we get organic from both. And I think it's important to keep track of. [26:16] And obviously the mobile metrics for this industry let alone my company have are getting better all the time the screen is definitely smaller. So so it's it sometimes harder to get the message for a partner so that's part of the. Constructive tension that is there between what the consumer wants and what the partner wants, because they might want for Real Estate so all of that is a constructive tension and we make sure we have great products and both. Jason: [26:54] Yeah and that gives like a common challenge that the guests are seeing is you know. [27:01] Increasing percentage of their other user bases are are becoming predominantly mobile. [27:07] Which generally good thing you know people certainly happy happy to see that but. [27:13] It it does feel like in most cases it's slightly harder to monetize that mobile traffic so for eCommerce sites like the conversion rate in the HOV from mobile devices tends to be lower than desktop and as you mentioned in that in the advertising platforms there's just less. [27:28] Less pixels that can be ads and so you know it's time for us to monetize I think Mary Meeker in her deck even highlights that like. [27:37] The the one kind of advertising that sort of wagging consumer. [27:43] Eyeballs is mobile that there's sort of a gap between you know how many consumers are moving to Mobile and how many advertisers are moving a mobile site after I got the challenge we all have two faces. More bar users becoming more mobile and it being slightly harder to monetize those mobile users. Scot & Chuck: [27:59] Yeah it might be harder to monetize but I'm just speaking as a general industry trend, and but the retention or the time spent, on mobile is probably more so if you go back to the metric from early days in the internet of pageviews so I know is somebody irrelevant now that would be Alien video but time spent. [28:23] Could be more on mobile so if you're making less. In your example of advertising per page view you're getting many more page views. [28:34] On mobile because the customer likes the likes operating that way right it's their favorite way so. So I think in total. [28:46] The companies can make more money on mobile just for more usage even though they're making less per, moment were / transactor / / screen. Or Percy p.m. from something that is on a smaller pixelization. Jason: [29:08] Yeah I know that's a that's a great point because you know I think the worldwide Trend there's already more mobile more minutes being. More digital minutes are on mobile devices than on desktop devices and of course that's only going to grow because you got that mobile screen with you. [29:25] 24 hours a day and all those other screens are with you can serve we left so I that I got I think that's a great point I want to change. [29:33] Slightly to the topic of personalization because it strikes me, you guys get a very detailed view of your users over time so you see a lot of their shopping behavior and what their individual purchases are but you also see a lot of these other consumer Behavior you know when they're when they're using your games when they're watching your videos when they're taking your surveys all those sorts of things, that seems like a super valuable source of consumer Insight do you use that too. Change to the customer experience at all I might like will the the offers that I see when I come to your site be personalized based on my past Behavior or is that something you're thinking about. Scot & Chuck: [30:13] Certainly we know what people like and don't like, and where they tend to spend more time and there are many ways where we use that information to give a better experience to the consumer but we've got a long way to go. We've got a long way to go and most of our customers. I like bouncing around and and engaging in different channels on our on our site so. So that makes it in the increasing challenge because should I be showing you more sites to shop on that I think you would like or. Have I noticed you fill out a survey 2 days a week and I want to show you we've got. Some surveys I might be right up your alley based on the consumer products you've you've answered before so there's a real estate play. As there always has been and how much should be personalized horses how much is standard or that day's daily promo. That's an inherent tension that I think is healthy within an organization you might have some partner who needs. Need something, blast it out to as many people as possible in a day and then the question is do you show that to someone in it and have it override personalization and many times it does so, I don't want you to think that the whole world is fully personalized yet there's a lot of data we could help. [31:47] Give it a better experience but it hasn't taken fully over where where everything gets down to that level, Brickell describes what you feel this ecosystem and it's kind of has elements of a Marketplace as well and we kind of started Market places with traditional Market, places like the eBay marketplace now we have coyotes hybrids with Amazon which is retailer with a third-party Marketplace and then even you can Skype I think of uber and Airbnb is a Marketplace when I talk to people, adult marketplaces one of the interesting challenges is it's almost like buying your building 2, two businesses simultaneously and getting that right on the supply side of the demand side can be tricky is that been a challenge for you guys how do you guys think you think about yourself as a Marketplace. Well certainly I've I've been in Marketplace environments before cuz bizrate Shopzilla was a Marketplace and. And we have elements of that heater to where we do need to make sure demand and Supply can be evenly met as much as possible but. I will tell you this I've enjoyed being in businesses that don't have warehouses. I got nothing against warehouses I work with lots of companies that have them but the marketplace business, helps me focus on what I think we're good with and what we're good with his matching up the right consumer with the right products to be shopping for or or seeing on our site. [33:28] And therefore I don't have to worry as much about the distribution or the logistics of a warehouse nothing against that it's just, to your point a Marketplace still is very different it's getting the right traffic to the right place to meet the right demand. [33:47] What's what's the most surprising thing you guys have experienced as you maybe a product you would have never thought would be popular or any any interesting consumer insights you can share. [34:00] Well there a lot of deals that come on that do really well we have charity deals at do well or you could sponsor a different. Different things there we saw a lot of razors. Write Dollar Shave has been a nice partner of hours and and we're happy to see that that's always a lively one I think the the one of the pleasant surprises has been. The Innovation to keep coming one thing I've learned is you can't be static in any business for long. You know we're in jog here businesses so they change so quickly so if someone on my team as a great idea. Will often let them try it. [34:49] So that's how we launched swag IQ 3 months ago someone wanted to do trivia game we have our own spin on it we have our hose to come in in the afternoon now we're getting in the theme. Games we had a baseball game a couple nights ago for the first day of the NBA playoffs NBA Finals we had an NBA Finals trivia game which was pretty interesting and and. We will just keep growing we will keep innovating we will keep coming up with new areas are consumers tell us what they want to see they posted on Facebook they tell us directly. [35:28] The employees here, tell me what they want we use an outside firm to to capture all of the employee ideas and we review the Mineral Company meetings each quarter and I'd say close to half of them we end up unimplemented. So and if we don't get enough. We wonder why everyone has been submitted one per quarter cuz there's always things that could be better and having that philosophy I think is very important and having the openness to just keep trying keep. Keep tinkering keep launching new things while scaling and sticking to your mission and making sure you're true to it. Jason: [36:09] Very cool. [36:11] You know Chuck one of the things we always want to make sure we take advantage of when we have someone that that has a deep digital experience like yourself is kind of get your view of where you think it's all going like, do you do you have a clear idea what you think the future of e-commerce is or what what you know some of the big big trends. [36:31] To think about now are for the next 3 to 5 years. Scot & Chuck: [36:35] I think it's hard I think it's hard to really 10 it because it changes so often like I never knew scooters were going to be so big and in the last month I've learned that. [36:46] Bird the chest when just raise the rent, had a billion dollar valuation its 13th month and and things like that that are just out on the sidewalks of Santa Monica had no idea that these businesses got so big, so they're going to be a lot of new things that come up that none of us have ever thought of and I would say. [37:13] I backed the question up a different way if you were 22 and getting out of college today I would recommend if you were my kid you make sure you get into something. Along this digital Revolution this is a time where. Brick-and-mortar has been laid but we have no idea how tall this building is going to be or how wide it's going to be or where it's going and you want to be there to be in this industry to live it breathe it. And have a great journey cuz it is one fun way to go and it wasn't always this way in Prior Generations the grew up in. Went to factories in and lived in the world wasn't changing as quickly as it is today. Jason: [38:00] Chuck that is terrific advice and that's going to be a great place to leave it for this week because once again we've used up all our a lot of time but if folks have questions for for chukar want to learn more about Swagbucks, will will make sure we include that the company information in the show notes and will continue dialogue about the show on her Facebook page so you're welcome to go there if you have questions and as always if you enjoyed this episode we sure would appreciate that, five star review on iTunes. Scot & Chuck: [38:29] Chuck thanks for joining us if people are are you a Twitter or LinkedIn her or is there a certain way if you have business. You put them out there I think it's probably the best way to find me. Do you want to do that Chuck Davis protege. P r o d e g really really appreciate you taking time out of your busy day to share your thoughts with us and hope you have a great day. [38:57] Thank you guys thank Scott and Jason. Jason: [38:59] Until next time happy commercing.

Episode 134 is a recap of Mary Meekers "Internet Trends 2018" report, and the weeks news. Industry News Walmart Shareholder Meeting Walmart Launches JetBlack Ulta, Sears, Macys, Target report quarterly earnings Apple WWDC Mary Meeker, State of the Internet 2018 Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 134 of the Jason & Scot show was recorded on Monday, June 4th 2018. http://jasonandscot.com Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Transcript Jason:  [0:25] Welcome to the Jason and Scott show this is episode 134 being recorded on Monday June 4th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scot Wingo. Scot:  [0:39] Hey Jason um welcome back Jason Scott show listeners Jason's been kind of a busy kickoff to Summer here and we talk tonight this week we would cover some e-commerce news. [0:56] Last time we talked about news there was the hot take on Adobe in Magento before we dig into that though and even more important question give me your spoiler-free review of Star Wars a solo story. Jason:  [1:11] Yeah well you know I took my wife to to the movie for our 5th wedding anniversary cuz I'm a very romantic guy. And we really liked it I I feel like I owe the new Star Wars movies I've really enjoyed this or the new stories so and Rotel more than a rogue one more than. [1:34] I I may be in the main trilogy. Scot:  [1:37] Awesome what is 5th year anniversary I always say it's paper to my wife to so I can avoid it. Jason:  [1:43] But yeah I I pretend everything is paper or dessert or cubic zirconia which apparently is not one of the anniversaries either. Scot:  [1:50] 10 tens another good one. They're on their give her some aluminum foil. Jason:  [1:55] When I pretend I'm taking her to Disney World for the the Star Wars Hotel. Scot:  [2:00] Nice. Jason:  [2:01] I'm just kidding we have to go probably sooner than 10. Scot:  [2:03] 10 m e t i n. Jason:  [2:05] Tell Tim I got it yes I like sorry I thought we were already planning my tent and a. Scot:  [2:10] Paper paper in Tempe. Jason:  [2:11] The odds of her being able to put up with me for 5 more years aren't you no not that impressive. Scot:  [2:16] I don't know the how about and then. Jason:  [2:20] Her or you for that matter. Scot:  [2:22] Yeah it's been a long 3 years her the trip reports and you covered a really cool conference around grocery tote us about. [2:36] What all is going on with the exciting grocery folks. Jason:  [2:38] So Royal Bank of Canada has as this event every year focused on all that investors that are falling that that category so I got to go do a keynote on how did you disrupting. Digital is disrupting grocery so that was a fun talk and they they pretended to laugh at my jokes which I always appreciate. And there are a ton of CEOs there so I got to sit in a briefing with the CEO of Kellogg and he had some pretty. [3:12] Pithy of comments that I think at some Traction in my Twitter feed he was kind of joking about how how these um. [3:22] Startups are awesome and they all go to a hundred million dollars and then pray to God to be acquired by someone like dog craft. [3:32] And the MPD did we cover their conference last year did pretty cool recap on the evolution of the grocery so there's a. [3:42] You know obviously groceries a big piece of consumer spending and getting jujuy disrupted by digital right now so lot of people are trying to figure out what the what the sort of ramifications of all that will be in place marpat. Scot:  [3:56] Pulling in your talk to you the whole curbside versus delivery and and all that. Jason:  [4:02] So you know what I actually was a little higher level I was talking about some of the. The main ways in which consumers purchase decision patterns are changing over all and it changed and other categories and how those apply to grocery so. I didn't get the Deep dive into the tactics of grocery pickup versus home delivery for these guys that'll maybe next year stock but the. Did talk a lot about her. People need more information to make purchase decisions and social proof in absolute value and transparency are becoming a much bigger deal and you know what retailers are doing that well and what retailer still has some work to do there. [4:45] And you know this sort of big big trend of Brands and retailers colliding and all the all the the. Retail are starting to look more like brands of the you know snap up all these products and acquire meal kits and watch all these organic, and I mean organic is in in home in in house new products that they did they're launching and that you know how all the brands are trying to figure out how to go direct to consumer. Scot:  [5:10] Brickell so let's jump into the news first of all just travel outline tonight without would cover, sometimes we put kind of what we call other news is kind of tidbits at the end and it always gets bumped so we thought we'd kind of reverse that so you get the delicious Tibbets first and then we're going to talk about Apple's conference and then what are the big events that Jason I both being beta Geeks get excited about is Mary Meeker had her 2018 deck out so we're going to wrap up the show and go over the Meeker deck, so that, being said what would jump into Walmart they had a shareholder meeting that was just one of those things that they they hold and it's not quite as big as Warren Buffett, pretty somewhere where thousands and thousands people go in and hear Walmart's annual report did you see any interesting news out of that. Jason:  [6:01] Yeah the other number to thinks it is that annual event that Walmart ahold usually a week or two after their their earnings. I report and also usually right after a board meeting and I'm heading may not have as many shareholders come to the meeting as one that's for Berkshire Hathaway but the other thing that Walmart does is they bring, thousands of Associates from all of all their various businesses all over the world and so the the sports arena where they hold the event is. [6:34] Way more friendly they usually get some dick music acts and an interesting and see. And you know they often have launched projects or talked about you know there their focuses and initiatives. [6:53] For the year so it's a good if you're Walmart follower it's a good thing to attend it's kind of a pain in the neck because it. Basically puts the small town of Bentonville in in Arkansas at capacity so I give you don't plan well in advance. You're likely staying at a hotel like pretty far away like maybe down in the college or something and. Hard. You don't get in a restaurant and all those sorts of things so I would I was actually pleased to follow this year's shareholder meeting from afar rather than attend in person as well as I have done none number times in the past. Scot:  [7:31] Call seems like the big thing that blew up is this jet black tell us more about that. Jason:  [7:37] So the rumors of this is are coming out a couple weeks before the shareholders meeting but they officially announced this new service. At the shareholders meeting called jet black and one of our glory is Lieutenant Jennifer Fleiss came out to. [7:54] To introduce that folks might recognize Jennifer. She runs the the I keep going store 9 and its taurate. The incubation lab for Walmart but she also is one of the original founders of Rent the Runway so has a lot of. Interesting bespoke apparel expertise. And jet black is a new concierge service that Walmart is piloting at the moment just in Manhattan and just for people that live in particular types of dwelling. So you have to live in a condo or an apartment building with a doorman. So the date they can use the Fulfillment methods that they have in mind and essentially what they're doing is there they're providing a. Personal shopper for everyone that's in this program you pay a monthly fee. I think they're experimenting with a couple different price points on the monthly fee it might be like 50 or $100 a month at the moment. [9:00] And essentially you can call or even send a SMS message and say hey I need a new outfit to wear for this party or I need a birthday present for a 4 year old girl. Or I need a very specific thing, and your your personal shopper will track all your preferences and past purchases and you don't either get the specific thing you asked for or. Or make a smart recommendation based on what what information you give in a mini cases Bill do same-day delivery so they'll, like you you can simply send a text message and have something show up at your door man when you come home from work for your building in New York so it's a very. High-touch data-driven model they're saying that they have some AI chatbots as part of the system but there's also a lot of human interaction and intervention. And it's a it's a huge. [10:01] Push for Walmart to try to learn how to capture these more affluent customers. They're really the only part of the US market you know that Walmart hasn't captured yet so, in Walmart owns a big swath of of the u.s. send you know the one the one demographic the date that they don't do particularly well in is. These affluent Shoppers in in Walmart doesn't have a store in New York City for example and so, watching this this service is interesting and it's semi branded jet which is also interesting right like it's not clear whether the jet in jet black is for the Walmart check brand or they just. Chose to pick a descriptive version of black to name the the product so that's going to be a little interesting and it's, you know it's going to be interesting to see if socialites in New York will will you know subscribe to this this high-touch Services provided by Walmart who they you know, with what historically look down their nose at. Scot:  [11:04] Yeah yeah there's several startups in this area that have raced pretty considerable Capital one's called I think Alfred it's two women that have done it and it's cut. It's got kind of maybe half product half concierge services kind of a thing so you can have, yeah. Only can you say hey I've got it I need a gift for this party I'm going to but please deliver it to this address which may be some services along with the items that they could be interesting to see how that goes. Jason:  [11:35] Yeah for sure and. You know a lot of the folks in my industry are super eager to try it out and so we've all applied you know for the closed Beta And so you know we all had to go and claim that we're housewives in New York. Scot:  [11:51] Funny when they show up in Chicago. Jason:  [11:56] Exactly. Scot:  [11:58] Other interesting retail news so a lot of retailers they have a combat off calendar q1 so they're just announcing their queue on but it's not January February March it's more February March April, that they were hearing about now some of the Ulta in Sears were interesting I found because it's kind of Tale of Two Cities this kind of. Bifurcation that that we hear a lot about. [12:20] Sears was kind of one side of that story and they're cops were down 12% year-over-year same-store sales were down 12%. Going to close another 70 store so they're kind of doing this kind of a shaving knock stores as they going to spiral around conversely, Ulta who we talked about on the show it is Crush their earnings and there's their comps were up pretty concerned and they're opening 34 stores, search this really interesting kind of changing the guard going on in retail, Mall based vs. Melt Mall based categories like Beauty doing well little lemon did well at least your and we continue these Trends we talked about on the show a lot, I continue to go on and a lot of them at the bifurcation another area that's doing really well is a wholesale clubs and dollar stores so that kind of value-oriented side of the equation is doing well also. Jason:  [13:14] Yeah yeah it for sure and then. I think Macy's also had their earnings and also was favorable so they think they there. They're the revenues up 3.6% and cops were at 3.9% and check me on this, but I think this was the second consecutive quarter of favorable comps for them after a very long streak of negative comps. Scot:  [13:42] Yeah yeah on our good friend how is over there and so I think he can take credit for about this cuz it happened on his watch always always good you know to to land somewhere and then have things turn around right when you do it so we'll give how all the current flow. Jason:  [13:56] For sure and they they. Do you have a bunch of initiatives that have gone live that that in some ways feel like they they at least partially have house fingerprints on them you know since. [14:09] Shoptalk they've been really touting this this pilot of mobile scan a self scan check out that they've been rapidly expanding to a bunch of stores I find that super interesting because on one hand I feel like it. [14:24] Saw the very real problem that that Choppers have with Macy's in fact I think they it's the number one report a complaint at Macy's is that you can't find. [14:33] A cart to check you out after you made your purchases. And so this is a sort of self-service thing where you pick your clothes you scanned them with your mobile app if they have security tags on them you you show. The digital receipt at the door and someone takes those tags off and you you get out of the store much faster. Minute parently Macy's Shoppers are really responding well to that service and it makes a lot of sense the one thing that's interesting as we've seen a few other retailers. Pilot it and then sort of step back a little bit so you know Walmart had a pretty significant test of. Mobile scan self checkout and they did it in both Sam's Club and Walmart and then they they rolled it out at Sam's Club and it seems like they turned it off at Walmart so I you know I think there was. [15:18] A different learning there and maybe it's at a different shopping dynamic. [15:22] I bet you know also are like turning up the heat on some of their their e-commerce fulfillment things today they did launch a new drop-ship program so they're expanding their. [15:34] Their catalog by listing more vendor product that they don't even carry themselves and having the vendor ship that stuff Direct. A lot of times for a retailer that's a baby step towards a true market place so if if this program successful for then maybe we'll see. See Macy's launch of marketplace down down the road they also, launch there buying on ship to store and in for lizards that don't track this carefully, that's a slightly different flavor than buy online pickup in-store so buy online pickup in-store means. The goods are already on the Shelf in the store customer orders online and then they go get in there you know someone pulls the one off the shelf and save it for him and they get that one, in buy online ship to store the goods are still coming out of the e-commerce fulfillment center but instead of sending the goods to the consumers home which is expensive they should the goods to the consumers near store in the consumer I can come and pick it up for free, it's a big win for the retailer cuz the delivery cost for my to lower and that customers going to walk in the store and potentially discover other things and so this, the boss or buy online ship to store program is a new thing at Macy's if that also has been one of the major initiatives at Walmart, over the last couple years and Macy says that they're going to rapidly scale all this program so so interesting digital stuff happening at Macy's. Scot:  [16:57] This is why not I thought you'd find interesting so Target had mixed results so on the positive side their foot traffic was up, over 3.7% year-over-year which is really good in the world of offline retail you know where you're going to look in it at 2 and 3% comps then they said e-commerce grew 28%, which is interesting and then we just had it wasn't Walmart in kind of 30% which footnote when all these things come out and always reminds me of this discussion we had on the show where. Everyone's growing 30% than who is not growing 30% why is e-commerce only growing 15-day 18%. What to save that discussion again for another day and get some Gaston to help us understand that. [17:42] Anyway but that was the positive side but then while she was expecting a buck, 39 on you. And it came in at a buck 32 so it's a pretty big mess on the bottom line in the management team essentially said look e-commerce grew faster than we were expecting and it's expensive and crowded are margins so they really blamed, the bottom line Miss on the the nice kind of hit on the e-commerce growing at 28% number so it kind of. Whenever that happens I kind of think of Amazon has a lot of retailers in this really tough. Lose lose situation where you know you lose if you don't grow your eCommerce then if you do Gregory Commerce City but I was going to Crater and Amazon has kind of figured out how to do that way more efficiently than these folks that I've invested all there. Best looking into the store infrastructure but catching up on these things but Amazon's got a nice kind of you have 15-year lead so interesting kind of a reminder of that trap that I think Amazon has retailers in. Jason:  [18:45] Yeah and you know potentially this is just the new normal and Retail is obviously we're going to continue to see if shift in the sales mix to online sales and you know inherently from a retailer those those sales are less profitable so there's more pressure on margins than ever before, and you know, if you're if you're just expecting you know that they're eventually going to get back to that same margin level that they were at pre-digital that that might be unrealistic expectation. Scot:  [19:15] Yeah absolutely pivoting to the other recent event you know usually in the world of keep them this is, pretty exciting but it's kind of mediocre out here today so today Apple kicked off their what do I worldwide developers conference creatively called WWDC and, Prime most interesting thing it and there's there's new versions of all the operating systems coming out it really kind of it there's a theme for this when I think it was less positive fix bunch of stuff so so apples been inviting a lot. And it's crowded just got a lot of dangling threads and things that aren't kind of a hundred percent so looks like. This kind of generation for the next 6 months is going to be kind of you know some consistency so for example I always have trouble going between my phone and my iPad cuz the you is totally different cuz I have a 10 and it's different than the operating system on the iPad. [20:08] They're going to raid a lot more of the stuff on the Mac Etc by the most interesting part of the day I thought was Wall Street reacted very positively to Apple. [20:18] And you know we talked about on the show little bit there's kind of interesting race to see which of the the. The Horseman of the internet are going to be the first $20 company in a big boom it was made today is Apple went up 5 to 6% so where it stands as of today which is recording this is June 4th after the market closed. Apple is got a pretty considerable lead at 942 billion so really kind of 58 billion away which seem 58 million billion away from a trillion. Seems like a lot but when you kind of think about percentage is another kind of 6% move on Apple and you'll be there so that's going to be interesting to watch. Amazon if you've been keeping track Amazon used to be dead last now there in 800 and 8 billion in Amazon is also doing very well but not quite keeping Pace with apple and then Google has done quite well and they're sitting at about 8. Switching with Amazon back and forth depending on how the stocks do then Microsoft at 781 the real laggard who was in the race is really kind of falling off is Facebook at 560 billion. [21:25] So yeah it's pretty interesting I think. [21:28] Think will happen is it's hard to tell who's going at their first right now you would kind of call Apple getting their first but I think we're going to see a scenario where we have like. You know 3 or 4 trillion dollar companies so it's it's not going to be kind of the trillion-dollar company I think I think some of these companies that have built these massive platforms that are just soaking up. Dollars across all these categories are are going to be each of them will be joined our company's so it could be we'll keep people posted on that. [21:55] The three some things interesting obviously they're coming on there a lot of scrutiny and Regulatory concern and things for him going on there. Apple really sue a lot of shade at them in the WWE. DC so some of the features coming out although they don't specifically talk about Facebook there things for you know. [22:16] Making you look even more Anonymous than ever and specifically getting away around some of the ways Facebook tries to fingerprint you as a user that was interesting perhaps the most interesting is there any missing some features that allow you to, manage the amount of time you're using your devices and the time of day and things of that nature and then also a fair amount new features around that same topic around children so you can kind of say hey I'm going to let my kids have 30 minutes on their device, after school so they can call me and be in touch but then that's it I'm not going to let them. I'm going to lock them out of the device between you know that the school hours and then in the evenings as well so. [22:59] It's interesting to see if that any of that will will cause kind of the reduction in online time, your people are kind of addicted to these social media use cases primary Facebook's family up of apps so those were some of the interesting kind of high-level things I saw out of the conference, what did you say it was interesting. Jason:  [23:18] Yeah so I think you hit it right like it. I don't think they were huge Commerce Centric announcements at the show I think they Lowered Expectations for the show coming in by saying hey. Probably not going to launch a lot of major new stuff we're going to you know we have a significant focus on fixing a lot of the stuff we've already made. But they did announce an upgrade to their augmented reality stack so what they call a Arquette they they announce 2.0 which has Richard features. We talked several times about how. They are probably has a lot more application in VR does for for shopping in the in the near-term and. [24:01] Historically it's required a lot of horsepower in a lot of special software. To do decent AR on phones and now you know Apple and Google are both making it much more ubiquitous in much easier to code. SAR Kit 2.0 can be interesting one of the date Apple literally has a new app coming out with a arcade 2.0 called measure which is sort of a using your your camera as a. Surprisingly accurate ruler to be able to measure dimensions of rooms and things like that. And we talked a number X about out you know how these cameras get better at measuring things. That can apply to a whole bunch of Commerce use cases of fitment for clothes and visualisations and fitment for furniture and housewares and all these sorts of things. Become much more more possible as as these capabilities expand there were no Hardware announcements at the show but there's a lot of rumors that the next iPhone. Will have a triple camera on it and that third camera being a depth sensor and so. You know there already is a really sophisticated depth sensor on the front of the camera for measuring your face. Did they put a sophisticated temp sensor on the back of that next phone that could really open the doors to some interesting. Apparel fit man and Maid to Order apparel over the phone and all sorts of think so. So what Cantina watch that closely they did announce a potential very scary new feature for Safari so this is going back to the the Privacy stuff that you talked about that they're adding. [25:37] The ability to block third-party cookies in Safari and so you like. It is probably a good thing for users but it breaks an awful lot of the internet like almost all the news sites you can rely heavily on all these third-party cookies from all these contents indicator is an ad. I platforms and things and and if if all of these Publishers have to adapt to a world in which third-party cookies don't work. That's going to be a pretty big paradigm shift. Inform me then like the like this is a double DIN for apple apple gets to say we care about users privacy and we're eliminating you know evil advertisers ability to track US. [26:19] But when the the content sites that are. Time are we making money by selling ads around free content they give you when they lose the ability to monetize their content through these add platforms. It actually forces them onto Apple news and Google news as their only source of monetization for their their content so you know Apple announced the new version of their. Their news platform at the same time they're making it harder for these these news Publishers 2. To monetize their own content so so you know you can look at that as a coincidence or nefarious plan. [26:58] This is already in Safari but I just want to highlight for folks that you know recent updates of to Safari added the ability for Apple to finally support Progressive web apps. They been in the Google browser for a while and this. People not talking about this is enough this is a huge Paradigm change for how to do mobile you can do way better mobile e-commerce sites using the pwa. What are called Progressive web apps then you then you can using traditional mobile websites and certainly. Better play for most retailers than doing mobile apps and now that you can do one code base and have it work on most of the Google and Apple devices. Every retailer really should be redoing their mobile right now and interesting Lee not very many are and you know, my my hypothesis is that part of the problem is that all these retailers have mobile fatigue that they, you know in the last year they just want the responsive site and they felt like that meant they were done at mobile, and now no one wants to talk about redoing their mobile again to support all these new mobile standards like Progressive web apps and accelerated mobile pages and leveraging this these new payment Technologies like the payment request API, these are all best practices that make a huge difference in in Mobile, so it's going to be interesting. To see how that that all plays out did you see any other cool stuff at the at the Apple conference that's worth noting. Scot:  [28:31] The other at the keynote there was kind of two that had a little bit of a Commerce flavor and they were are within the augmented reality World which which we we talked a lot about on the show, side note we do have a deep dive into a rvr that, you should check out if any of this sounds interesting to you so one of things they did is they had a group of folks from Lego there and they had a table with, I just one of these little village kind of sets you know where they do kind of get you to buy one and then you can buy a multiple Village so they had this kind of apartment building set, I didn't they could look through their iPads and they could do some really cool stuff that could go inside of that apartment building set virtually and See Kai animated Lego. People living and doing things in there and then they kind of pull out other sets and look at how they would look next that set then there was a lot of animated. Play around there so the building could catch on fire and then someone could have the little Lego fire people come out in a Lego helicopter and does really interesting cuz you could, many people can have a shared 3D experience and then you know so you could imagine. [29:41] Husband wife in a designer having a shared 3D experience in a house. Planning where Furniture would go or the redesign of a kitchen and those kinds of things and then the other one that had e-commerce implications was Fender the Guitar Company, at least actually showed this is kind of interesting example where they went to the website and designed a guitar. And then they press the button and there's this new way of communicating these models that button than kind of. [30:11] Creator 3D model put it into the AR kit and you can kind of like then see a 3D version of the guitar that was designed then they Presta and that was kind of in just kind of a white space you can kind of spin it and see it, which is a terribly new for the world e-commerce and you could actually see it kind of like. Sitting I don't know why you want to do some guitar kind of sitting on its stand and and you can even kind of like you know Vision it in your environment so. These 3D models are starting to get kind of more transportable between experiences which is interesting and they announce the new new model. Sweet file format for this that seems like a relatively big deal and you know it may have e-commerce implications cuz I do hear from eCommerce folks you know. Everyone's out there creating these 3D models and there's a lot of duplication of effort so at some point. If you're a brand you made that may just be part of the digital package you give to somebody is an AR model that everyone can kind of consumed versus. Oh I have to. [31:12] At maybe house needs one in the Ikea needs another and I don't know the Wayfair app needs another or they're all creating on a duplicating work so soon. Scot a nursing implications out there for a our shopping for for what that's worth is probably many years out still. Jason:  [31:30] For sure but I think it exactly mirrors like the early days of e-commerce if you want any conversate you you hired your own photographer and took pictures of all the products you are selling because, the manufacturer wasn't used to giving you digital, versions of all their photos in overtime like we do all these pretty robust system is where you know manufacturers now syndicated a lot of digital content to e-commerce sites to help them merchandise products and I think you're exactly right you know that, the early a are examples that the retailer all recreated 3D models of the manufacturer's products which you know is expensive for the retailers in, oh by the way may or may not have been an accurate representation of the manufacturer's product until I think over time you'll see, that syndicating that 3D data just you know being another another attribute that a manufacturer has to provide to a retailer when they sell a product. Scot:  [32:25] Yeah and then last will note the the one thing that as I was reading a summary of all the changes coming. get me the most excited is I probably like you I am double authenticated on everything I do so probably 4 or 5 times a day I have to send myself a code and take that code and type it into a variety of, different devices they're coming out with a new feature in across the operating system family called security code autofill so if you generator code to your phone and you need to go type that in over on your desktop if you're in the Apple ecosystem and you have the messages and all wired up it'll say, when you going to tap in that code it'll say should I just use that code that came from this message you got about 5 seconds ago so that made me very excited I think that's going to. Save Me by 40 hours a year and typing coats and remembering all the seven digits over and over and over again. Jason:  [33:19] Yeah for sure I'm definitely looking forward to that to multi-factor authentication is super important and everyone should be using it and it's kind of a pain in the neck at the moment so, so reducing some of that friction is I'm all for it so we wanted to use the last bit of time on Today Show to talk about, part of the recode conference or code Commerce conference is it's called us it is a Big Show at in California every year put on by our friends at recode and Kara Swisher, and they get really Marquis keynote speakers every year and some of them have been very commercentre so I think 2 years ago Jeff Bezos was there and made some significant news, this year there were not a lot of. Connor speakers that are super excited about I think the big Keynotes were like the CEO of uber and CEO Spotify and Airbnb, I know Katrina Lake had a little presentation who's the founder of Stitch fix but to me the big presentation, did they have every year that always has some relevance to digital Commerce is one of the partners at the Kleiner Perkins on Mary Meeker does this annual, presentation called the state of the internet which is a super data-driven deep dive into the the major Global Trends in digital and so this year. [34:51] She did that presentation again and and what was the count was it like three hundred two hundred and something. Scot:  [34:57] 300 yeah right at 300. Jason:  [34:59] Yeah yeah almost 300 slides so for me that that's about how many sides I prepare for a 15 minute presentation. Scot:  [35:06] Yes Jason I have gone to those slides in want to kind of boil it down to 15 minutes that matters to you guys, it may be handy will put a link to the PDF in the show notes so that you kind of like the zip to the slide numbers that that we reference as we go through this is kind of the takeaways we got from the e-commerce section so it's a macro trends. Pretty much what I call, Steady As She Goes the some of the things from the macro Trends section the growth of the internet is slowing people are spending only 5.9 hours a day online that growth is kind of really slow down, a lot of the growth kind of interior there is in messaging and video she referenced which is this platform which is streaming gaming that it's really up into the right. Jason:  [35:55] Natasha Lyonne by Emma. [35:59] Don't I just spoke over you but exactly is owned by Amazon. Scot:  [36:03] Yes yes exactly. [36:04] And then kind of the new thing this year is because of the you know the amount of internet time and and the companies that we talked about just a Min ago there is increased government scrutiny of course which creates this kind of. Interesting Paradox that increasingly the the you know the displacement of the internet need more and more data from you to have these great personalized experiences. But you know, regulatory perspective are you really clear the date of your giving up how it's being used to his thing shared with so you know she kind of. Pretty easily predicted that's going to be an ongoing challenge for everybody Facebook's kind of squirrely kind of caught up in that right now but I don't see how anyone is really immune from it. When they're singing areas I thought was. [36:51] Investing in Tech in this kind of thing is at the highest ever over the 20 years they've been tracking it here in 2018 and that's both. That's that's kind of venture capital if you will set private company investing at the same time when you look at public companies they're spending more on R&D than ever has been spent a slide 40 is interesting and it does show. Amazon at the top there some people that really track this will know to that Amazon does put some of the acquisition of regional content in their R&D budget so. I may not be quite as big and scary but I think it's only like two billion of that is original content so it still keeps them at number one in the R&D spending public company R&D spending is up 18% year-over-year so when you had those two things together. If you thought the piece of Animation was going to slow down you're probably incorrect cuz if dollars are the the leading harbinger of innovation which I do think is true both public companies and private companies have, getting larger and larger investment than ever. Before I'm even at our scale percentage-wise it's a very large number so new slow down on Innovation even though the internet growth is slowing. [38:04] And then from there. Jason the e-commerce section really kind of kicks off on page 44 I thought you know last year there's a lot around ads in the ad ecosystem and I thought this year we got it. Well it's not worth shattering who got more kind of of the Meeker deck was on e-commerce so is that would cover each of our car highlights here Jason what were some of the takeaways for you in that section. Jason:  [38:28] Yeah yeah and I'd start out by saying like I really look forward to this presentation every year in in in every year in the past, there been in major insightful takeaways that were like major nutrients I hadn't really thought of that were super valuable to think of and so, looking for that again this year and I have to say this year felt a lot more interested to me was a lot more Hades trans we talked about in the past or accelerating these Trends we've been talking about for a long time or decelerating, I didn't have as many like aha moments as I have in the past and maybe that's just sort of the price you pay for this being the fifth or sixth time she's done this. But that being said I agree I think she did a deeper dive in Commerce she kind of talked about a lot of Commerce trends that would be old hats at to folks that listen to the show in terms of. You know 14% of 14% eCommerce growth in US 16% world. The cheese is some really low numbers but like I think she has about 8% of all. Retail sales being e-commerce now internet that's again the broadest definition of retail that includes I'd gas and things like that. But then the big things are interesting to me, she really focused on this this trend of personalization and everyone talks about personalization but she really excited as evidence for the fact that people are willing to trade. [40:01] Privacy for personalization even in this it is crazy privacy climate. She's highlighting services like Waze and Uber and snap. And even next door which is kind of interesting service where people are willing to give a lot of Geo located data in exchange for this personalized experience and so she showed the rapid growth of all these sort of. [40:27] Services that she defined is highly personalized services. I thought that was interesting in the e-commerce delivery section she she talked a lot about the limited growth of a UPS FedEx in the US Post Office and Anna as we talked about a bunch of times on this show. There's a huge gap in the the growth and knows those carriers ability to deliver packages and the 30% e-commerce growth that everyone is claiming they're having. So that you know that certainly is going to be a recurring theme we're going to hear about. And in the past she talked. She talks a lot about ads digital ads in general this time she talk kind of specifically about Commerce ads, and she's talking about how these ads that have a conference call to action or emerging is one of the most effective formats of digital ads so she talks about. Google Play is having three times the engagement is there another advertising platforms. She talked about you know the Facebook's continued traction and then cheat you know how I did that Amazon is emerged as a. A true huge advertising platform in that you interview they have a 4 billion dollar run rate they're growing 42% year-over-year. The you know I thought that was pretty interesting she talked a lot about the adoption of subscriptions Commerce and how the subscription services are growing so she with you. [41:59] Amazon Prime as a as a key Tampa subscription obviously but also. Netflix and Spotify and Dropbox and Stitch fix and Peloton and how these things are all going up into the right. 88 Ranch she talked about a number of times that she hit again this year is her version of the mobile gap which is sort of. And advertising look at the mobile Gap that essentially advertisers disproportionately spend on every other. Platform compared to his percentage of audience consumption. [42:32] Advertisers are still dramatically under spending on mobile advertising compared to audience consumption of mobile and so she thinks there's about a 7 billion dollar opportunity there and adds shifting to mobile being the. The platform. And then when she got out of the Commerce section the other the last thing also to highlight that there was really interesting to me we've talked about the bifurcation. Spending power a lot on the show and certainly Casey well and buys been on a couple times who's done a lot of thought leadership in that. [43:05] That's based she had some pretty detailed data that. You know despite the fact that there's a lot of economic indicators that are really growing household debt is it highest level ever, and she shows this really scary chart it says so I had 103 wear in 1968 the. Ratio of debt to income and the amount of personal savings that people had were both similar things right and. Debt to income ratio is a bad thing in personal savings is a good thing if you're talking about a family's Financial Health. And from 1968 till today those two Transit been going in opposite directions were saving less every year than we did the year before and our debt-to-income ratio is getting higher every year than the year before and so we're opening up this huge gap in. You know families being over leveraged and not having a lot of savings. And she highlights that part of the reason for that is healthcare insurance costs and housing costs are going way up and people are having to spend more of their budget on those things. Which subsequently means people are spending Less on food entertainment and apparel. And we talked a lot about people spending Less on apparel but it's kind of interesting she's highlighting data that you know people are spending Less on entertainment experiences and food. And you know compared to some of the hard Goods we said hey. Experiences in in food are doing better but she's highlighting that like in reality I like all of those the spending categories are challenged as people are having to spend more of their. [44:45] Their wallet to pay back their college loans in their health care and I guess the last part of the bifurcation was interesting to me as a she talked about, this decision Walmart made back in 1990 to get in the grocery and how they pretty quickly became the largest Grocer in the US, and that one of the big impacts of that is that grocery prices have gone down every year from 1990 to today and so today, food costs are are you permanently and substantially down from 1990 and that's that's a row did every Grocers ability to make margins and and you know we talked earlier on the show and we think digital, has the potential to do that to a lot a lot of other categories as well. Scot:  [45:31] Free cool so quickly some of the things I wanted to just point out to listeners from the deck that just kind of be aware of onside 50 she has kind of a look at some of the different, Tools around e-commerce and where the the current state of the art isn't it kind of has a framework for looking at the online store platform the payment platform fraud prevention prevention. [45:51] Purchase financing customer support Discovery process and then the delivery process so, weird order there I usually put kind of like Discovery at the top and Delivery at the bottom what not but but. The guy interesting to highlight those things have a fun chart on 63 where she shows kind of the evolution of finding products, where are you kind of have the old school to search box and then here we are today with voice search kind of Married With fulfillment, using Amazon is example and then using Google as an example, showing again that same kind of growth from simple organic search kind of. Google connect me to. Is that like 1997 car time frame all the way to the current shopping options actions where everything is really kind of integrated and you can buy right from the platform. [46:42] You know what. [46:45] The Firm she works where has really big China group and they always chime in on here and I always find there's this really good insights China's ahead of us as far as penetration and growth of e-commerce is well as mobile so. They're stuffing some insights there I think sometimes we ever read those here in the US so I think a lot of the rush to kind of copy the you know the messaging and the Commerce within messaging is. Is probably not going to take off cuz it's kind of pretty unique to that that environment that ecosystem in China. That being said there are some really interesting things there's a couple I wanted to point out, I'm number one is Alibaba is on a really big they talked about this there see you I was at the conference as well they've invested a lot in these stores called him a human they call it dope lusso which is online plus offline, which is kind of their version the kind of version of omni-channel if you will but it's much more of like. Shops in those kinds of things so it's kind of like a Next Generation retail so you can see their. What airlines I found interesting is some of the top apps in the US are these entertainment apps like HQ trivia most commonly abbreviated HQ, in China this really cool apps that have kind of married entertainment shopping and of course Ali Baba does this round singles day but there's more of that are kind of doing it, when I found really interesting to talk about your ended a lot of research on it this was a concept it's kind of invite. [48:12] The 2000 time frame a lot of companies try this e-commerce it didn't work in those called group buying where they would say hey I've got this widget and if you can get a hundred people to buy it I'll lower the price. The problem that is in those time frames we didn't have the platforms for telling a hundred of our friends very quickly but now has social media we do. [48:31] Chili's discount Next Generation platforms are tied into messaging and social media and whatnot and the Really geared towards and sending the consumer to share to get a discount. [48:40] The one on site 86 that she talked about is called pin duo duo and now I'd encourage listeners don't have time to go into it but I think that's really interesting concept and, could be used for a way to do liquidation and Sky really. To be like the next flash-sale kind of a model so I thought that was interesting, and yep. That kind of were some of the highlights I wanted to point out for folks and you know if that stuff is interesting to you let us know on her Facebook page and we can kind of dig into some of the area's deeper on one of the feature shows. Jason:  [49:14] Yeah yeah we do have to do a deep diver that makes sense on any of this specific areas it's, super dense deck and said there's you know a lot of potential things to take away, but that's probably a great place to leave it for this week because it's happen again we've used all of our a lot of time again there there is further conversation we love to hear from you on Facebook again if this was valuable episode for you we sure appreciate it if you jump over to iTunes and give us that 5-star review to that that feedback is what keeps us going. Scot:  [49:47] Thanks everyone for joining us and have a great week. Jason:  [49:50] Until next time happy commercing.

EP133 - Hot Take: Adobe acquires Magento  Adobe announced that they are acquiring Magento commerce for $1.68b.  It was disclosed as part of the deal that last year magento’s revenues were $150m, so that’s a 11X multiple which is pretty awesome.  Adobe’s largest deal in decade. Adobe announcement Magento Blog Mark Lavelle, CEO, and Peter Sheldon VP Strategy at Magento Commerce were on Episode 50 of the Jason & Scot Show. Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 133 of the Jason & Scot show was recorded on Monday, May 21st 2018. http://jasonandscot.com Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Transcript Jason: [0:25] Welcome to the Jason and Scott show this is episode 133 being recorded on Monday May 21st 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your hoes Scott Wingo. Scot: [0:39] Hey Jason are welcome back Jason Scott show listeners this is one of those unusual times. You're actually recording back-to-back shows and Publishing them simultaneously that's because we had previously planned put out our. NPD idea show recap which you should be able to find right there in your favorite podcast listener, device select / technology, and then the universe was curveball there was a big announcement after the market today and that announcement was that a Doe B is acquiring which into Commerce for 1.6. Billion dollars that's billion with a B it was. Disclosed as part of the deal that last year magenta revenues were a hundred fifty million that's already some analysts notes that are saying they would expect that to be about 180 million this year that's 11% multiple witches. Pretty awesome for Magento and also adobe's largest deal in over a decade. So what we're going to do here is a pretty short show because it is very timely and, just got to get share some background on these two companies and their aspirations and some of the things that have happened to them before and then. Jason is our resident. [1:58] E-commerce platform Guru I'm going to send him some lightning around rapid fire questions to kind of get some analysis what that means for both Adobe Magento and then some other. [2:11] Books out there so we can kick it off with a brief history of Magento. [2:16] And I'll cover that and then Jason oil run you run us through adobe's e-commerce history. So would you do was born in 2007 it's an open source project which means you have this collaboration of people, they got together and there was a commercial company and Roy Rubin and you've cut his eyes at you. Jason: [2:38] Aren't you don't know a Metroid but I never met you oh so I'm going to assume that's you got a ride. Scot: [2:46] Listening you can write in and I would have better phonetic. We have six new they released this isn't what they were planning on doing was taking a. You know I previously open sourcing in making improvements but they did so much changes they came up with the whole new offering and so. That started as a community project and then they monetize it to an Enterprise offering that initially just had some support and then later on had, kind of different feature set than the community offering Bob Schwartz join in 2009 he is a guy that I think pretty much everyone in the world e-commerce is met several times he still out and about, a great guy has enterprise software background really ramped them up and. Jason: [3:27] Side note is a Jason and Scott show Wisner as well so shut out to Bob and Bob used to run e-commerce at Nordstrom. Scot: [3:34] Hey Bob Hope you had still had some more options in here somewhere I'm not sure if that's possible but hopefully did he so then they sold Magento to eBay for $180 which was a great eggs. Because we didn't raise a ton of capital of my recollection is maybe 20 to 30 million. [3:53] Pair to today's companies you know, 6 x 2 money raised so that was good eggs. Jason: [3:58] And by the way I think a bunch of that raise was from eBay. Scot: [4:03] Yeah yeah eBay wasn't investor through the PayPal site but they. A combined company at that point and it's part of that deal they got PayPal integrative Magento that was kind of what they were after there, oxa 2011 eBay acquired the whole entity and owned it until 2015 eBay had bought both GSI and Magento and then, put them out in 2015 along with the PayPal split so eBay sold the Magento asset to a private Equity Firm called permira. And that was for about 200 million so kind of sideways kind of a deal I don't know the specifics that I've heard mentioned took kind of went sideways while I was in the in the eBay ownership Cyril the key people left. [4:48] Then once it was free from eBay in 2017 the private Equity Firm raise an additional 250 million from a large Chinese investor called Hillhouse capital. And. We actually had the CEO of Mark Lavelle here on episode 50 of the Jason Scott show so that was exciting to have him on a side note we do have a 10% finders fee so when there's an exit, I at we and you put on the show we would like a 10% finders fee it's just a small thing of it is like that it's just a very small thank you to the podcast doomed. Look at you that exit it's hard to nail down exactly how big Magento is because unlike a sass platform you no one there. Publishing the source code out there they don't have many people are licensing dinner price version they don't really know how many people are using the Community Edition. There are companies that spider the web and they'll kind of show tell you there's this many websites that they don't know how big they are from a sales perspective so it is hard to know how many active users there are over gento. I've seen kind of numbers in the 300,000 range for both Community Enterprise I think Enterprises in the low thousands so like 1 to 3000. And that is a brief history of magenta. Jason: [6:09] Yep and I just one other side note on how hard it is to know what size they are like also because it's it can be at one time. License or or download a free version like you don't know where there's someone that that got your software is still using your software a year later and so there's actually a lot of sort of. Orphan sites out there that might still be turned on but aren't actively selling stuff that are running running Magento so it makes it even harder to know how many how many active sites you know with meaningful volume Iran on the planet. Scot: [6:41] Yeah a lot of times you'll see this announcement you know like he was Pottery Barn Pottery Barn. That's a huge win the you dig around you look around and they find it's like. The kids furniture couch category in Australia. So it's really tricky. These things can pretty seamlessly be integrated with each other and and you'll find a lot of times, I see Magento used by larger players as a cross-border trade kind of thing of increasingly that's going over to different platforms like Shopify because just the ease of use of spending those up is a lot lower than the on the SAS guys can spend up a new store pretty quickly compared to the open-source guns. Jason: [7:25] Yep for sure Magento for some smaller Brands it's their primary platform but for many bigger Brands it's a. A utility platform that use for particular use cases in and you know smaller markets would definitely be one of those, I was in a side note it's mainly an on-premise solution but there have been a couple efforts over the history of Magento to sell it is SAS so I think even during the eBay ear or maybe right after that you bet your other was this product Magento go, that was sort of intended to be a low in SAS solution that might have competed more directly it was low but now Shopify. But yeah it's you know it's it's a mix of of implementation patterns for for Magento and as we talked about with Mark. [8:15] The bulk of users are on this first generation platform that the Troy and you are put together magenta one when Mark was on the show they had just released a major, re architecture Magento this called Magento to but you know obviously. He a significant number of those the small clients did not immediately move over to to Magento 2 and so you know there's. When you're talking about the Magento installed base right you know one of the questions that you're you want to know is like what percentage of the users are even on the the current. [8:49] The newest iteration of the platform review off. Scot: [8:54] Yeah so then why would a Dobby care about this day how's the Titan with Photoshop. Jason: [9:00] Adobe has a very popular product that we are all from there with Call of the Adobe Creative Suite which is like a Photoshop and Premiere and the the audio editing software we use for this podcast called in addition, but they have another Suite of products that they call the Adobe experience cloud. And this is a sweet of sort of Enterprise products that are used to host a lot of commercial websites so the. To my way of thinking the disorder, Cornerstone of the experience cloud is Adobe AEM which is there big CMS I think it's the most popular most successful CMS in the world it hosts, tons of Big Brand websites like Mercedes-Benz and all these different. Brands that you don't have non transactional websites would use Adobe AEM it's hosted SAS solution for for those kinds of. [10:01] Use cases you actually can also buying on on Prime version of am still but then there's a bunch of other app. Pieces of the experience Cloud that are pure SASS and so the one that comes up the most often in the Commerce world is. A product they bought a number of years ago called omniture which is a web analytics platform that competes with like Google Analytics. That's been rebranded Adobe analytics over the years and it's a very popular e-commerce analytics sweet that used by a lot of commercial websites we've had Tamara on number of times, change some of the data from. From that platform and they have a bunch of other e-commerce tools that they bought ATM was originally from a company called a software. They bought an image technology called seeing seven that that a lot of website you use to resize images on the Fly four different sides. They now have a other marketing tools I got DMP campaign manager. [11:09] Sort of a next-generation ESP personalization engine they have a a b testing platform that used to be called the Adobe test and Target. Insa Dave Dave sort of in the same way that they put together all of their their creative software for end-users together. [11:27] They put this whole sweet of Enterprise packages together that are used by big companies to host websites and the one big glaring hole in that sweet is an increasing number of those, does companies that are relying on the Adobe experience stack to create their web experience. Want to sell stuff online and Adobe did not have an e-commerce platform so you know what Adobe historically has had is a. Integration framework to let you use the Adobe experience sweet alongside someone else's e-commerce platform like. [12:02] IBM Oracle sap or Magento elasta path and I think digital River or the big ones. So for a long time we suspected that adobe did want to own a platform. You know obviously I mention IBM has has their their big platform and they're trying to grow out a full marketing Suite to compete with the Adobe experience platform. Oracle you know bought a number of companies and is put together a marketing Suite that competes with Adobe in or colognes. Several e-commerce platforms but I think the the one we think of most for e-commerce is used to be called atg. [12:43] And then back in 2013 sap bot hybris. A lot of people were using hybris and Adobe together at that time and they were you know they were rumors that adobe was one of the. The bitters on hybris and lost out to sap in 2013 I'm not sure that deal size was disclosed but like all the estimates were over a billion dollars back then. Then we know in June of 2016 like the most successful. SAS base in a B2B Cloud out there salesforce.com bought demandware and I think that was 2.8 billion dollars. And I think it was fully disclosed that adobe was one of the bidders. Fordham and where and so we seen Adobe out there trying to acquire a Commerce platform and seems like today's the day they got it done. Scot: [13:37] Cool so that gives us the background let's do kind of a little lightning around here what's this mean for Adobe so they've got this content peas that got this experience Cloud why, yeah you know why does Adobe need an e-commerce platform. Jason: [13:54] Hot tub, again like most of the brands that are hosting websites on AEM and that are tracking analytics on Adobe Analytics. [14:05] Either already are selling Goods or want to sell goods and so historically adobe's had to partner with someone that provided an e-commerce platform and the functionality of that e-commerce platform competed with the functionality of the Adobe experience Cloud so. Adobe would want you to save the data and they experience the customer data in the experience cloud and I would want you to say the customer data. And in Webster Commerce and promotion engines and all these different things and so. [14:34] Now Adobe has the potential to have a seamless solution that allows all these brands that are hosting websites on AEM to sell Goods, and you know they can have a very homogeneous solution that shares data across all these these different pieces of the solution. Scot: [14:54] Got it, and then so most of the Magento customers are kind of SM he's so small medium size Enterprises it sounds like the Adobe customer service trying to make transactional you mention Mercedes-Benz that's obviously you know very large company. Probably I don't know how big this Adobe content management thing is but it's probably pretty expensive so it feels like adobe's going to want to take Magento upmarket does that is going to create a problem for existing users. Jason: [15:22] Potentially you registered it on paper this is not a perfect match up right it's a well-known popular e-commerce platform and a well-known popular experience platform so that you know that superficial level it makes sense, but the, right below that you're exactly right like the the bulk of the Magento customers are long tail smbs or you know mid-market at best and that the core Adobe customer is an Enterprise client you know there are you likely spent several million dollars on their implementation of the rest of the the, the Adobe experience Cloud Adobe is a pierce a solution, you know it the moment you know most of the magenta stuff is not sass add Adobe stack is mostly based on Java the Magento stack is based on on lamp or PHP so, like they're they're definitely going to be some, some challenges I got you know it's super early I haven't seen a Doe B come out with the message yet but hopefully in the in the next you know several days they should really put out a message to put the Magento customer base at ease, because if I was in Magento customer I might be nervous that adobe is going to move them up Market going to want to move it to a SAS illusion, and a lot of in a small businesses pick magenta because they could own it they could, you know customize it and have access to the code themselves and they could host it themselves and so you know I think, on the one hand I'm sure those customers are excited that there's some deeper pockets and you know potential for bigger Investments to kind of accelerate the Magento road map. [17:01] But you could also imagine that the Adobe is going to shift the Magento roadmap in a way that isn't particularly advantageous to a lot of those SM Beats. Scot: [17:11] Cool so another Domino has fallen or I like the musical chair metaphor so so now we've got to know the Discover the marriage here between Magento in Adobe one of the companies that's kind of always mentioned that doesn't have any Commerce platform now on the large software Cloud side, is Microsoft you can make a stretch and say. Google does Charlie have one you can even straight to say Amazon doesn't have one but but Amazon was in that business and kind of got out of it I think they pretty squirrely believe though. [17:44] The marketplace is coming to the Future there I guess eBay doesn't have one but they don't wanted and didn't really suggest it very well so it's a. Now that's that's one side of the equation then you have Shopify and Bigcommerce shopify's a public company with about a 20 billion market cap. That's a really big bite for someone to take there and then Bigcommerce is private but they've raised three or four hundred million so that's going to be probably a bigger lift than. Magento what what do you think is the next Domino toppling in this platform world. Jason: [18:18] Yep I don't know that there's going to be an immediate counter-reaction here so the. The other you know the Enterprise company that you mentioned that has a lot of the other elements of a quote-unquote marketing cloud like you can really think of. Sap IBM Oracle salesforce.com and now Adobe, really competing for the same core Enterprise customer right and in today I'll even need complete offering skin to compete with each other the the other company that competes with the awful lot of those Stacks is Microsoft, and so you know you on the one hand you'd say hey they would be a really interesting acquire now Microsoft at the moment doesn't have a CMS or a e-commerce sweet but they do have a very robust Erp system, Microsoft dynamics that includes a CRM that competes with. Salesforce.com they of course have the the web hosting Services through azure, so you on the one hand you could imagine Microsoft wanting to more directly compete with IBM Oracle sap and Salesforce in Adobe but on the other hand, Adobe actually I think is moving most of their SAS hosting services to azure, and they're actually several a cms's I know a sitecore and episerver that RT run on the Microsoft stack so there is a. A counter argument that that Microsoft is doing well by supporting. [19:52] Multiple players and that you know if they were to acquire a single CMS in a single Commerce platform. Did they would potentially alienate some other partner so you know I don't know whether the calculus is there for Microsoft. Show choir and I would say Microsoft in the distant past did on a Commerce platform and didn't do very well with it it's actually. It changed hands a number of times and is I think now part of the sitecore solution. So you know maybe they they eat are a little tainted from their their previous unsuccessful Commerce ownership that they don't make that play again. There are a bunch of smaller Converse platforms that don't have the kind of traction that Magento has from a customer base that are much more. [20:40] Are arguably more modern architecture there's folks like Commerce tools and Symphony Commerce mahzu there's a host of these other you know. Companies that probably hoped to be acquired but never you know don't have the customer base yet that the Magento does. I'm so will they continue to go out alone is it going to be harder for them in this world where you know that their competitors are owned by these big Deep Pockets. That's going to be interesting play and a dark horse to buy a Converse platform to me would be some of these social networks so could you imagine Facebook, buying a Commerce platform either to make available to their their customers or enable better at Commerce, functionality and their echo system could you imagine Pinterest. Or you know Instagram or SnapChat you know having more robust Commerce features to integrate into their platform would be another. [21:37] Potential play like that there's some problems with that but you know there will be guys that you might you might see sniffing the tires on some of these these e-commerce platforms. Scot: [21:47] Sniffing the tears I never heard that usually you sniff around or you kick tires at yes. Jason: [21:51] The tires or sniff around yes I don't know if I mentioned this or not but this is the second show we recorded in a way. In a row so I'm I'm mixing some metaphors sorry. [22:04] I'm not the brightest bulb in the in the knife drawer away. Scot: [22:06] Any last thoughts on the platform Wars as it were before we close up. Jason: [22:18] No I mean from my perspective I'm excited to wear a big Adobe partner I should say and I'm excited to see them making a bigger investment in Commerce oh that is exciting it again. Yeah I don't think Magento is a plug-and-play Panacea for Adobe and so it's going to be interesting. Adobe has done a really good job of integrating all their other Acquisitions but they they were not in a particular hurry to do it they took a long time, and slowly evolved all these Acquisitions into this this more homogeneous Cloud so you know where they going to do the same slope play with Magento, that would be good for the existing Magento users but it would take a long time for Doby to get value out of this acquisition or you know will they do something on a more accelerated Pace to build Magento into the kind of. Enterprise solution that fits the rest of the Adobe stacked like I'm going to be really, eager to follow that and I would argue that we're still having those same conversations around demandware and Salesforce in that like Salesforce with predominantly of B2B play, demandware you know Excel to be to see you and wasn't very good at B2B. You know they were not on the on the same stack and so you know along while we're watching Adobe in and Magento figure out their negation plan I think we're still closely watching. The the demandware which is now called Salesforce Commerce cloud and Salesforce integration play out and then I think we mention this. [23:53] This is maybe a couple weeks old news but the Salesforce actually bought another Commerce platform called Commerce cloudcraze, that is a pure B2B e-commerce platform that was actually built on top of the. The Salesforce tax so so so sources continuing to evolve there there, strategy in some really interesting ways as well so this. [24:16] We kind of been static in the Commerce platform Wars for a little while and this is you know where this this month we're seeing some pretty exciting disruption so I'm I'm eager to see how it all plays out. Scot: [24:27] Yeah who knows maybe sap and Oracle decide they could always use one more platform. Jason: [24:32] Yes I do like. [24:36] Clearly these platforms are all have a significant amount of volume through it and you know a lot of the Legacy sites are on them I think it's an open question whether these any of these Legacy platforms are the future of the business like there's, there's an argument that we're at the the most recent trend is I'll call it done platforming is actually moving off of these like shrink wrap full-featured e-commerce platforms. And moving to a lighter-weight set of apis and microservices you know you talked to a lot of cio's and that's the. The the kind of stacked that they're more interested in but we don't have a ton of great examples of big retailers like embracing that model just yet so it'll it'll be interesting to see if. Any of these big Legacy platforms kind of transform in that direction or whether they. They continue to win out against that there's newer architectures or whether some of these up-and-coming architectures can can kind of disrupt the market. [25:34] But that's a great place to retrieve the quick-hit cuz I know we wanted to get it a short quick read out for a listeners in as things evolve what will you know. Potentially do a deeper dive on some of these platforms down the road but if you have any questions about the platforms or would like to discuss this and more length. We certainly encourage you to jump on our Facebook page and the post a question and will, will get back to you as always if you found any value in this heartache we would love it if you jump over to iTunes and give us a a 5-star review. Scot: [26:07] Thanks for joining us everyone and remember if you're going to sniff the tires make sure the car is not running. Jason: [26:14] And while you're doing that have a happy commercing.

EP132 - NPD Idea 2018 Recap  NPD held it's semi-annual customer conference, Idea in Austin Texas on May 16th and 17th.  Jason and Scot both presented content at the show.  This weeks episode is a recap of the show. Target CEO Brian Cornell Keynote Google X, Captain of Moonshots, Astro Teller Keynote Author Michael Dart Keynote (Retail's Seismic Shift: How to Shift Faster, Respond Better, and Win Customer Loyalty) Scot Wingo "MarketPlace Madness" (PDF) NPD Retail Trends Don Unser, Group President at The NPD Group Steve Baker, Vice President, Industry Analysis at NPD Group Jason Goldberg "Last Mile In The Customer Experience" (PDF) Oren Shauble, Partner Guinn Partners Jamie Sohosky, Walmart VP Marketing, Customer Experience Jaron Waldman, Co-Founder, Curbside Generation Z Panel Connor Blackley Youth Logic Madison Bregman  Youth Logic Jonah Stillman - Genz Guru Alexandra Levit (moderator) Entertianment by Runaway June and The Doobie Brothers Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 132 of the Jason & Scot show was recorded on Monday, May 21st 2018. http://jasonandscot.com Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Transcript Jason: [0:25] Welcome to the Jason and Scott show this is episode 132 being recorded on Monday May 21st 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your Coho Scot Wingo. Scot: [0:39] Jason and welcome back Jason Scott show listeners will Jason we're both back in our local areas here I think your local are you okay. Jason: [0:50] I am I am your correct. Scot: [0:52] I never know where you are these days we were both in Austin recently and we had a real fun trip down there it's rare were in the same city much less at the same conference and we both spoke on separate topics at the NPD idea conference. [1:08] Did you have fun. Jason: [1:09] I did it was a great conference I enjoyed the conference and of course it's always fun to get to spend some time with you in person I feel like we we talk all the time via VIA the microphone but it's it's fun to actually see you making funny faces when I say stuff. Scot: [1:24] Absolutely yeah it doesn't come over to the the podcast quite as much as in person. Jason: [1:29] No we might have to start doing this as a video Call Me Maybe. Scot: [1:32] Okay so tonight we thought we would there. [1:39] Wanted to share some of the insights from the show this is a pretty interesting show that we attend and let me kick it off by explaining who is NPD the provides data 2 / 20, and how this works is because I like Nielsen Nielsen I think does this for cpgs and NPD does it for non CP Jesus how I can I think about it. Large scale systems across. Over a thousand retailers that opted into this program that data is all swirled together anonymized and then also mixed in with over 12 million consumer. For surveys and output of that is really interesting data that they Brands license and retailers to understand things so for example. Let's say you sell. [2:31] I don't know what's a good idea if a GoPro style cameras or anything like that action cameras you can use in PD data to see how is your model doing versus the competition. How you know how much is the number one doing the number to cross different retailers things like that. Every year they every other year they get some of their top customers together and categories like apparel Automotive Beauty. Construct Tronics jewelry I sent you everything but cpg and they look at the trends that are shaping the industry. [3:06] And I've spoken of this a couple times and it was exciting to have you there this year the theme was Under Fire On Fire. And it's got a clever theme so what are trying to articulate there is. Retail is under Fire everyone's feeling that but then there are certain segments that are doing really well so there's certain segments that are on fire. [3:31] Unfortunately had a conflict and I was not able to get down there for the first part of day one but you were there and we're able to attend some really good session you told me about so let's start the recap there on the morning of day 1. Jason: [3:46] So there they kick things off with a bang, you mention a lot of great brands that end it also tends to be really seen your stakeholders from a lot of the brands and retailers which is kind of cool so it's pretty, impressive intimate Gathering into the first keynote was actually the CEO of Target Brian Cornell so that's a pretty good gift as we would say in the industry and I'm always. [4:13] Like obviously I always want to hear what brand has to say it's always it's always great when these guys coming events are willing to share, [4:21] The CEOs of major retail organizations are super polished and their they certainly don't come here with the intention of giving away any Trade Secrets and they never do so. You know you got a kind of moderate your expectations you're not likely going to get some. Revolutionary new announcement from from Brian at a show like this but you know I think it's interesting to hear his his take on on a lot of the things that targets going through in trying to do. And he spent a lot of his talk. [4:51] Really talking about the sort of changing role of the store and you know he was pretty damn that he's like hey you know these stories today have all these super important roles we. Yeah we have customers that come to the store to pick up orders that they placed online we have a lot of curbside pickup now we're using the stores as an inventory location to do same-day deliveries to customers home. We ship over half our e-commerce orders from the stores to the customer's home you know customers use. tattoo sort of exploring evaluate products and now many customers want to check to make sure the products are in stock before they come to the store you know all these different use cases of how the target guest wants to use the store. That are very different than the use cases the guest had. Even seven years ago when you know most of the newest Target stores were built and so you know he spent a lot of the time talking about the challenges and opportunities of. You know taking a test or if it was designed to solve one particular set of problems and leveraging it to solve. A lot of newer very different problems and so I found that interesting. And then he did Chef to talk a little bit about their their acquisition last year or this year rather for shipped and shipped is. A delivery service so they are so you can think of the Minnesota personal shoppers before the target acquisition they supported a number of retailers. [6:26] You could order products from their website they would go to a retail store pick up those products for you and deliver them to your home. And in so you know I think most of us talk about them is primarily being a same-day delivery option. And you know Brian to mention that I think that they have curbside pickup. And over a thousand stores now and then they're quickly moving to same day delivery in a thousand stores leveraging these the shift employees that they have. They've hired but he is real Focus was. Did the delivery is the least important part of the the shipped experience that these are the magic of a shift in the reason at Target was particularly interested in and then versus some of the other vendors that into space was. That ship that had this intimate personal shopper model where they. They did that try to maintain full-time employees and they would try to send the same employee to the same customer so that all I read them you know I always tried to match up the same shop or with a customer so that that Chopper will get to know the customer overtime. That communication tools built in the platforms or the Shopper has questions are asked to make substitutions. They can communicate in real-time and apparently a high percentage of the the shipt personal shoppers are moms and so Brian kind of talked about it being, a moms to moms service and that the the target gas really value this personal relationship that they were starting to develop with this. This formerly shipped person personal shopper that's now a core part of the new Target experience. Scot: [8:02] Wrinkled so then after that they followed up with another strong keynote this one was from Google. Jason: [8:10] Answer this is a dude I'm pretty sure this is not the name his mother gave him but he goes by Astro Teller, and I was familiar with that sir I haven't seen him speak before though and he was I thought he was awesome so she is responsible for the moonshot program at Google, and you may know more about this than I do but like in general I think of the moonshot program is the portfolio of, initiatives at Google that are all intended to develop new billion-dollar plus Revenue businesses so like the autonomous vehicles would be. The the big Marquee thing in the in the moonshot program. Scot: [8:51] Yeah they would they transition to alphabets I think they call it X and then the self-driving is spun out as, waymo there's a couple other things they've done but inside of their. [9:08] I think this drones the balloon internet's flying cars that you're so a lot of really wacky stuff in there so. Plenty of interesting things going on in that that group. Jason: [9:19] And will come back to Wacky but as you can imagine a guy named Astro is pretty good at talking wacky so, he he he was mainly talking about, Innovation and he started out by defining this thing that he called level 1 versus level 2 Innovation right and so level 1 Innovation that are like those things that could make your business 10% more successful and the level to Innovation are those things that could make you you know 10 x more successful. And so you know he's not the only guy talking about 10% versus 10x but his point was. [9:57] The first time you can't you hear any good 10x idea it's going to sound crazy, and so like by definition to be successful at these kind of 10x Innovations in any organization you have to be comfortable sounding crazy and you and you have to cultivate environment that safe enough that, the people are comfortable enough proposing things that sound crazy because he's like you know his is premises fundamentally. These things that are so disruptive to the business that they could you know Drive 10x growth for the business. [10:32] Like just are so disruptive that they that they don't sound rational or safe. Upon you know first consideration and so kind of funny line. He is a no-show hands in the audience imma give you a choice between two options and you raise your hands and tell me which one you would rather do. Would you rather do an initiative that has the potential to generate a billion dollars in new revenue for your company but only has a 10% chance of success. Or would you rather do something that will generate a million dollars but has a guaranteed success and. Not surprisingly that you know basically everyone in the audience raised her hand and said hey we would rather do the billion dollars with a 10% chance. Mathematicians on their listen to podcast with quickly note that like the. The weighted value of a 10 billion dollar opportunity with the 10% chance is still a hundred million dollar opportunity versus a $1000000 opportunity so. So statistically speaking that that's the. The better risk but then he asked the funny frog question how many of you fundamentally believe that your boss always supports the billion-dollar opportunity versus the million dollars guarantee. And way less hands went up and so he's like Alright so. [11:55] Here here here's my Innovation solution for you you don't need a new innovation strategy you need a new boss. And so he you know you kind of went into this this whole premise about how organizations are just. Young wired to avoid risk and that you know even though it's irrational you know most most organizations are are built to reward. In a biased towards the $1000000 in guaranteed Revenue versus the the 10% chance at a billion dollars shot and how companies that want to be successful you don't have to think differently. He even kind of went into even some of the things that you you should do to be a successful level to Innovation company. And you know one of the big points he had there was that you should always tackle the hardest part first. Any he talked about how that's kind of counterintuitive that a lot of people that you don't want to get a quick success under their belt so you know the tackle the part that seems. Easiest to do and you know you talked about how when you explain to someone rationally why they should do the hard part first. They say they kind of get it but it doesn't really change behavior and so he has come up with this kind of silly metaphor. To make it more apparent he's like if your boss assigned you to get a monkey teach it to recite Shakespeare standing on a pillar. [13:22] Should you start by teaching the monkey how to recite Shakespeare or should you start by building the pillar. [13:29] And his his point being like sure you could start by building the pillar and you get a early way in and you can say you are 50% through the problem because you solve one of the two problems. [13:39] You're never going to teach the monkey how to recite Shakespeare so building the pillar was a complete and utter waste of time whereas if you would have started with the problem of. Training the monkey to recite Shakespeare you would have quickly learned you cannot impact training monkey to recite Shakespeare. And therefore you know you would have moved on and then a company that rewards level to innovation. That that quick learning and failure you know what would have been rewarded versus versus penalized so that was kind of. [14:09] The premise of his talk he was a super engaging heads funny antidotes. My favorite part of his presentation was definitely the off-script moment he he walked through a bunch of. Future technologies that he feels like are going to create 10x opportunities for fur companies so he was talking about bioengineering he's talking about it and he wasn't so much selling any of these specific ideas but just talking about how. They trigger these kind of 10x ideas and you know some of the things that you might do with them sound sound crazy at first, and one of the points you if you wanted to make was about you know some changes to cybersecurity and so is a precursor he said he he asked everyone like, Teresa hand if they were you know primarily concerned about cyber-security today and, how much snow in in the room raised their hand and it was it was his reaction was hysterical he it was kind of a No-No moments, and he's like he's like oh my God forget all this stuff about innovation. I have bad news for you the bad guy is already in your network like you've already been breached. I didn't realize this wasn't already coming. And so this whole whole like absolutely correct narrative about how. You know sophisticated intrusion has gotten and how you know these kids that attend that the hacker conference is if I break into much more secure networks than retailer networks for fun and how like all these networks are almost certainly already breached in there already people inside your network. [15:44] And that if you don't have a business model to protect your customers data when you've already been breached you know you're probably in Trouble In fairness to the attendees, you know he went right after Brian Cornell from Target so you know a ton of target people were in the audience and if you work at Target and you you you been the victim of the very public breach that had a material impact on your business, you probably don't in a public room raise your hand and say hey I'm super concerned about cyber-security right so you know maybe maybe people just felt like it was inappropriate, to share that concern publicly and that's why they didn't respond or maybe they had question-answering fatigue by that point. But it was a funny diatribe that Astro went off on and and I certainly true like we all should act like like the bad guys already internet work. Scot: [16:35] Got it yet maybe it's cuz Brands a lot of brands of these conferences are pretty early on their direct consumer turning so maybe they may they're not even really thinking transaction websites maybe while they're not retailers in room should be pretty stuff. Jason: [16:51] Yeah and I will do it on another show that there been a lot more breaches and in retail in the last couple months in particular Avengers there a lot of retailers rely on it been breached and it's doing a black eye at a Best Buy in Sears in a bunch of others. Scot: [17:05] Yeah but what I find interesting is it's the ones I've seen usually are not through the Commerce side because the Commerce sides kind of got more thought around this usually is to the physical point of sale which is the entry. Jason: [17:18] Yet the physical plant cells have been a disaster and then some of these recent ones were where Aunt like ancillary things like the. The chat system that the retailer uses for customer service that you know you can also change an order via chat and so there's a Commerce function in there and your point is. It's not leveraging the same technology as the normal e-commerce site and doesn't you know apparently and in several cases didn't have the same level of security. Scot: [17:45] Cool and then who was up after Google. Jason: [17:49] So then the afternoon keynote and this is all on Wednesday so Wednesday was kind of a full day I think most of the attendees maybe showed up Tuesday night or early Wednesday morning. Tuesday afternoon keynote after lunch it was a gentleman Michael Dart who's at the a t Kearney and. He has written a book called retail seismic shift how to shift faster respond better and when customer loyalty and I want to see it came out. Late last year maybe like November or so so it's probably about 6 months old though. [18:28] And so he did it talk about consumers of the future and had a lot of good points in it I think we're going to try to get him on the show here in the upcoming episode. Scot: [18:38] Yes so maybe we should let's give just a little taste and then we'll. Jason: [18:43] So a couple of the things that jumped out of me and that's that's got subtle way of saying that we're going to slow an interesting thing I just never thought about is one of the trans he talks about his dematerialization which is this sort of shift. From atoms to pixels. And he had an interesting stat that in order to create a dollar of GDP in 1930 required about 4 kg of material. Like you had to make into something to sell to generated our GDP. That that same GDP in 1990 so 60 years later you can make with one kilogram so so the amount of of atoms I got cut down by 1/4. Only 25% of the atoms are required 60 years later you know fast forward today and you only need a hundred mg so one tenth of what you needed in 1990 in so there's that just. You know this this strong shift in the economy away from from Material Goods driving the the economy. [19:47] He you know then kind of went into the the bifurcation topic that we talked about a few times on the show so you know he had to stab that 65% of the. Of the population was in the middle class in the 1970s and today it's only about 40% of the population is in the. The middle class so you're getting you know Uber rich people and poor people and you know his his promises one of the ways that that plays out in. Retail is you have these on one end of the spectrum price base retailers are really focus on offering low price and that cohort a Retailer's he. Believe have grown 35% is there is there five year growth rate. [20:28] For the price face retailer 37% on the other end of the spectrum the luxury premium brands of actually grown even better at like 80%. And all the retailers in between that he would call the balance retailers that aren't like aggressively focused on price and aggressively focused on luxury experiences have only grown at 2% so it's sort of showing the. The growth and Retail is exactly mirror the bifurcation of the population of we've had Casey well and brought back from the Delight talking about that on the show as well. You know you had some interesting statistics on on malls we talked a lot about how the a malls are doing a lot better than the rest of the malls but he actually has some statistics that all malls are down 9% it's just. The a malls are traffic is down 9% over the last couple years from a better starting point so they've gone from like growing to flatware as the BNC malls have gone from Flat to losing 10% of their traffic in the last 2 years. Scot: [21:30] Yeah on the malls he also I'll put it out as a teaser from having the show he had the the. [21:38] Worst Mulligan prediction I've heard so he had the highest number of Mall closures that he's thinking are going to happen so I was a little surprised by that but that's interesting. Jason: [21:50] But it is true that like only about like 20% of the malls would be in this like a category so I think did he say their UE thought about a thousand miles we get taken out of the system is that when I'm remembering 13. Scot: [22:03] I think you said 1300 out of like 1500 I think there's only like 200 remaining. Jason: [22:08] So that's that does still mirror that kind of a versus B and C ratio. Sign out we'll talk about another show is the Planning Commission in Miami-Dade Florida just approved a new mall project which they're very few of those in the world, and this mall would actually be the largest mall in the US who would be bigger than the Mall of America in Minneapolis and so that. Can a bucking the the the mall again in friend is we could have a new bigger motor than we've ever seen before which would be an interesting evolution. And then the last thing I'll touch on from. Michael Jordan's presentation he was talking about this Matrix that he called the the con Matrix. Is developed by this one on barbercon who's the professor at Ward and she she would have booked a couple years ago called the shopping Revolution. And in her world like. You could draw this 2 by 2 Matrix that all retailers fit in on the left side of the Matrix are our retailers that are focused on product benefits and so I'm proud of benefits on one end of the spectrum you have. [23:16] People that focus on The Prestige of the brand and so she would use like. Louis Vuitton or Warby Parker Saks Fifth Avenue or Zara Nike is kind of brand. Branda Advocates there and she would use like Eataly or Sephora as experience face retailers as the other end of that that. That extreme in in the other side of the Matrix would be people that focus on customer experience and their the. The spectrum is from people that primarily focus on a low price so she's got like Costco Walmart TJ Maxx in Burlington and that. That quadrant and then frictionless. As the as the other end of that spectrum and she has Amazon is the primary example of a frictionless and so kind of a different Spectrum this would be way more apparent if I were able to drop for you on the podcast so maybe I'll try to put a picture in the. In the show notes but as as you'll hear a lot of retail pendants talked about like another 10 to be the Spectrum there tend to be areas. Any Spectrum where retailers can really Thrive and do well and then the the retailers that are really struggling and we talked about Molly get in and we talked about retailers that are seeing negative growth. It's almost always the case that there. [24:38] The ones that have fall in the middle of the spectrum's and haven't really made a committed effort to own. You know one of one of the the pillars and so this this was another one of these Matrix is where. Where that you know you kind of look at at her Marquis examples in each each of the quadrants and say yeah that makes perfect sense and then you'd say you know folks that kind of fall in the middle of this this to buy to our bar probably in trouble and. And you know at the moment that that's sort of what's playing at in the marketplace. [25:10] Yeah so then that was all really warm up so those were those were a sort of the three opening acts Target Google, Michael dark, because then we all went to a even bigger room where they had their biggest session of the show which is this whole session about marketplaces and sign up for our listeners Scott, is a second-year Scott's done this talk and it was super annoying for me because every time I would talk to the the women planning the show about my session that say Hey registrations great you're doing really well you're right the second most popular session, but you're way behind Scott. Scot: [25:51] Yep so that was fun I was I was coaching them to make sure that you knew that I was figured a little fun competition there would be. Jason: [26:03] Yes and I I was a little just cuz you did get to pick your topic and I sort of I I accepted a topic they put in the agenda. Scot: [26:11] But you knocked it out of the park will get to that in the second yes or no. Jason: [26:13] Thanks man so what did you talk about in marketplaces is that a thing. Scot: [26:17] It is yep so two years ago and I did my skin. [26:22] Standard Amazon talk which is essentially for long-time listeners if you go way back to episode 24 we did the Amazon Deep dive so that's kind of a lot of the same content, that I gave that talk and this time they wanted to kind of widened aperture and talk about marketplaces so just just a quick summary about what we talked about. And what will do is. I'll send you a pediatrician that we can put kind of a copy to it in the link to it in the show notes if people want to go to the presentation so. The Purge for Marketplace is really interesting because you know you and I've been at the salon time I've been at this Marketplace thing for 20 years. [27:02] And what I found is there's a huge desire for Content that. [27:07] Pretty basic for what a retailer or a seller with the Cabana Marketplace because what's happening is all these brands are starting to think about going Direct. And they're just learning all the basics that that you know. A retailer or a seller has already there I'm kind of version 8 these guys are on Virgin once so. But it is always fun to kind of go back and revisit these things because the world has changed so much just a simple thing and you and I had a fun to scream about the marketplace and how do you do to find it so for example selling a car on over. [27:42] Talk is that a Marketplace or not I would say by strict definition probably not because. Well my definition marketplaces you sell off of your website. There's transparency for the consumer who you're buying from and then the business model is a percentage kind of a business model not a traditional wholesale markup so once you have that wholesale markup in there it's just a drop ship relationship. [28:07] First party retailer not a Marketplace so so in this talk we we probably talked about yo. Taking a step back and talk about consumers what do they want yeah we've talked about that a lot on the show don't think they'll be any surprises there then what is a Marketplace. [28:23] So just answer that question the types of marketplaces so you have pure plays like eBay you have hybrids like Amazon you've got a new social ones you got at base now. Etc, and then we talked about the pros and cons of selling on Marketplace and then some takeaways for the Brand's so it was, when I'm in the middle of training I can never remember the questions I don't know if you recall any that were Salient for listeners but. There was way more questions we had time for and then we had to go to a break and then had a lot of good discussions around marketplaces. Jason: [29:00] Yeah and let the record show I think you like I certainly agree with your definition that like, Wayfair is a drop-ship program more so than a Marketplace but what you call and Marketplace. That I totally understand after you explained it but like I think myself in a lot of other people don't immediately think of his Marketplace are some of the the social selling models in like when Google sells products through pla Zoar, shoppable pins on Pinterest or some of those things and then once you draw the picture I totally get out it is a Marketplace but I think those are the the the the one that outliers that kind of surprise, are the sneaky marketplaces if you well. Scot: [29:40] Yeah and when you're selling on eBay and Amazon. Don Juan differentiator is day or The Merchant of record which do I think about is when the consumer gets their credit card it says Amazon not you know Jason's Mouse shop so. But then to July these new models they're using so his new payment systems like a striper Braintree and they're asking you to, the merchant to now be The Merchant of record so it's kind of an interesting hybrid in that way. But it still has a percent of sales model there still a fair amount transparency does Consumer they're dealing with a third party so I. I continue to put those in the marketplace bucket but you know a lot of people don't. Realize when you're using things like Wanelo or there's this many of these now there's, we are well over 200 Market places that we track it down visor and more everyday and there's all kinds of really interesting models there is super vertical ones like. Reverb for professional music. [30:42] Or there's some for you know that dinner Morpher city-dwellers that are in the apparel category and it's kind of like high-end apparel so you're a pair of sunglasses that. Probably you and I wouldn't buy for $600 but there's someone out there that that is into those kinds of things. Jason: [30:58] Yep and I think one of the marketplaces that you introduced a lot of the audience to for the first time probably was wish and I happened to notice they're running like national tv ads now. Scot: [31:10] Yeah yeah wishes really, yeah they don't disclose a lot but there's all these rumors that they have crossed over a billion dollars at um they're spending a lot of money on National branding so they've done, I need to be a sponsorship so drawn symbol logos their logos are on jerseys they're doing a pretty big ad campaign around their Marketplace. I think of them as a cross-border Marketplace some most product available on wish is being sold direct from China and they. If I'm in a lot of supply chain things and whatnot. [31:44] The result is you get super cheap product which really applies that value or any consumer we talked about and bifurcation. But the trade-off is cuz a lot of its kind of on the literal slow boat from China it does take awhile to get there so it's one of those kind of trade-offs that consumers seem to be willing to make, today, I'm the one thing I worry about witches Amazon is now I got kind of all the same stuff at the same price but then it's an FBA so now you get it 2 days so it can be interesting to see how wish does against that. Head-on competition. Jason: [32:16] Yeah yeah the the television that I noticed, it was like a dad that had bought like SmartWatches for three kids and they each got like 10 bucks and so the kids are you know it's it's he's low-cost like sort of surprise and Delight moments. But I did have a take away from their their big NBA sponsorship is if you if you are building a business and you decide to use it professional sports endorsements, make sure the players know what the heck you do because there's some really funny videos on YouTube of like reporters asking. LA Lakers what which isn't as they're wearing The Witcher logo on their uniform and they they have literally no idea. Scot: [32:54] And then after my session we went to a one that you were excited about which was the jinsy panel. Jason: [33:03] Yeah I probably made Scott go to this one and. You know this is kind of a common model at a lot of shows is you you bring actual Generation Z folks. To talk to the audience and like help help give them the more accurate you know representation of of this. This Persona that you don't lot of Market marketers are targeting and what what's a little different about the MPD version like very often. Literally like the show organizers will go to a high school and get like five regular high schoolers and have you know some moderator ask them questions about how they shop or what brands they like and whether they like going to malls or not. In this case these are almost I'll call them professional Generation Z spokespeople. There's a guy I got to meet a couple of times now Connor Blakely who. I don't I don't know how old he is but you know he's probably like 19 and he started a company called youth logic and they essentially cell, need this kind of advisory service to Brands and so is a brand you you higher. Connor and he sends some genze folks to your office to. Serta evaluate your offerings and and talk about you know how they're seen through the the jimsey wins so Connor was on the panel one one of his employees Madison bringman was on the panel and then. [34:34] Another gen Z expert that it start his own company called Jen's iguru a guy named Jonah Stillman and I think Jonah actually got Mark Cuban to invest in his company. So we have these kind of three genzie's they were interviewed by the moderator who is Alexandria Levitt. I wrote a book about about some some other customer to cohorts in the past. Lacerta interviewing and they're all the typical funny moments like they. You know it some point they talk about olds and you know referencing like parents that that don't get something and that you know they. They talked about super old people and they were talking about people that were like 35 and older which you know probably was every single person in the in the audience. There's a lot of of a interesting dialogue about. Authenticity and purpose so you know like there's this notion that like genze like brands with a purpose like. The Tom shoes you know buy one get one kind of program but how Jen's he's really good at smelling out these inauthentic purposes. And that you know a lot of Brands Make Mistakes by having these inauthentic purposes Connor use one example of a you know company that bought a Super Bowl ad. Do I got a message that they are that they have an environmentally friendly purpose and conures like. [36:06] Hey if you really have an environmentally friendly purpose you would have wasted five million dollars on a Superbowl and and his you know kind of thing was, what you have to understand is jenzie grew up digital they've been bombarded with all these messages after multitask much more than any previous generation and so is a result they're much better at curating information and he he going to bluntly put it, like we we have more attuned BS meters than previous cohorts, and so you know you just have to be really careful about being being inauthentic with him and so there's some interesting takeaways, you know I thought the panel did a good job but I personally I do Wonder, if this is the last cohort we ever have to talk about because I like I do have this kind of premise that all the behaviors they were describing, like I can find you 60 year old to behave exactly the same way and in the old world of like television advertising like one of the only things we can know about her audience was how old they were and so we could kind of Taylor are commercials to a particular age, but today I feel like we have much more granular tools to the market to individuals and so I just I just wonder if, is like the differences between Millennials and gen Z are are ever going to be as important as as you know once the the differences between Boomers and and gen-xers was. Scot: [37:33] Yeah I kind of came away from the panel with called. Cognitive dissonance where says there's like six examples where they would say one thing and then they would like say something that totally countered it and it was really hard. To get your head around so the one example is in the early part. UConn reslife Genji's love them all is great I got them all the time and then someone else then several times you can tell that they haven't been to the mall a very long time because you know the guy was trying to describe what. Abercrombie looks like now and he couldn't really kind of articulated cuz I don't think he's been in an Abercrombie in a long time and then some. Jason: [38:10] Fun of Abercrombie from like 4 years ago but you're right like they have chain. Scot: [38:13] And then someone said if you had $100 what would you do in one guys like buy stuff in fortnite and you know the girl was like I buy some Nike stuff but she's not going to go to the mall for that she'll go to. I assumed she'd order on. [38:27] She also said you know I just buy everything from Amazon and I know from my Gins ears that you don't got to college age kids they do not like to go to the mall and you really have to kind of like. Dragon alert. So there's some that was kind of one example there's like six or seven other ones were just kind of like you just counteracted what you just said like 6 minutes ago. I don't know it's hard to nail down if I can. There's no actual thing to do. Jason: [38:56] Yeah no end to me part of that is like, I'm sure you can find Jen's ears that do go to the mall like an N relative to other cohorts yeah there are there are more 16 year old kids at the mall then there are 60 year olds at the mall, but like it's going down across all cohorts and and you know the point is being today you can know which 10, gen Z years really do want to go to the mall and you can have a message for them and you can know which ones like by 95% of the purchases on Amazon and you can have a different message for them so, that's kind of my death of the personas as we move into a one-to-one world. Scot: [39:36] Yeah I did not one thing the folks at NPD do a great job at is the entertainment at their shows is top-notch so they shuttle us over to Austin sea life which is exciting I never been there before I and we saw, a country music band which was runaway June and then the Doobie Brothers and it was kind of a long day so I actually enjoyed the opening acts kind of more than the closing act but that was just going to be so that was good. Jason: [40:04] Yeah and I I know nothing about country music so I had never heard of them so that way it's got a fun and I think it's a trio of young women that sing harmonies and one of the women was the granddaughter of John Wayne. Scot: [40:18] Yeah that was kind of neat neat fun fact. [40:22] So then we that was day one and then Day 2 began with you drinking three venti latte and then we went to go see Don Unser he is the biggest titles VP of sales there in PD he's the head sales guy and in one of the guys that leads there vertical teams and he had a really good presentation of some of the insights they've gotten from their data. Jason: [40:49] And so. The a Scott was nice enough to have bought at least one of those lattes for me that morning said thank you very much I appreciated that I had to meet early for breakfast with my panel so that was super nice of you. So MPD because they have access to this really rich data set Don and in particular is super well known for doing these retail Trends Decks that leverage update a lot and so this was kind of a. A permeation of that like he had some key retail Trends from the date in there and then you also had some. Hypothesis about like how consumers were actually changing as a result of some of these Trends which that was maybe a new spin on it. So is you mentioned upfront MPD tracks these 20 core categories across a whole bunch of retailers. And so it was the first thing he shows is MPD money so I'd which is kind of. How big each of the categories that they track is and whether it's growing or shrinking in so this was. A March 2018 view looking at growth over the last 12 months and you had you know category like the biggest category with by far the most significant growth for them as video games. So that category was growing at 18.4%. And it's a decent-size market it's like a 36 billion dollar market as they is they Define it Prestige Beauty was growing at 9.4% small appliances were growing at 7% Auto Parts at 5%. [42:24] Toys at 5%. Consumer electronics at 4.7% a house where is it 3.8 and then you kind of dropped in all these categories that had. Pretty nominal gross box office supplies Footwear perishable grocery Dry Goods Health and Beauty AIDS. And then you got into the bottom categories that were laggards for them apparel was basically flat accessories which is like sunglasses and things like that was down 2%. And then the big loser which is probably no surprise to anyone as Video Entertainment. Which young for most of The 3 Tails used to be movies that they sold on these plastic circle is called DVDs. And that that was way down at like 12% so. All told if you total up all 20 categories and MPD follows their following about 1.8 trillion dollars in consumer spending. All retails probably about 3.8 trillion dollars so it's a good chunk of all consumer spending and on the aggregate all those categories grew at 1.8%. You know but it's interesting to know that you know they're these big opportunities and in things like video games and Beauty less opportunities and apparel and accessories. And if you're a subscriber to MPD. That the even more granular view which Don didn't get into is super important cuz you look at consumer electronics and you say oh my gosh it's growing at 4.7% that's good news but then you look you look at the Grand your data and you see that like. [43:54] You know flat screen TVs which is the bulk of of the market you know it's kind of flat to down and it's things like headphones and smart smart speakers that are responsible for all the growth in the Consumer Electronics category, that's really kind of the the magic value of NPD is having that that. Granular look at what's happening in subcategories what's growing what's ranking you know what's on Trend versus off of trend. The one of the things that Don broke out that was kind of a new-look that I haven't seen them talk about before is that this concept of. Distribution of of Shoppers based on the amount of their spend is online versus offline so they so. See if I can describe this in a way that this possible to follow there's a chunk of the u.s. population that spends less than 10% of their their makes less than 10% of their purchases online. [44:55] And that chunk is 43% of all consumers spend less than 10% online then there's a cohort that's been 10 to 25% online that junk is 18% of the population another 20%. [45:10] 20% spend 25 to 50% online another 13%. Percent spend 50 to 75% online and then they're 6% of the population that spends more than 75% of their budget online, and said you know they had this kind of interesting distribution and you say oh my gosh the overwhelming majority of consumers 43%. Still you know which is the biggest by far one of these cohorts still spend less than 10% of their daughters online. You know the easy take away there is there's a lot more online gross and you don't call back to Michael Dart from the day before like he made the point. Nobody knows what that. What the final equilibrium will be on online versus offline shopping like Michael postulated that it could be 50/50 eventually but what he says I do know is. That is a one way Road people are only moving from offline to online that there are not people moving from online back to us. Which only makes some sense so. [46:12] You take mpd's new idea of breaking down the distribution of spender of Shoppers by these different different spending patterns. And then he you didn't break it down by retailer and you get some really interesting insights right so. Less than 1% of Amazon Shoppers spend less than 10% of their budget online so that big 43%. [46:36] Amazon only has 1% of those guys like those guys are not Amazon Choppers yet which is like frankly great news for Amazon. And Walmart is exactly the opposite right like the biggest chunk of Walmart shoppers spend. Less than 10% of their of their budget online and a tiny sliver of the Walmart Shopper spend 75% online and so you kind of you know those are the two extremes. Amazon heavily biased towards predominately online Shoppers Walmart heavily biased towards very casual online Choppers. And then you know what was interesting as they showed Target Best Buy in Kohl's which had surprisingly even distribution across all of those different colored so it's kind of interesting Target Best Buy in Kohl's. [47:25] Do just about as well with the the guys that spend 75% of their budget on line is they do with it that the women that's been less than 10% online versus. Walmart and Amazon you know I tended to be heavily bifurcated and so I thought I thought that was sort of an interesting new. New dimension that I hadn't really thought about before. Scot: [47:46] Yeah it was really cool it kind of need to take away was you know once there's another one where. [47:55] The big guy is so close Target at such a loss share as people went towards online in Amazon. With exception of Best Buy so it showed in one takeaway was Best Buy seem so kind of figured out how to stop erosion so you're what are they doing to do that and then you know there's definitely this battle for that 43% of people that are. We think we'll come online and your Walmart play wants to keep them in the Walmart family in Amazon, wants to extract them over onto Prime and that's going to be a really interesting Battle Ground over the next five years was one of my takeaway isn't it was just, we heard Mark Laurie talk about it Amazon hasn't really talked about specifically but some of the moves they've made with going to monthly prime number you know. [48:38] Paying Prime fees with cats all that stuff has been kind of along the same lines so it's going to be interesting to watch that that battle come to play. Jason: [48:46] Yeah yeah for sure and you know it. [48:51] I mean I always enjoy Downs presentations cuz I just think the the date is super valuable and it's like you know we have all these urban legends about how things are doing. Let there be super useful data sets the MPD provides like there's another one I didn't cover but that they do frequently. Where they show the fastest-growing subcategories right and that's all you know much more important than the big categories are you find out there like a shoes my beat Footwear might be flat. [49:21] Performance running shoes is a huge growth opportunity right now. And you know they even particularly talked about how in the subcategories. You can really see trends go viral so I can example that use is like Office Products is not a particular growth industry right now but. Elmer's Glue like in that the adhesive category is booming. And the reason is booming for for you no parents that don't have have like sub 10 year old children at home is there's this huge trend on YouTube of kids making goo. And slime rather yeah. And you know they're all these different ways to make an all these interesting you know things kids are doing with slime in the primary ingredient for all this slime is Elmer's glue and before this trend. Office product companies mainly sold for Nas you know bottles of Elmer's glue that you'd use to glue paper together and now they're all selling 5-gallon bottles of this this this glue and you know selling a much higher quantities. Scot: [50:31] Yeah it sucks I won't get into it it's a problem so I'm fine just taking over our lives. Jason: [50:36] Yeah it's interesting to see those Trends in and be able to react to this trans another one is like the instapot is the is this you no booming small cooking appliance which has you know lifted the whole small appliances category at the MoMA. Scot: [50:52] So that was the highlight there and then there was some random guy talking about last mile did you go to them. Jason: [51:02] I did I did I was actually the moderator for that one. Scot: [51:05] Oh yeah yeah. Jason: [51:07] Yes it might have been hard for you to follow because they had to like shrink down the room a lot from the earlier Marketplace one you know not make it look empty with with just interested in something as trivial as. You know how you get the goods to the consumer. Scot: [51:24] Is more intimate setting than the marketplace. Jason: [51:27] Exactly. [51:28] But I thought we had a good day so so I had three subject matter experts on the panel we had Jamie sadlowski who's the VP of customer experience at Walmart VP of marketing. Owns the Indian customer experience for Walmart and this is you know Scott Walmart is doing you know a ton of new last-mile experiences. We had a Jarren Waldman who's the founder of curbside so there a vendor. Curbside pickup programs for a bunch of retailers including like Sephora Nordstrom CVS. And Jared has kind of cool past he had the it started a mobile geolocation company that ultimately got bought by Apple and so Jaron actually ran the the mobile geolocation team at Apple for like 4 years and. You know a big part of the value proposition of curbside is that there's some really smart technology for using your phone to geo-locate you and get your order ready you know as you pull into the parking lot. So he had had some good good povs about. What customer expectations were in in The Last Mile and then we had a gentleman named Warren schauble who's from. A consulting firm called Gwen industries that specialize in drum Technologies. And Gwen is his bosses name who was the former president of DJI so you know certainly credible. [53:04] Drones face but these guys are selling like industrial drones for a lot of B2B uses. And of course you know drones are fake only talked about in The Last Mile and and I was certain pleasantly surprised orang was was. Turtle refreshingly candid that like. Really the regulatory environment in the u.s. is is we we are miles away from drones being an important part of the The Last Mile solution in the us cuz we're. Where you know there's still some very significant regulatory barriers but he did mention that most of the other technical barriers that you know the ability to build these practical drones that can carry heavy payloads. And the software capabilities to do the traffic management and delivery like you know he felt like those problems. Used to be big big technical challenges and essentially are completely solved and so you know in his mind at this point. [54:01] That the one barrier to two drones being important part of of The Last Mile are regulatory but he doesn't think there's going to be a resolution of that anytime soon. We did get to talk a little bit about autonomous vehicles and and you know their role in the last month which was interesting. The big takeaway from Jaren and Jamie is kind of going back to this Persona thing that like. You know the old world where we have like buy online pickup in-store consumers versus home delivery consumers versus in-store consumers and what you know both curbside and Walmart it started independently learned is. [54:38] Every consumer is a user of all these different experiences and that it's it's just really based on context and that there's a. In a soccer mom that loves curbside pickup for her regular groceries but you know how to certain occasions when she wants home delivery and she really wants to shop in the store for her own Christmas dinner meal so. You know thinking about. All these experiences being important in different context for the Shopper as opposed to thinking about these experiences being the one and only delivery method that different consumers would use I thought was pretty interesting. Scot: [55:12] You just back up a little bit I think it'd be good for listeners you had a great. It kind of opening setup which was good and you talked about the existing carriers and how much package volume they can handle and how much they're growing versus e-commerce maybe maybe run to that. High level for folks. Jason: [55:32] Yeah yeah so we've talked about this at a high-level a couple times before on the show. The in general e-commerce is growing at you know call it 15%. And that the carriers are growing their capacity at about 8%. So you know we we we have a clear mismatch there. For this show I showed some more granular data that Kalin and put together and so you kind of paint a picture for for how eCommerce companies are using the different carriers and and you know don't you know, the primary carrier that Amazon uses for the last mile is the US Post Office. And that's because their fulfillment center so close to the consumer that Amazon's big problem is not. [56:22] Moving the goods across the country they they mostly do that in their own private Network now they're their big problem is the Last Mile and the US post office has the by far the most economical. Route based delivery solution for that last Mile and so you're saying like 44% from memory of of all of us. Amazon packages get delivered by the US post office then UPS of the big air air carrier for Amazon. FedEx does do some deliveries but it's only like 5% and then you know a growing chunk I think it's like between 13 and 15% of Amazon. Packages get delivered by Amazon Zone people in that that's obviously a growing percentage. So then you break down that like the US Post Office is growing at like, their capacity light 8% UPS and FedEx are growing actually even slower and you go man for for these big e-commerce sites like Amazon and Walmart that are growing like 35%. They're they're consuming much more capacity than the post office and and ups are growing and so you know you think about Amazon investing in their own delivery Network, that's not too bad just reduced costs or to threaten the viability of of the commercial carriers it's really cuz they, they simply enough to meet their own growth expectations need more capacity than they can buy on the open market. Scot: [57:53] Yeah I thought that was so so super insightful and really cheated up nice and I just kidding it was a really good paneling. Learned a ton. I wanted to ask her side guy a couple things that he mentioned they're doing a lot more food curbside delivery in when he starting about food now these places have a curbside vendor like curbside and they've got six or seven other kind of pickup and delivery places at one point, do like. [58:20] Does the supply chain that the soccer they're using consolidate because you don't need restaurants think it like the six iPad sitting there so let's try to get Jaron on the show and see what he has to say about that kind of thing. Jason: [58:31] Yeah yeah that'd be awesome we we we did not, talk about that specific question so that be great when I asked him he definitely did take usra sort of the fastest growing component and I do think. That like he's providing. Software that essentially the retailer buys and owns versus a lot of those delivery services are sort of outsourced Solutions and be well you're certainly right like there's a but you know a, a desk full of tools that these are restaurants in Key West hours are using at the moment. Scot: [59:04] Cool and then your panel wrapped up and then I had to shoot out and then did you get a chance to see the rest of the show. Jason: [59:13] I didn't say there was one other. Breakout session that I did not get to attend but like I should we should have said for each of these hours during your session in my session there were a couple topics that you could choose then obviously we we were both you know the. The most interesting one to choose. [59:34] There a couple couple sessions during the last one there was an interesting case study on Sony. Sort of rebounding from really losing a lot of their brand Prestige to focusing on making some really hard decisions to get out of some categories and reinvest in others. I heard I did not get to attend that but I heard it was interesting and then the final Keynote. Then unfortunately a work emergency called me away for was the A-Rod was in town and and. You know talked a little bit about his own entrepreneurial Journey which I imagine was was interest. Scot: [1:00:14] Yeah I wonder if Jayla was there. Jason: [1:00:17] I did not see her yet I feel like she would have drop me a line if she was in town but. I feel like it's a good thing that we didn't have a deep brief recap on a ride because it's already happened again we've used up a perfectly good hour of our listeners time. So if you have any questions we didn't get to or or if you're at the show yourself or had any any comments we would love to hear. Your questions on Facebook and we can keep the conversation going there as always if you enjoy this show you know it only takes about 10 seconds of your life to jump over to iTunes and give us that 5-star review. That that really helps us with visibility on the podcast and we we really do appreciate. Scot: [1:00:59] Yep thanks everyone for listening and thanks to the team it in PD for putting on a great conference and for having Jason and I are speakers we really enjoyed the show and appreciated the opportunity. Jason: [1:01:09] I absolutely in until next time happy commercing.