EP083 - Andrea Leigh, selling on and negotiating with Amazon
Andrea Leigh is the owner at Andrea K. Leigh Consulting, which helps clients sell on and negotiate with Amazon. Andrea enjoyed a 10 year career at Amazon where she served in a number of Buying and Category Leadership roles. Andrea is a recognized expert on Amazon, who has written a number of helpful articles about Amazon on linkedin:
We spoke with Andrea about her background and experiences at Amazon, the digital grocery market and Amazon's efforts in the segment, and the best practices and common pitfalls in working with Amazon.
Andrea will be one of the speakers at "Amazon & Me" an all day workshop on Tuesday June 6th at IRCE, hosted by Scot Wingo.
Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.
Episode 83 of the Jason & Scot show was recorded on Thursday May 11, 2017.
Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at Razorfish, 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 - Amazon Automated Transcription of the show:
Jason: [0:25] Welcome to the Jason and Scott show this is episode 82 being recorded on Wednesday May 10th 2017 I am your host Jason retailgeek Goldberg and as usual I know Scot Wingo.
Scot & Andrea: [0:39] Hey Jason and welcome Jason Scott show lister's let me first apologize it is peak, pollen season here in sunny Raleigh North Carolina and my allergies is amitab attacked me and I have a sore throat so I apologize for the the lowness of my voice however I will be doing some Darth Vader quotes later so it will come in handy, Jason before we dive in it's been about a week and a half before we chatted any road trips you want a report on.
Jason: [1:08] I do have a couple of days or so very sorry to hear you're feeling under the weather it's sort of Harkens me back to our famous shop talk shows where I didn't have much of a voice.
[1:19] And our live listeners are totally on it that I've got a bunch of my text messages since I just did the intro in this is actually episode 83 so I want to apologize. For the falls. Boss intro a minute ago but thank you to all those folks that are listening in the show Live this week I was I got to do a trade show in town in Chicago in my hometown which is a rare treat for me. Mwb research does a show every year for the B2B in this week I'll be to be online so I. I just got to go do a presentation there yesterday and talk to some folks about B2B e-commerce which is her that interesting contrast to the the retail stuff that we talked about.
Scot & Andrea: [2:02] Yeah did you get a lot of questions about Amazon business that's whatever you ask me.
Jason: [2:06] Not as many as I would hope I would take it as a better sign of people were a little more concerned in that space about Amazon business, perhaps a parallel the sum of things we'll talk about today. There's some really Advanced B2B e-commerce companies but the general level is pretty digitally immature and so, you know you tend to be talking to people in that industry that you were talking to retailers about maybe four or five years ago, and I have a theory that that a lot of the cpg space are also somewhat digitally immature and a rapidly trying to catch up and so we we we make it to hit upon that in today's episode.
Scot & Andrea: [2:45] Coolest part of your talk to call the audience to Julie immature.
Jason: [2:48] The love I do talk about the digital maturity curve and I let them judge for themselves where where they're on but my talk. Is ironic cuz I I was mainly talking. To stakeholders they were really interested in watching B2B initiatives inside e-commerce initiatives inside their company about how to get c-suite buyin and since I've been kicked out of some easy sweets I thought maybe that was. And ironic choice for me.
Scot & Andrea: [3:16] Old Town ironic if your c-suite the immature.
Jason: [3:19] Exactly I've been in a lot of sweets just for a brief period of time.
Scot & Andrea: [3:22] You're mature getting kicked out of six weeks.
Jason: [3:25] Exactly how I'm high on the kick after blow on the maturity curve.
[3:31] Just got one of my favorite thing, the show is you know from time to time we get some nice listeners that right in and say nice things about the show and had told her to reorder top and something and I always enjoy that, but I thought you liked this week I may have gotten my favorite piece of fan mail.
Scot & Andrea: [3:49] Go to zip front and what they say.
Jason: [3:51] Yeah so it is from a listener and Marie who runs the e-commerce site called dog quality.com and she's a regular listener and. Had a recent occasion to go to our website where the show notes are and. There there's an about me tab there with a picture of me and my dog MacGyver and so Emery who obviously is in the dog industry so I'm a guy her and wrote MacGyver a piece of fan mail.
Scot & Andrea: [4:17] What are you going to read it first.
Jason: [4:19] Well I won't read the whole letter as she's right kind of currently Doug quality focuses on. Elder dog quality of life in and products that the older dog specifically need and she was nice enough to say that in the Guyver looked like a spring chicken and probably didn't need any of her products, but she is she certainly offered hook MacGyver up should should the need ever arise and I was laughing because she doesn't know this but the MacGyver is a frequent guest on the show MacGyver is Jenner sitting on my lap for the show and so he was, very pleased to find out that he finally got some of the recognition that he he well deserved.
Scot & Andrea: [4:56] GoFundMe you wear at shoptalk it sounded like he was he was doing your part.
Jason: [5:00] Actually he is a man of few words but he's much more insightful than I am and I don't know this but I think you have a couple dogs that have at least made a cameo appearance on the show as well don't you.
Scot & Andrea: [5:13] Yes sometimes in my podcast recording studio here which is also my home office ad my 10 year old Border Collie kit sits on the floor and that we have A1 year old, Cavalier named Lulu and she usually sits on my lap but tonight they are elsewhere hanging out with the kids.
Jason: [5:31] Nice.
Scot & Andrea: [5:33] We'll just before the podcast goes to the dogs we have an exciting guest for listeners tonight. As you listeners are well aware I'm a little bit obsessed with all things Amazon and every time I talk to tonight's guest I learned a ton about that what makes Amazon tick, and really spent a decade and Amazon from 05 to 15 and now runs a consulting firm called Andrea Kaley consulting or she helps Brands and sellers with their Amazon strategies as well as other e-commerce growth in it, I'm hosting a workshop that internet retailer Conference & exhibition which is commonly abbreviated IRC. And Angie is one of our speakers talking about Advanced strategies for Brands and wanted to go she ate with Amazon and you're welcome to the show thanks for having me. Cool and so we got Central covered with Jason in Chicago on East in assume you're in Seattle in 7 days. How's the weather is it is it typical Seattle are you guys getting your sunny days. Know where we got a little bit of fun but you know it's still we still have to get to the Fourth of July before summer really starts here cool so um. We really want to jump into it so one background statement before we jump in. Sometimes be a few back for listeners will jump right into Sonny's topics and I neglect to cover some of the basic so tonight when you use phrases like one p3p hybrid, we see one PSP specifically in the Amazon context that usually that someone has a wholesale relationship or a first-party relationship with Amazon third-party usually refers to more of a Marketplace kind of relationship.
[7:07] Are the hybrid is a lot water brands now that exploring kind of a dual approach so a wholesale Ana Marketplace approach just wanted to let her listeners kind of have that that little glossary there at the top of the show before we do it. And I'll turn it over to Jason who is dying to kick off.
Jason: [7:24] Thanks, let me highlight for a listeners that are not driving weather listening to podcast that the whole one p3p hybrid thing also makes for an excellent drinking game.
[7:39] So it's winter before we we get into that and III.
[7:43] One p3p question for you where I think there may be some Andrea Scott controversy early I hope there is but before we go there. Maybe we can start with a little bit of background about you and sort of you can walk us through how you got into this industry and what some of your experiences.
Scot & Andrea: [8:02] The absolutely so I said you know probably the majority of my career at Amazon that was there for 10 years from 2005 to 2015 and I was on I worked in the retail group for the entire time, I'm in different roles as actually started as one of the founding original buyers for the amazon.com grocery category and you kind of, migrated my way to the company and number of different roles, including divisional manager for the baby category and working on getting the Amazon, baby registry can I prevent in and then good good order with customers as well as a leading category teams for Amazon Fresh, and, Rawhide most recently before I left and for the longest actually for a little over three years was a category leader for a hard-line soft lines. And consumables for Amazon Canada where and we watch consumables and softlines on while I was there I also ran the prime program and Canada and Italy Avon with it with the transportation team, in addition I've worked on the, crab process for Canada help develop that and get that thing running up there if that some of the term that everyone is familiar with that's Amazon's term for can't realize any profit.
[9:32] Which is through their way of identifying items that are unprofitable for them. And I left Amazon two years ago to start my own Consulting practice where I work now with Brands a lot of them that I worked with while I was at Amazon, you know to help them achieve their goals on Amazon whatever those might be gross profit you know I saw him planning. Etc and in the category leadership relate Amazon if you're not familiar with that sort of structure at Allegan General Manager and you're responsible for all of, a buyer vendor management planning in the stock management marketing product management sometimes the technology teams as well so that's a little bit about that rule the last years I have been working. And Consulting can I have them working directly with Brands doing some speaking and doing some writing. And a man actually really partner with Melissa Burdick the kind of team up for Consulting practice and so that's, that's kind of what I've what I've been up to.
Jason: [10:41] Questions about that you went from being the evil buyer to helping Bray.
[10:51] Kind of like going from the federal government to becoming a lobbyist is there a man.
Scot & Andrea: [10:54] You know it feels like there should be, the Empire is not but I mean I really feel like for the most part the work that I do is really Amazon's best interest I mean when it's actually one of the reasons I wanted to start my order form I mean in the early days of the Amazon Vendor Manager spent a lot of time with her and I spend time with my brand I'll be in them figure out how to grow how to use the platform head understand it to be successful and kind of coaching them and teaching, and you as Amazon, skilled and crew become more automated and that's my role grew and I took on my two teams I just found that I was sending you know very little time talking with brands, an Amazon in Genoa spending very little time kind of in that teaching capacity, and so you know that was kind of one of the reasons that I wanted to do this, I think would just like a small amount of Education about the Amazon platform, no Brands can see some really amazing success by applying some really basic principles and it's not hard you know it's it's I think it can be pretty straightforward once you understand how Amazon is different from other retailers. Quarter certain types of Brands you properly work with her show cpg seems to be a real house kind of area for you or your little bit all of them. You know I've been all over the map where's and small and end in any number of different categories but I will say that this species tend to have kind of the biggest challenges on Amazon pretty early because they were you know they're they're off and doing a pretty sizable businesses.
[12:34] In addition to I'm just having a lot of products that are really difficult for Amazon to ship profitably so I think they kind of think they they have the most challenges, I'm as it relates to Krista voorhis with the with the, a platformer a business model where products are shipped directly to customers often in the single units but I've but I work with all kinds of brands. Across all categories.
Jason: [12:59] Nice and you mentioned um baby for a while and if I have the time line right the Quincy acquisition happened right in the middle of your tenure.
Scot & Andrea: [13:08] Right in the millimeter exactly and it's funny because I remember when they first got on our radar and we were and we were really thinking about like they're getting some really great friends on the site and how are they doing that and I remember thinking like we should go for this we should do we should go get them, we should call them but I'm and it's it's really interesting but I mean you know you know how all acquisitions go it's pretty it's pretty hush-hush internal lake cinemas that stuff happening.
Jason: [13:37] Yeah but so did you literally go from hating them and they were an amethyst to like becoming a partner.
Scot & Andrea: [13:45] You know I had moved on to another category by the time we actually started integrated integrating with them but you know I was there I was definitely there for the acquisition piece and you know they were doing. Three steps hi I'm just doing a really nice job pretty Leanne diapers.com, Beano getting new customers and as we all know that time when the consumer becomes a parent is just such a pivotal point in terms of brand loyalty and brand switching is really high at that point and they were really they were seeing a lot of success with some of their marketing tactics, in an option that consumer as well as you know getting a lot of kind of more perceived higher-end baby Brands to to partner with them.
Jason: [14:31] Nice and I don't know we've talked about this on the show and I will surely understand if you don't want to share an opinion but you know there's been a little controversy is his Wizards probably do know.
Scot & Andrea: [14:42] Fish.
Jason: [14:43] They spend down Quincy Quincy this year and there's at least one of our friends in the media Jason Delray that that. So it has this hypothesis that it literally was out of spite for markquart who's who's competing with them Amazon it at Walmart and I'll just pay for the. I personally don't believe I don't know what the real logic was behind spinning a down I can imagine there's a story that we don't know but I have a hard time.
[15:14] You know potentially several hundred people are getting laid off space. Out of some competitive spy on the part of of Jeff.
Scot & Andrea: [15:23] Yeah I read Jason's article about that. Yeah I read that article that I mean I think that's possible and obviously I don't know I don't work there anymore but I, email Amazon just serve god with a needed out of that relationship, and there wasn't a lot of sense in keeping up separate websites me over the years Amazon had tried to spin out other web sites and it's just really challenging it's really challenging to drive traffic to a new site I mean as hell with the endless launch and then take down they got so mad it is so much traffic through going to their native site so kind of continuing to some, pour it into additional websites just seems really. Really tough and I'm not really sure why that would be a great strategy for them and you know if you think about like they sort of got what they needed that of that Arrangement they were able to you know take out app, who is Fab a fast-growing and competitor that was getting a lot of traction you know this is going back like 10 years ago. And then them from sort of like, becoming you know a real material competitor and then in addition to that you know they were able you know to integrate some of that inventory or those Brands under their own site no maybe some of the brands or harder for them to. Dino to acquire so I still feel like they got what they needed and it's really expensive. Having a Second Sight means possible there was some slight there it is truly when you look at that whole it's Story I mean it's like a soap opera.
[16:58] Terms of the level of drama. I mean it's just fascinating but I think Amazon is a company with more Integrity than. You know that one that might you know I have all that and you know I just have a lot of people suffer.
Jason: [17:18] No I think the URL consolidation makes a lot of sense and there are just good business reasons for. Amazon ultimately to go there at the one I I guess ironic thing is they thought they were making an acquisition to take out a competitor and all that money that used in the acquisition ultimately was used to create a new competitor so I guess.
Scot & Andrea: [17:37] Flatbush feel like soap opera or irony I'm not really sure that's why I need that's the real twist in it.
Jason: [17:46] The irony of me is that I use the word irony wrong all the time.
[17:52] So changing topics you mention the crap program in Canada and we we talked about a crap a little bit on one of the other shows. But maybe you're in a good position to confirm or deny. The rumor is that that was started as an internal term that was not intended to be.
Scot & Andrea: [18:13] Yeah. Exactly what I read in one of my articles he was not intended to be public-facing it all it was a term that was developed by the finance team like I'm very clearly recall this and I don't know I can't imagine they share this room just funny, and you know I remember seeing in the fruit one of the first meetings where the finance team brought us this program and the program itself makes sense you look at stuff is unprofitable and figure out how to get it more profitable, I put the acronym Chris is really terrible and I member we all kind of looked at each other like this or go it's like really and you know I don't think it was ever meant to be other two vendors but now it's out there and now it's like an industry term.
Jason: [19:01] It's it's really awkward cuz they a category that's particularly vulnerable to crap is of course toilet paper in so when you're, to a cpg manufacturer that's talking about their total, trapped out it's really on the potty humor goes goes downhill really fast.
Scot & Andrea: [19:19] Yeah and I mean I don't think that I don't think the procedure of that was lost on them right I mean diapers and toilet paper or two of the kind of like really on really difficult items to ship, take us to Harris profitably and so I'm pretty sure that was so, Davidson strategy around the name but the funny part is like by the time I left we were just tossing it around in meetings and like it was the term has lost all of its like conversations, and I think it's funny now and I talked with Brands and I and I talked about crab and, really quiet like Amazon came up with it hasn't explained it so disgusting.
Jason: [20:02] So the shocking part to me is not that any of that happened the shocking part to me is when you move to Canada that you didn't find a nicer friendlier term for Canada because it's Canada just say is nicer.
Scot & Andrea: [20:10] You know that's a really good point like at that point it didn't even occur to me that when we started the program in Canada we could have called it something else but you know it's too late now.
Jason: [20:25] So one one last topic before I let Scot get a word in edgewise, at the beginning the show you talked about or Scott introduced the concept of one p and 3p and we talked a lot about 1p and 3p. And when a 3p seller is using FBA as their distribution strategy. Scot and the show generally talked about them being a 3p seller that uses NFPA and I've noticed in some of your writing that you call. FBA sellers to pee so I'm just curious if you and Scott and have our are aligned on that vernacular or of or.
Scot & Andrea: [21:05] I mean I think I think I think it's 3 PS1 of encompassing both Merchant sold as well as, social Diana son so you know where Amazon a store in the inventory shipping on your behalf they are still there that's to pay the sizzle by Amazon program, mn3 can include that but I usually it's referring to Merchants that ship out of their own warehouses.
Jason: [21:29] Got it so what do you call a vendor for field FBA.
Scot & Andrea: [21:34] I would call that she pee.
Jason: [21:36] Gotta and Scott are you are you okay with that.
Scot & Andrea: [21:40] I try to keep it simpler so I think that would maybe confuse people, chicken official Amazon me cancers that just no actually never heard these turns until I left. And they're sort of what a lot of my clients used to describe the different business models and with some of the folks in this kind of like ancillary Amazon industry send you so that's it those are the ones I've adopted but you know there's a really simple version is one piece retail, is Amazon buying product from Brands and reselling it and then 3p is where, the brand or the other retailers uses Amazon's platformer services. Who is one thing I wanted to jump into before we get to nerdy on e-commerce side is is on your bio you are part of the Amazon or raise our program of study that a lot as a internet I'm kind of obsessed with Amazon's culture in and how they, such a large company she needs Innovative and doesn't seem to have a lot of bureaucracy and it seems like the bar razor program is kind of, last couple years decided as a really kind of key contributor that four letters that aren't following that is close to as I am maybe give us a quick background a bar razor and, tell us about your experience being in that program. Yeah absolutely I'm in if you really interested in Amazon's culture and how they say Innovative actually you love my next article I got one coming out another week that's just the really just phones and on that specific topic.
[23:13] I would love that actually if I could really use some other program, and I think this is some Polish so I don't think there's anything like confidential here but it's essentially her Amazon where there's a set of interviewers that are meant to, teach other interviewers how to interview so this is like so the more experienced said of interviewers go through specific training to teach others had a interview and then you know you need to have. I need to have someone in this from this program at least you did when I was there on every interview Loop scissors or busy, and you know that the idea is not that that's like the tough interview or whatever I think that's been written before actually not true it's it's the person that facilitates the conversation and really drive out all of the insights from the interview from all of the people who interviewed the candidate, and really make sure that you're having a cohesive discussion and that you're applying kind of them. Does cats a consistent set of principles to hiring decisions across the company and so it's not your consistency, and for maintaining the culture not true, being like a really particularly tough interviewer although probably some of them are really tough interviewers so I was in that program most of my time there I mean cuz I was, I know I started there you know kind of it before they started some of their real significant growth.
[24:50] And I got into it early and I think by the time I left I have done almost a thousand interviews and you know, mayilada hires connect during that time. Cool so you're in the interview and then you also delete a post interview kind of debrief is that I would have her. Exactly exactly any ideas just really for consistency and for us I think the same is true in any organization where you've got some time so it's on interview Loops it University experience or.
[25:23] I'm in after struggling a little more to apply some of the principles, you know the leadership principles are still learning the leadership principles and so is their kind of someone in the room that's got some experience with that and can help guide the conversation. Clannad articles I've read say it, cuz of this book number one usually by razor is in a different apartment and so you would be the Barbies are for like engineering or something and some other person would bar raise for fire, a person like that I mean it's like I couldn't I couldn't facilitate a conversation about someone who's going to, be on my team you know you want certain external perspective but I think that's just a general in your dream practice Amazon anyway regardless of whether it's a bar raise or not it's just a lot of perspectives on a Candida think the weirdest interview I've ever participated in was for it was, like a mad scientist like an economist, I remember prepping for That interview and just thinking like what am I going to ask him if I did try to get this person some Economist questions I would be hard-pressed to judge the quality of the answer and I remember though it's sitting in the defense I didn't know anything about the contents of this person's work but it was room market like the process of, determining if they work a candidate was like, damn I mean was really it really didn't change so do you have a go to question like why are manhole covers round how do you do the mountains.
[27:01] You know I think one of my favorite ones someone who asked I heard someone else asked in an interview as part of our thing is like you to train people you Shadow and you, we go along and someone it's something that like your job is to lunch the houseplants categor live houseplants category on Amazon like what we did see how would you approach this, is this at lunch or something and I remember just thinking like, that's a tough one it's just kind of shocking anyway.
Jason: [27:30] I think that's where you go to selling seeds.
Scot & Andrea: [27:33] Exactly exactly.
Jason: [27:37] A in it it occurs to me that like in addition that Consulting with brands on how to do a Amazon you could also do interview Consulting for a candidates have you helped anyone interview since you up.
Scot & Andrea: [27:49] I'm in a little bit here and there I can do some projects on it and I had a Consulting project recently where there was a component of it where they were looking for some some guidance in their organizational structure, and had it had a sort of resource this business and what skill sets and things like that are critical to a little bit but you know the core of it has been, if people don't want people just tend to want to talk to me about her half and one piece EP 3 p and headed to go see it with Amazon Amino seem to be a bit, the topics that are the biggest draw.
Jason: [28:28] I asked questions I always like to ask XM is zonians I've never work for Amazon but. I have great admiration for the company in the caliber of former employees I've met all the reading I do it frankly comes off as a totally unappealing place to work.
[28:50] Talk to ex amazonians that sort of Concur and I talked to ones that wildly disagree and so I guess I'm just curious.
Scot & Andrea: [28:57] Most of the ones that don't agree probably still work there no I thought it was an amazing, inspiring place to work I mean I have. I just had a really incredible experience there I feel really fortunate to have worked with the high-quality caliber of people that I was but I interacted with you know I wasn't working with more and more on Clans and other organizations and just realizing how remarkable that was, I want a time I mean I feel like I had some pretty nice career trajectory there that you might not see it, another types of organizations I mean I thought it was an amazing place I think you know when you think about like that, I'm bossy Channel article of it was like, it was right when I was leaving that that article was published about how terrible it is to work at the corporate headquarters and the people cry at their desks and you know that article everything except probably some of that I feel like some of the past employee like the people who'd been fired sort of testimonials sounded off like they didn't sound consistent with the company that I knew, the rest of the day that was like pretty true I mean if I'm really hurt it's really hard hard to make history and you work you working with some of the smartest people, I think around but the article was just really um. And it will be amazing there any Amazon.
[30:28] Top 5 Business Schools all those people we have a choice we have to work there and they have lots of options there for a reason and it's because it's super inspiring and you can be Innovative and build your own business, you should hire a nanny is taking a lot of responsibility, I'm here if you have an idea and it's a good one and you can put together a good business case for it it still even though it's a big company now it's still the type of place where you can, you can see that through and so I mean I think it's I think it's an incredible place or I didn't see it it's a it's a. It's like running a marathon you know you can't do it has to look at has to stop at some point I think it's hard to it would be hard to work there your whole life. There's no free snacks.
Jason: [31:19] Bananas free banana.
Scot & Andrea: [31:20] There's no reason I give you the Sheep pens you know just don't know books are like that you know the $0.50 ones there's no there's no curse reality leadership principles you can use PowerPoint Jason I make a living on power, Point sucks really dense white papers, I think I think I got some of the best writing training. Bear in just being a headache ran the most about and data into like the shortest way if you possible.
Jason: [31:58] Yeah so that brings up one of my biggest garage with X amazonians I'm I'm always super excited when I hired one because I'm thinking like I'm going to get these really insightful well-written long-form deliverables. And then I keep getting these crappy power points from them.
Scot & Andrea: [32:14] They're just so excited he's her.
Jason: [32:15] Exact exact.
Scot & Andrea: [32:16] That's just for so many years and now all I can I cancel team does a star play for almost everything I'm one of those people I totally am.
Jason: [32:26] Yeah so that was a little bit disappointing for me I have to be honest. You don't want of the categories that I am super interested in at the moment it's been a lot of time and is grocery in and you use us and gray. Experience in the impression Amazon might my premise is in North America.
[32:48] Wholesale e-commerce like the battles basically already already been one right like you don't frequent frequent statement in my practices you're not going to Amazon Amazon and so you're looking for Winchester or you know. Little place around the edges but like you nor anyone else is necessary going to just build. 400 million skier general merchandise catalog in and capture majority market share from Amazon but I do believe that grocery is a huge category potentially larger than general merchandise. Did just now is coming into play for for digital Commerce City.
[33:30] We deliver that in so I do feel like it's a white space and I think we're seeing sort of Walmart Amazon and you know to a lesser extent the. The pure plays in Kroger and stuff all all battling it out is that it are you following that category at all still in.
Scot & Andrea: [33:48] Oh absolutely absolutely both Serta professionally and also personally my husband has a firm idea quickly build, Play click and collect software so I follow it. Religiously and he mentioned the consumables categories are there in Norma semi dwarf, the other general merchandise categories but I think the beauty of them for e-commerce is that they uh they drive frequency in traffic, and you know I think once, once Amazon in one Southern retailers can I caught on to this they realized how important it is to make this work online because you know when you think about it like you only buy coffee maker like every couple of years I need a picture in TV is like those don't those types of products, don't drive frequency and visit people like every week, so you know these categories I mean this forever or the trip drivers and they called them truck drivers. They got people in the store we sell them for their stuff I mean the same model those two Outta mind, you got customers traffic through the consumable categories and then in a while they're there hopefully they buy other things.
Jason: [35:04] Yeah until 8 and I was here in Seattle so you get to see a lot of the first iteration of concepts of I assume you've walked by the ghost or if you haven't snuck in with an old age anything in.
[35:18] Don't get in trouble on the show don't get in trouble on the show.
Scot & Andrea: [35:21] And we also because we can never even rolled out, wake me to tell Gram here for a while where I think that was only in like two or three markets we're in this I think this is the precursor to Prime now where, or they would deliver your stuff and like a bag on your porch with no over boxing or anything, I mean I'm sure it was really expensive to get all the stuff that was pretty cool and you can sign up for like a tote day was like a regular schedule day so we get all kinds of Pilots here which is kind of funny to see experimentation with Amazon so yeah I've been by the ghost or I haven't gone in, and I think it's really I think it's. One of the more remarkable technology that Amazon has Philip Justin just walk out technology.
Jason: [36:12] #JY.
Scot & Andrea: [36:14] Is she literally just walked out of the store was actually sounds kind of awful if I'm shopping with my kids but I'm sure Amazon for your at the above.
Jason: [36:23] As we pointed out early on when they want that concept that they're claiming it's his big new revolutionary thing and myself and one of my peers we're using that technology in high school so.
[36:34] Not sure it's quite as impressive if you got a chance to go by the the fresh pickup location yet.
Scot & Andrea: [36:43] No I haven't but that's the second lunch of those in Seattle we had another pilot years ago to pick up points so CA, I'm seeing the model and I know where the spot is in fact I was thinking maybe next week I don't think it's up and running yet but I was going to go do a drive by and just check it out to pick up stations in Seattle I mean like it it looks like I'm driving through it looks like a drive-in burger joint with like all the ankle parking, pretty is pretty cool and then another just bring it all out and put it in your in your car but I mean this figuring out pickup, I mean it's super expensive to ship dog food to customers dog food to Prime customer and you're totally upside down economics, and you know in order to be competitive and figure out how to make money in the space you have to figure out how to get people to come to you and sell them a bunch of stuff at once.
Jason: [37:41] Yeah for sure and it I do think that's going to be the dominant model for grocery like I think you know it and you use only strings this with. Fresh but like you know most of the Amazon Goods get delivered on a route and you can bundle a bunch of deliveries and I can be really efficient but when you deliver fresh in the person has to be home to receive it because they have to put it in the refrigerator, settling you're not doing routes accepting in a few really high Denso occasions you're doing individual deliveries and that, that's super expensive in for most of the country the economics just don't work and so it seems like saving all that shopping time and having that pick up. I it was my. That's going to be the the mainstream digital grocery experience and I have literally nothing. Thousands of consumer interviews where they just talk about it being life-changing when they start using that that feature from whomever they use it from.
Scot & Andrea: [38:35] Witches, which is really funny because like this isn't a new feature like I used to when I was a kid we used to call the grocery store and we tell him what we wanted and we drive by and pick it up there's not a new model, scale is probably a new model I mean I just grew up in a small town but I think what's really interesting is the whole evolution of this thing like I remember going to trade shows and like 2006 going to like that candy and confectionery and. And talking with Brands and saying, sell on Amazon and they were like that's crazy like why would you sell food on Amazon and then there was like they all signed up. NN and now it's like a race It Was a Race for a long time you know who would get there first two and half capture all the market share who can work most strategically with Amazon and other in Walmart and can whomever else and then everyone knows everyone knows grocery had a great day, now it's like it's kale and now he's calories are in a small anymore for these retailers and now they're just like a. I'm probably suck and so how do you figure out how to make it work and that's I mean that's where I think a lot of experimentation comes into play through a lot of these players it was trying models to see what might work, you know in Seattle we have fresh we have Prime now we have pickup points we have a, Amazon go store anything for a different model for the Amazons experimenting with an S with Amazon and then you're seeing really the rise of cook and cut which I totally agree with you I think I can collect is the next, that's the next thing because I'm already fatiguing I mean I've been shopping for my groceries online since you lunch freshman 2007 here and I'm sitting at the pricing you know it's just it's just cheaper like you just it is because the economics are different and they don't have to ship it to me and another driver.
[40:21] And I'm sure Amazon's figured out you know how to make all that stuff work, and the reality is it's just worse than even the prime now and even instacart and I were to costco.com and safeway.com you like all the different models and even has to offer higher prices on some of it in store specials online and so I mean as a consumer and fatiguing, of the pricing I'm Slicker she's just as much like and it's tempting to go back to the store and horrible so I see.
Jason: [40:53] Scot would be horrified if you did that.
Scot & Andrea: [40:55] You're so right for the next model, and I believe it's click and collect and I believe in you profitable and I believe whatever groceries get on board with this the fastest are the ones that are going to, you know they really going to kill all the share.
Jason: [41:11] Yeah I think that Title Wave is is coming it's going to be fun to watch you're certainly right it's not a new model there used to be this thing in the world called the milkman.
Scot & Andrea: [41:20] Totally we actually the mailbox I mean we know when delivered anything to it but it still existed in her house.
Jason: [41:27] Yeah absolutely so at the end of the day do you think there's a chance that someone other than Amazon wins that space so I could you foresee a Walmart or a Kroger someone else.
Scot & Andrea: [41:40] Will depend on how fast we can both I mean that's really what it comes down to it's not a complicated model you ordered online you know you pick it out your stores and you know you let customers come pick it up we've got it here at Fred Meyer local in Seattle, I'm so it's not I don't think it's a challenging model that I think a lot of these larger groceries or kind of, I don't want to say freaking out but their head of flummoxed by the concept of like setting up a retailer website what does that mean how do you up so customers how you do it right how do you let Brandon getting on it because you're basically recreating like an Amazon, .com grocery store online and let you know that feels really overwhelming, and so I don't think they're moving real fast and I think it's just going to be like humuhumu fast but I do think it will be hard to compete with Amazon's Automation and personalization as it relates to marketing. They're just they're just so good at it and so far you don't haven't seen any other retailers that have even touched it and that's either really where you get like that, if you're able to drive customers to larger basket sizes online and help them discover products and be productive about like when they're about to run out of things and that kind of thing. It's funny I said the big fan of this show Silicon Valley and that this is not a spoiler but in last week's episode they, the two the characters went to the grocery store and they were the only non tasker's in the grocery store there's like 80 people in the grocery store.
Jason: [43:11] That is a great point like I the one you're at your hair percent right about the price fatigue the one loophole is it can be really cheap to deliver groceries to your home when you get a venture capitalist to pay the delivery fee.
Scot & Andrea: [43:22] For Google.
Jason: [43:25] I feel like at the moment there's this the short window of opportunity I encourage everyone to use all that good Andreessen Horowitz money to deliver their groceries.
Scot & Andrea: [43:37] I'm just change topics little bit so then your Consulting gig you can spend a lot of time with Brands you talked about the things they want to talk about which is crap and pricing going to go see a Ting one piece of p3p. What are some of the pitfalls you see them falling into an ear do they they come to you and they say oh my gosh I've got, does problem with her your what are some of the pitfalls that you wish things would have oil for they come to. What are the three things like people they were staying for a bit but a consistent being that I'm seeing is that a lot of them in the CPC space are only thinking like one or two years ahead and it's kind of a reactive model, a reaction way of thinking to Amazon's kind of, anyways have a crap program but I think they're getting a little stricter about it and kind of the last one to two years and so a lot of his friends are going items crapped out, they're trying to keep up with like how to, how to leverage Amazon's new marketing platforms and they're just really focused on the here and now and not I don't think thinking too much about where's the where's this thing go into yours me Amazon's never going to make money shipping dog food and cat litter across the United States alike what is the future of this look like and I don't think a lot of them are spending. Enough time thinking about that because this is when you want to plant your seeds for that so you know if it's the next big model is me nice I might. My opinion is on Amazon they're really going to figure out the pantry program I mean the way to economically ship products to customers. You know that that is secreted that is.
[45:07] Freshly unprofitable in a direct-to-customer at least should be model is to put in a box of the whole bunch of other stuff so it perfectly fits and charge the customer like a nominal fee that they're not going to really. And I worry too much about and then ship them a whole bunch of stuff at once and that's basically what the pantry program is and that program seems to be doing pretty well for them. Iskra. Really fast cording to some of the brands that I work with that are participating in it so I mean I think you thinking about like where the future is and Pantry still kinda challenging it's hard to hear item set up an assault like an automated thing yet, and so in thinking about like where where is the next gen of this thing going, because I mean in the writing on the wall is it like Amazon is not going to keep seeing all these products to lose money in this in the consumable space or they're just going to get really refined assortment. And so programs like Pantry Paramus Lake you know Prime now or the pickup points or whatever those are the Amazon ones but then like what we're talking about click and collect like. I think that you know expanding their, nearest Thinking Outside those kind of the current challenges you're having with your Amazon retail businesses is critical and the brands that are doing that are the ones they're going to be set up for Success because they planted seeds and cut it started that smell, this is nursing one side so let's step outside consumables and take out a category that's like maybe more mature like up.
[46:39] Electronics repair or something the one that I keep hearing is when the Randall say when I think 5 or 10 years down the line. Amazon tonight exclusive retailer and that scares me because it's a race to zero so that's why a lot of brands are on the doubt that's that's one of the reasons you did they have map pricing in controlling the 3p Marketplace, do you think that's that you know you're obviously have drunk a little bit of Amazon Kool-Aid over the last 10 years but no. Is that what we're going to be facing his is this kind of you know it brings have a logical argument to not be on Amazon because they're kind of feeding their own destruction. But I don't think I mean it would be difficult to not be on the phone because of the opportunity that presents to Branzino just from League of Revenue prospective, and sometimes from profit perspective too but I think it's I don't think it's a wise choice, anti depends on a lot of factors but it's not a wise choice to like think of Amazon is your exclusive e-commerce player me the brands that I see that have healthier businesses. With Amazon are ones that sell to multiple e-commerce players and are investing in other ones not investing like investors but you know investing time and energy into getting their business up and running and marketing and things like that on some of the other players and so that's where, I think that some of your business model is feeling more Diversified but if you thinking that you're going to be exclusive on Amazon I mean they change the game there every 6 months, and you know it only takes kind of like one change that's in congress with your business model to be out.
[48:17] And here maybe that's private label or meet you maybe they want your private label of your product or maybe they either come to you with terms like negotiation terms that are unacceptable to you or that you can't you can't actually if you can accommodate, can I still run a business and if they're your only Taylor you're kind of in a really tough spot, yeah I don't think they're setting up Amazon to be exclusive I think they see Amazon becoming a de-facto exclusive because when they look at the online players, Amazon so much bigger than everyone else to. That it's hard to build that diversity that you're talking about that that's not what they worry about that kind of say my brain is priced wrong is right now so maybe there is a strategy right now. I don't help Amazon be the the 800-pound gorilla well and I think that's where it's important, that's what's important to look on Amazon at some of your third party Partners I need your address with Amazon you've presumably all are presumably also selling to other people that are reselling on Amazon it is important to look at their ass and selling across multiple platforms, Samsung, and so you know they're giving you any not might be still small but they're giving you some distribution also they're also giving you an alternative if you don't want to sell directly to Amazon anymore but you still and have a presence there and have a good brand experience and help you have sales, Anthem anything that's kind of like a another diversification strategy you look so, so is private label it was kind of jump into that a little bit what are you tell Brands when they say hey I'm really concerned that you know Amazon just opened up a private label in my category.
[49:50] How do you explain that I mean I think they should be concerned but it's not. Eminem retailer tender copying top selling products it's not too similar differences you know how they're able to manipulate the digital shelf to be able to savor products. Over others, and you know we don't have any like confirmation that they're doing that but it sure seems like they are when you look at the site and I know you're searching for backpacks and you know the one that looks just like the other one, private label comes up before it in the search results really totally it's something really scared about for sure but if you're also kind of going back to the concept of diversification if you've been, yeah totally. If your business is so driven by one or two skews you know you're a right candidate for it for Amazon taking on serve a private label. Copy had approached and so you know figure out how to grow other sections of your business so that you're not completely dependent on laptops Q, because Amazon Michael private label it I think it's probably a good idea and it you know I've seen them give like favoring some of the marketing and and obviously all the marketing is free for them so there, those are going to be really high origin ID on this but they look like they're just going after pretty much every category now which means I mean that makes sense for them to do.
Jason: [51:26] I think you may have inadvertently given this the secret sauce away earlier I just get into the live plants category.
Scot & Andrea: [51:33] Really difficult for Amazon to copy must be because they kept asking it as an interview question and they never launched it so there you go.
Jason: [51:41] Exactly which is odd because I feel like that's one of the first categories than invented cologne.
Scot & Andrea: [51:46] Actually I think that I actually might be irony I'm not sure.
Jason: [51:52] Yes Neil thank you for that.
[51:57] So I know you're going to be at IRC in a couple weeks and I understand it right that topic is tips for negotiating with Amazon can you totally ruin the irce panel. Giving our listener some of the high-level pitfalls and tips.
Scot & Andrea: [52:14] Yeah yeah. Blue am so I mean the presentations really just going to talk about it I think it's another one of those areas where a little bit of Education will really help Brands be successful in their negotiations and the biggest. And the bastard of a feeling or pitfalls that I saw when I was out in the sun because she with friends is just friends not preparing for the negotiation not coming with with data me with questions you know not being prepared, I'm not really thinking through, the Amazons perspective and being kind of blindsided by some of the ass and granite Amazon desert huge so it makes sense to be helpless by the numbers, and so I will talk a little bit about that in the presentation will talk about how to prepare, you know what information to request from Amazon if you have an opportunity to do so I mean I think, an important thing is he knows the lot of times, especially some of the mid-tier the smaller hands are not actually negotiate with a live person and so how do you navigate that right like you probably negotiate with a robot doesn't look like a robot in the email comes to you but looks like a. Can a person that it's you know it's definitely an automated it's going automated process so we'll talk about how to. How to prepare am had to actually execute and then you know what kind of go through some of the typical ass from Amazon and and talk about like when he's made me sense for you like.
[53:47] Who who who doesn't make sense for it to think about like the cross. Program or when would it make sense for you to invest in some of the, the larger marketing programs or or Crap allow answer you know we'll kind of talk a little bit about that. One of the things you introduce me to his this house get this wrong but like driving the car really fast with your. Foot on the gas your hands off the wheel tell tell us more about that Provisions growing quickly and scaling and it's really critical more and more automated. And so you know I'm seeing with my clients and also one of the forums like the Lincoln Group and things like that that a lot of brands are just really at the end. At the receiving end of more automation than ever before and they're hearing from their buyers you know how critical it is that they continue automated and you know not Place manual. Borders and let the system do its thing can have their hands off the wheel that's the hands off the wheel concept so you know and that's definitely you always been kind of a push it Amazon but I feel like it's getting, my friends are seeing more of it and I'm in recent here. An interest Amazon's interesting automation when you negotiate with the with that machine doesn't sound like Alexa. I mean if you get on the phone you're talking to a real person.
Jason: [55:20] For now for now.
Scot & Andrea: [55:21] I'm sorry Jason we're going to cut your crap allowance.
Jason: [55:26] Here's the tip you're not talking to a real person when it's Sign May Day that's always.
Scot & Andrea: [55:31] Chicken area.
Jason: [55:34] Come on you guys don't get Amazon Fire jokes.
Scot & Andrea: [55:36] No I guess I totally get it.
Jason: [55:40] Scot snoody the lack of systems we have to go somewhere for him although annoyingly Scott's car can drive really fast with a hands off the wheel which I'm a little jealous.
Scot & Andrea: [55:51] Do you have a self-driving car have a tablet doesn't have that that future though I got I was too early in the doctor its equivalent of having an iPhone 1 right now.
Jason: [56:04] You can still drive really fast with your hands off the wheel once.
Scot & Andrea: [56:07] Yeah just let me know.
Jason: [56:11] Exactly and any big mistakes you see people making in negotiations.
Scot & Andrea: [56:18] Yeah I mean I think this one is just giving like a specially for the platform or have experience I have significant growth and so it's like one of the first time actually talking to someone like a live person they just give too much away in the first year, that you know they don't hold back enough funding for themselves, Cindy has Amazon ever use an annual negotiation process that you every year and they're going to want more and you know you don't want to give it all away, in the in there for a couple years of Amazon you've got a kind of pre the reserves at or or just kind of the other it's just kind of, signing up for the most you can possibly do for that year from a from a Amazon funding perspective and that doesn't give you any kind of slush fund for the stuff they're going to come to you with. Fourth root beer like participation in certain marketing programs that you know they didn't know about the weekend because you know they're. A plan a little bit more in a three to six months in advance or are you know price-matching error or some chargeback store. I don't want to be in a position all year we're all of those little things are extraordinary painful cuz you already gave them like the most you could give them that you're so I always recommend a can of creating a reserved sign for yourself, you know don't like some leftover money is there be no room in your budget to pay for some of the things throughout the year.
Jason: [57:43] That Prime days only two months away don't don't touch.
Scot & Andrea: [57:49] So I never been a Brandon or works for me but I meant it would be really weird because there's probably this old school believing believe that you reformulation ships and I know I've been a bit more couple times and. You just see the brand raps just kind of going through there and you know it's almost like the airports Gear Drive for them there's a whole infrastructure and there's this whole, pilgrimage to Walmart meet that guy try to build a relationship drugs drinks the Dan Draper Martini lunch and all that stuff and then you probably do all that then you try to. If I go try to beats when Amazon that I won't meet with you unless you're like. Super Dee duper Top Gear brand so then now you're kind of talking to this AI machine and these brands that kind of holiday how they feel. Yeah yeah especially some of the larger more established ones that are really accustomed to working with brick-and-mortar there they believe that they will be able to see crater 6s on Amazon to forming a relationship with their buyers, and I will tell you like the last thing those buyers wanted to do it for him, bladder relationships because it's extremely time-consuming it doesn't help them execute on their initiatives might get them like that anymore Co-op, they can also get that by sending out like a hundred automated emails and so you know I still remember kind of, the concept of like Thursday Amazon buying team they're in their jeans and occasionally flip flops, I'm at the brand comes to visit and they're all wearing their suits and they want to do a line review and like that concept it's just totally lost.
[59:30] Play baby and they're not going to make it they're not going to make selection choices they're going to list everything on the side so it doesn't. The best interest to learn a whole lot about the products and which ones are different from one another. So yeah I mean I definitely see a lot of her and still trying to formulation ships but I'm also seeing a lot of emerges getting like Savvy about that, he has already had a couple of turnovers and their Vendor Manager and they're realizing that like actually the best thing they can do is educate them so. About the, Phat Farm and how it works because of no sex that's really understand how the form works that I work with it and keep keep up with the changes to it I think it you know, the Amazon I think just there was a Jeff quote once and he said we're not in the business of selling things were in the business of helping people buy things and they just, Amazon believes they are a platform for selling things they don't believe they're retailer wish I think kind of speaks to you know why they don't think the relationship development super important. That's an important Point Jason spends more time with the offline guys than I do but up but I'm always. Stricken by there's the still believe there's still this belief and I'm a computer engineering guy but there's just believe that there's this Merchant King, Merchant Prince water be called Jason and you know they can predict what people are going to do and they go and they buy that hot thing in the ghetto, the create fashion themselves and that I'm console surprised how much that still exists and I think you know this this Amazon model of.
[1:01:02] Why should she choose like put everything up and let the customer he just seems so obvious to me. But it really is so counter to hell all these other companies are built that that. It's the step to get even closer to that existential dilemma than they are right now which is hard to believe but just console amazing to me in the retail world that that no one else really gets that. Universal some elements of that and that's really like in my opinion when I was a fire that was like the most exciting thing about being a buyer what if you find the next big thing, like what is it what if you're the one that brought it on the side and I'm ever going to trade shows in finding like weird and scary products reticulate like the Expos and, Ambien like maybe this is like the new coconut water like we don't know what is going to be so I think there's still some elements of that but I mean definitely a lot less than than traditional retailers, stop and come from a line review I guess.
Jason: [1:01:59] Well it has happened again we've used up our allotted hour Andrea thank you very much for us spending time in the educating all of us and especially for educating Scot.
Scot & Andrea: [1:02:13] But thank you for having me on the show and it was really great to be here. Yeah right I said at the top of you everytime I talk to you I learned a hundred things I think I have checks at least that many boxes that is good take me awhile to counter but we're in that that neighborhood, it is reminder to listener see if you enjoyed Andrews view on Amazon brand strategy and then and other topics she's one of the speakers at internet retailer conference in exhibitions Amazon and me Workshop, which is right around the corner it'll be June 6th in Chicago, and Andrea is folks want to follow you your writing online you mentioned you got some articles coming out where's the best place that can find is that a Twitter handle or a, that chatter where where do you hang out online I am mostly on LinkedIn so you can find me on LinkedIn and it's Andrea Leigh Leigh.
[1:03:05] Possible thanks again really appreciate it.
Jason: [1:03:07] Yeah and we'll make sure to get that in the show now so until next time happy commercing.