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Episode 118 of the Jason & Scot show was recorded on Tuesday, February 17th 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.
Jason: [0:25] Welcome to the Jason and Scott show this is episode 118 being recorded on Tuesday February 27th 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 and Scott show listeners Jason you have a big webinar coming up this week that I think listeners would love to hear about the also it's live video so listeners will actually get to see you, that's exciting.
Jason: [0:55] I know I know I feel like I do have a face for podcast so that you know is not necessarily a good thing but I'm a little disheveled right now I sort of torn apart my office to set up a little, video set up because I'm doing the webinar on artificial intelligence in Commerce, with episerver and I'm doing it on Thursday morning, and the reason we're mentioning it on the show is because the last big webinar that they did I had this author I really like and I am embarrassed to say I don't exactly know how to pronounce his name but I think it's near y'all and he wrote this great book called hooked which is a lot about, how people form habits and and he's a super interesting cognitive psychologist but he did the last webinar and I'm desperate to. Get a better attendance than him so I think I just passed him in pre-registration and you know hopefully I'll bring it home on Thursday morning for the Jason and Scott show.
Scot: [1:57] Awesome we're counting on you also it's it's starting to be season here of trade shows and we have I think 3 or 4 we're going to be there together which is pretty exciting going on right now and neither of us were able to attend Izzy tail West so bummer on that one.
Jason: [2:12] Yeah but shout out to everyone enjoying the good weather in Palm Springs.
Scot: [2:15] Yeah yeah can't can't blame me for one down so once we're going to get together March 12th to 14th in your hometown Chicago we're going to get the path to purchase Summit, and it will be at shop talk in Las Vegas and then in PD ID in Austin March 18th to 21st, and it be the idea is May 15th to 17th so it's going.
Jason: [2:37] Exactly and I'm I'm speaking at shoptaw Canton PD but I'm particularly looking forward to Pat the purchase cuz I'm just going to be in the audience heckling you.
Scot: [2:45] Yeah yeah I look forward to your heckling it'll be funny usually want to do that no one realizes who you are and it's Robert so it's always good.
Jason: [2:53] Even when they know who I am it's generally super awkward.
Scot: [2:55] Psych episode of the office but looks stretched out and more painful. So since we're hitting the traits of circuit and we do that we do have a lot of guests lined up we're going to the Sobe we missed last week due to me I was on a little bit of a holiday so this week we're going to catch up on news and then, it'll be a little bit of a news coverage drought so we need to kind of knock this one out and of course when it comes to news it wouldn't be a Jason Scott shows without. Amazon news new your margin is there opportunity.
[3:38] Big news today it's been kind of timely that what you were going to do the podcast today which is good we appreciate Amazon working this out for us then else one of their biggest Acquisitions ever they are spending a billion dollars to acquire ring. Rings cool as in October I think Rings kind of classic case study there for other option verse so the CEO the founder went on Shark Tank and was rejected by all the sharks I thought it was, terrible idea admittedly the name wasn't that good was called doorbot. They just kind of her like you know we can't see how or why anyone would use this thing so just goes to show you that sometimes when all these experts and your is reject you that you need to just kind of hang in there then they caught the eye of Richard Branson and he invested some like $38 I guess he really, saw used for the product Amazon was an investor to the Alexa fun and they raised a considerable amount of VC.
[4:32] Rivers word that they were out raising Capital at kind of what's called a unicorn valuation or north of a billion dollars and Amazon has picked him up for a billion bucks. What do you think about the new station.
Jason: [4:44] Yeah they I really appreciative of Amazon getting all the news in before our go on their deadline I think that's always very considerate of Jeff, number one listener thanks again, and I think it's it it seems like a checks a lot of boxes for Amazon I think Amazon his has had a major push into devices and smart home obviously they have you know this huge put on hold with the, the Alexa but you know they, they bought that camera company not long ago I mean I feel like just as a consumer product space they've been particularly interested in that space and then you add to that that this that ring could be an integral part of, giving Amazon delivery people and Home Service people access to the home like it you know it suddenly is synergistic with their supply chain and reverse Logistics Ambitions and so it seems like. It's pretty it's a pretty clever investment and you know a lot of us were talking about after the big Whole Foods acquisition, then maybe we wouldn't see another big retailer acquisition but that you know didn't necessarily mean that Amazon wasn't going to continue to be aggressive so to me this is.
[5:55] Another great example of them. Trying to be in a build or own a consumer brand that has even competitive differentiation in the marketplace.
Scot: [6:06] Yeah that really cons pros got let down if you can't think about the other, folks really active in the space you have apple who's really playing catch-up they just kind of came out with their smart speaker and as we discussed on the show it's, not not really clear that's going to be a big hit and it really doesn't do much more than be a speaker and then you have Google and. Google is just kind of frantically also playing catch-up they acquired Nest which gave them the thermostat and they put Dropcam into that cycle of a camera and then they have the Google Home Smart speaker. You pointed out to me that those things actually don't really work well together which is kind of funny you know it's cuz they're all it in the Google House of devices. And then you know they there was talk of Nest coming out with a ring competitor, so no now Amazon has bought the number one doorbell device Irene was working on a cool security camera which I tried the private label ish kind of Amazon home. Cameron is not very good so I'm hoping that the the new ring camera will displace that or or at least have a better offering in that category so it's going to be pretty.
[7:14] I agree with you at the cut checks a bunch of boxes for Amazon so you know I get into the. Alexa ecosystem will be great it kind of helps with home automation security which is this huge area that no one's really conquered yet, then you have the delivery you know and and then another area I watch her the clothes that Amazon seems to be encroaching and more and more is home services so imagine some kind of an Amazon either. Either, Marketplace from services with like a cleaning service or Amazon actually does it themselves through employees. You know you could have all this time together and in one seamless experience so you could have it kind of. The Holy Grail experience would be you you order your groceries through you know that your Alexa wish list they are delivered to youth from at Whole Foods. And then you your do all this while you're at work and then you've authorized ring to allow access to your house to certain folks and maybe there's some.
[8:11] Maybe they hold up a QR code or some kind of authorization there with the ring device that doesn't even require you to answer your phone and see who it is and they place the items in your house so it really kind of. Thinking through this user experience in connecting the dots and in a really interesting way that is so far ahead of everyone else is getting a little scary to be honest with you.
Jason: [8:30] Yeah and you know when when you said I didn't immediately think of but the, you know I think it's another big Synergy for Amazon you know most of these cameras are inside your house right so inside your front door or in your new Nursery or whatever the case is that the primary ring camera is, on your porch and you know of course there's there's this huge problem in e-commerce of porch piracy where where you know bad people are are coming to people's houses and stealing their packages and that that happens frequently enough that it's a it's a major, problem for some consumers that are frayed to buy stuff and have it delivered to their home so it literally is a limiting factor for Amazon and so having a, an army of these devices that you don't have the potential did dissuade porch Pirates you know is even another synergistic thing with Amazon.
Scot: [9:20] Yeah you could even do some cool stuff with a I wear a ring on her I don't have one they're telling the there's some neighborhood alert feature and so you can almost see you know if there is a. Porch pirate out there you know a I could, detected and then turn on all the ring cameras within a 3-mile radius and and you sit all the video to the police kind of a little scary there on the Privacy side but you know when you do think about these use cases is pretty interesting Amazon has all the pieces to do something like that, actually relatively easily right so think about all the AI and the face mapping and everything inside of the ghost tour, you're so they could easily apply those out rhythms to detecting hey this package was picked up by someone that's not the owner.
[10:01] So it's really interesting to think about all these Lego blocks that they're putting together and all the internet use cases to have.
Jason: [10:07] Absolutely.
Scot: [10:09] Another kind of kind of more on the Whimsical side hq2 search 220 cities, I'm in is really funny that they kind of went into an in da mood where you know they kind of had this huge hoopla about what's going on in and now all these folks hurt the states there negotiating with her under NDA sermons trying to read the tea leaves and. You know I think some of the funnier ones that you noticed conspiracy theories I guess I would call them that are out there.
[10:37] There's one that says that Amazon gave a clue that they're going to Austin and if you remember that Super Bowl spot that you and I both kind of thought really won the Super Bowl you know. It kicks off with the lady asking Alexa what the weather is in Austin so a lot of people have kind of tied into that as a clue and then there's a couple other kind of you know Easter eggs in there that there, Canyon to sellers country music that plays in the in the thing this little bit of a stretch but evidently. Austin is has an affinity with peacocks and at the end Anthony Hopkins is sitting there feeding that peacock so I don't people have kind of used the Super Bowl ad is kind of saying is Amazon sending us a subtle clue.
Jason: [11:18] Yeah most of those a lot of people are from Austin for the record but yeah.
Scot: [11:26] And then another one I saw it was funny is a lot of people were kind of saying oh they're going to. Los Angeles and what would happen is actually a local reporter here they're able to file an information act kind of thing and they got. At least a cover letter for for how the proposal was sent from of a city in North Carolina and it called it project golden.
[11:50] And so then a lot of people said they said there's more evidence was found other other reporters kind of took this q and they were able to file these freedom information act. Request get some information mostly cover letters ricewood was redacted. Okay it's called project golden that's like. The Golden State which is Los Angeles or yeah so then everyone but what happened is the person that's just kind of. Gathering Together The Proposal so their last name is golden, who played around this hq2 so even though it's in super quiet mode and in a way it's actually causing more more kind of strange things going on.
Jason: [12:34] Again it's it's evilly brilliant PR and you know they they got all these municipalities to you know, drop their drawers and in demonstrate exactly you know how deep their willing to do in terms of Economic Development incentives to get Amazon there and you know whoever Amazon picks for the hq2 they know how much money is on the table from these other cities and you can imagine they're going to use all that in negotiation when there, opening fulfillment centers are other pieces of infrastructure in those cities do you have a front runner in your mind.
Scot: [13:07] For the longest time I thought Austin.
[13:11] Is it it for me it has a lot of the the elements are looking for so so I can think of this is Amazon's retail business from a people perspective is really well-built out, so I think hq2 is going to be maybe 5 or 10% what you and I would think of is the retail business and the rest is going to be. AWS mom so that's where you let things growing like 60% year-over-year, maybe you put some add business there but but still it's kind of different footprint than the retail business so and and in the proposal and talk about it being largely engineering, so I think it's going to be kind of these y'all hiring cloud-based engineer types so that really made me think Austin because you have three or four engineering schools right there, I'm cost of living infrastructure all those things get checked and it's close to Whole Foods which you know I think if I'd spent 14 billion dollars being near that would be. Pretty nice wind is well within the one thing that is suede me is Scott Galloway has been meeting up making a pretty. Compelling case for the DC area so three of the 20 are in the DC area Bezos just bought like. Largest residence in the DC area and it goes on the DL and then it leaks somehow.
Jason: [14:24] How many owns the Washington Post to.
Scot: [14:26] News Washington Post is like a toy project and you know they're if you do think about the only thing I see that could cause any kind of existential crisis for Amazon is the government. And I do think you're having the influence, being there getting some of those key virginia-maryland folks in your pocket is pretty interesting so so. I kind of see it as a race between those two Austin if it's a kind of really leaning towards talent and they don't really worry about the government thing I think Austin wins and if they're at the government thing is kind of looming large with them that I think the DC area makes a lot of sense.
Jason: [15:01] Yeah no I am I tend to lead towards the DC area as well like you if you sort of think of them. In many ways like Amazon is the next Generation Walmart you know Walmart said really invest in there a lobbying in there and their government relations and, you know like the guy running the government relations program for Walmart is like Dan Bartlett who's the, with the press secretary for George Bush and you know there was a bunch of political news a couple weeks ago I had the number three person at the Department of Justice resigned and she resigned to take a VP job at Walmart so I Walmart building these, this table is like really credible, Washington folks and if that's important to Walmart like you know odds are it it already is or should be important to Amazon and sew in, the proximity make some sense when they are just from the odds perspective you got you got three sites so that seems logical the one thing that.
[15:56] Makes me a little dubious of Professor Galloway's.
[16:02] Evaluation is he also throws in New York is the front-runner and is why Jake is because everyone wants to live in New York and I kind of called him out on Twitter he he. Took the high road and then respond that only people that live in New York want to live in New York that's a little it's a little bit of a reality bubble that New Yorkers have.
Scot: [16:20] Yeah yeah and you know Newark is on there that's like an no way they.
Jason: [16:25] Hey that seems like a non-starter to me.
Scot: [16:27] Yeah yeah you just can't get text out and some of the things that I have and then you saw some interesting news around the go store.
Jason: [16:35] Yeah I think Jason Del Rey broke this on recode but it appears that they're getting ready to scale that out and open six more of those. Stores in Time Turner member but I think they they even identified or speculated some of the the potential for sites was. Austin one of them if I'm remembering right.
Scot: [16:59] Yeah I think that carved out another couple already in the Seattle area at which makes sense that's what they did at the bookstore stay I think they open to in Seattle and then they went like San Diego Chicago New York kind of thing.
Jason: [17:10] Yeah if you're really going to Market and try to you know Drive traffic to it it it it's much my door to open multiple sites in the same city because then you can buy. Geographic marketing Vehicles like newspaper ads and radio ads in television ads you know opening one store each in a bunch of different cities is much more expensive for traffic generation.
Scot: [17:29] Coon and since this is kind of a clever Segway into the grocery last week in our reader question or listener question segment we did run out of time for one of the ones that came in to Twitter and it was from long-term listener Michelle Grant, and she asked do you think Amazon will close fresh and Charlie what do you think about the moose and so I think what she's referencing there is so Amazon did do a little bit of a layoff a couple hundred folks and I think it was the fresh team you know cuz now Amazon essentially has there's a lot of irons in the fire when it comes to a grocery store they have Prime now, they have even like the what is it Warehouse or the the big box thing they have fresh which was the, jewelry that have go and and the Nets Go curbside thing so it had it in and of course at Whole Foods and now they're doing, same day delivery they're on their own how do you reconcile all those things.
Jason: [18:28] So I do think fresh as a standalone fulfillment center, model probably does go waste of you if you think about it like. Amazon Fulfillment centers that they generally ship products from them or do One Day deliveries with their Flex drivers from, they've got these Prime now for filament centers which have a much smaller SKU assortment but you know really optimized for that one and two hour delivery, in the fresh cities they have a separate fulfillment center that has a lot more cold storage and accommodations for perishable in the drivers, deliver out of the limited assortment of the fresh profillment Center which was different than the prime now fulfillment center which is different than a, fulfillment center and now they're announcing that they're going to start delivering inventory straight from Whole Food stores and so what I think is going to happen is that that fresh. Fulfillment center as a standalone entity goes away most of the volume for delivering perishables in groceries is going to come from the, the Whole Foods store the Whole Food store. She has a much larger assortment then then fresh did, and I do think Amazon's continuing to build out there, fulfillment center capabilities for cold and Frozen so you know we wouldn't be surprised if they have cold capabilities, in Prime now fulfillment centers and they continue to fulfill some some.
[19:59] Cold items from Prime now but I would imagine that those are mainly items that are synergistic with other, other types of products that people buy from Prime now so maybe you need some like, cables in an emergency router for your office and you can also buy you know a case of soda or water you know it wouldn't surprise me if they had those kind of skews in Prime now that you know if you're going to order bananas and milk, that's more likely going to get fulfilled from a Whole Foods rather than a standalone fresh Depot.
Scot: [20:30] On the show you guys talk about curbside wins delivery. Is kind of tougher and probably doesn't win sounds like you just going to reconcile that all down two more like delivery dude do you think Amazon does continue with that curbside I think it's called Amazon go pick up or something.
Jason: [20:50] Amazon Fresh curbside is it fresh pick up Amazon Fresh pick up, yeah so there are these two first pick up locations in Seattle I continue to strongly believe, that the majority of digital grocery shopping is going to be pick up right so you're going to order your digital groceries from Walmart or Kroger. Or Amazon and you are going to drive to that store. A surrogate location for that store at a convenient time and have someone to load your groceries in your trunk and that's. The economics of that are just infinitely more favorable than the economics of delivering a fresh and we can get in the all the reasons why we just explore delivering perishables are much uglier than the economics for delivering.
[21:41] White goods in general merchandise there are niches we're home delivery of fresh make sense and you know rich people in New York and Chicago and California you know where are certainly going to take advantage of that and you know I think. All of Amazon's offerings at the moment with the exception of those two locations are home delivery in so you know I was kind of answering the Fulfillment question through that lens but I also think I'll be utterly shocked if. After Amazon turns does Whole Foods into home delivery venues they don't also offer a curbside pickup option. For pickup at Whole Foods and what's going to be super interesting to me when they do that is, what and if the pricing difference is between having his groceries delivered and picking them up at the store because at the moment the deliveries free as long as you you know trigger certain thresholds. And you know but the the cost for delivery are much higher than the curbside pickup cost so it seems like. You know there's there's going to be a strong argument for there being some price savings if you're willing to pick him up.
Scot: [22:50] Prequel show thanks for the question sorry we couldn't get it to it last episode of a glad we were able to pick it up kind of rolled up inside of this Amazon Go News, I'm just wondering I don't think I wanted to pick your brain on the big news kind of over the last week or so was Walmart really miss their e-commerce growth goals for Q4, I am so I think they came in at a paltry 23% which is kind of fun, because that's not too shabby but you know why she was expecting 50% which is a Dunham Park orders and then it there analyst day which we talked about on the show, they're kind of being in their chest and saying hey in 2018 we're going to get this thing cranked up to 60% of the result of that. Stock have been on quite an upswing since the jet acquisition and a lot of this good e-commerce news and it had a single worst day in history, I'm from up with a percentage in a point bases so that did not go over well with the street then, are there is a flurry of Articles you know is Lori on his way out what's going on what what's your take on what happened there.
Jason: [23:58] Yeah so I mean just a brief moment of silence for all that that value that was lost when they announced that they're e-commerce crew at 23% when they're, Industries only growing at 16% and oh by the way, traffic in our stores was up in our stores grew by 3.2% which our store volume is way higher than the, the unlined volume and way more profitable so they actually like reported really good financial news with this this one miss about what, you know economically is kind of a relevant portion of their business and they they got cream for it but of course. You and I are listeners know that that that you know in the long run that that winning e-commerce is is Paramount and so I do think it's fair that investors are. I really nervous about that that Miss. So that being said it's interesting cuz you know Walmart had these three phenomenal quarters where they went 63% growth 60% gross 50% growth, and you know when they are doing those two were a bunch of Acquisitions and everyone's like oh the Acquisitions really paid off. And Walmart really pushed back on that and said no no no the bulk of this growth is organic. You know the boat Boca this girl isn't jet or bonobos or ModCloth are you almost out of those those things and so now year later when they kind of lapped those acquisitions. And the girl that is way down you know people are speculating it's because the the Acquisitions are now.
[25:30] You. They've been in there for a year and said the cops are against. Against the business Windows Acquisitions and so that hurt them you know Walmart came out and said that they had some Logistics misses and you know that that holiday really had a different mix and that caused them. Tamisium shipments of missing opportunities but what I haven't seen talked about a lot which to me is really the hidden story of both Walmarts growth and Walmart's Miss. Is the last topic we just talked about which is grocery so what what listeners need to remember. Walmart is first and foremost a grocery store I think between 50 and 60% of the revenue is grocery. And you know a year ago they started rapidly rolling out buy online pickup turn side grocery. Two individual Walmart stores and so about a year ago they announced they had their thousand. Grocery pickup store and you know my contention is a huge part of that e-commerce growth is they went from zero groceries to you know some grocery store sales in a thousand stores. And so now they've lap those thousand stores those those thousand stores are in the comps. Answer now the growth you know doesn't look as spectacular unless you open. Another thousand stores which Walmart actually announced they were going to do, and conspicuously absent in this in these latest announcements was any indication of whether they they hit their goal or didn't hit their goal or they were behind and I really think some of the young to be interested to hear some of the.
[27:03] The stock analyst you know you know if if they asked us questions and if they got good answers cuz to me.
[27:11] We really need to be thinking about these these e-commerce grocery stores a little bit different than pure e-commerce when when Amazon as a product of their e-commerce catalog it's available in all 50 states simultaneously. The grocery is a store by store basis so you almost need a same-store sales number for e-commerce to really see the true growth. In an Eakin e-commerce Grocery and so I like that that maybe evolution of the retail financial reporting that we we start to see.
[27:45] One other thing that caught my eye related to that mess is there was funny to me probably not funny to Walmart. A Blog on gardeners website from a guy Bob head to who's one of the good retail Analyst at Gardner and he was talking about how he seen some substantial price fluctuations at Walmart. In a centrally he tells the story about how I-44 research she tried to get his family to buy all there. Their stuff online from Walmart they were they are Walmart shoppers apparently but he tried to get his wife to use walmart.com and she diligently tried and they actually failed because.
[28:23] Walmart online pricing was so much higher than their in-store pricing and so you know Bob speculation is. That you know part up part of this mess is that they have this disparity pricing strategy between e-commerce and in-store, and you know that he seen the shift more recently took two closer to Universal pricing and he thinks that might be something at Walmart suggesting. In response to some of their they're softer e-commerce growth. In that that is potentially interesting there is this you know huge urine everyday low price retail or it's it's part of your.
[29:04] All brand proposition knew you'd expect to see the lowest price everywhere and if prices are higher online like you know.
[29:11] You can understand why that would alienate the core Walmart Shopper and so that that to me is a interesting part of the story that we haven't heard a lot of Anna's talk about is. Is the pricing part because we have separately seen Walmart make some announcements. That you know I kind of funny announcements to hear a retailer make which is. They're shifting focus of their online inventory to be more profitable and they're actually asking cpgs to make. More expensive bundles and more expensive products for them so they can get the AO Vivo online up to get profitability up and the sort of. You know implication and all of this is, hey we're getting tonight's e-commerce growth e-commerce is going to be meaningful for Walmart but one thing that sucks about it is the economics and you know now Walmart's you know trying to shift to be more more profitable online and so you know when you talk about this growth. You know is it is it profitable growth in his part of the the softness and Walmart's growth because they have shifted. They are trying to shift the next to be more profitable online. You know what I don't know but those are going to be the interesting things to follow.
Scot: [30:18] Any other Walmart new phone cover.
Jason: [30:24] The couple other interesting things they they they have announced some new brands. So they watch a bunch of new apparel Brands and I think they officially I think we're might have already been out but I think they officially announced them today as well I'm so again props to them for getting on our data Toro schedule but cities are Brands like time and true, Tara and Sky nation and I think I'm one call George, and you know for those that are intimately familiar with Walmart's apparel they've they've had private label apparel for a long time like that you know.
[30:58] It doesn't have a particular good reputation for style or quality and yet I think it's a pretty big seller into these new these new brands are. Like we were singing The Marketplace the seems like there's a much bigger effort for them to be real brands that are distinct and not simply private label. And so I think like the shift is yours going to see retailers talk about not their private label but they're owned Brands and so I think Walmart would say the only boats and ModCloth are owned Brands and now time in Fruit owned Branford. For Walmart so it's going to be interesting to see if they're able to kind of move up market and get a better reputation in a peril. You know apparel and everyday will prices haven't historically. You know I've been two things you think I'd together so so I think that's working against them a little bit but they also announced a private label for mattresses that seems like it's directly competing with a Casper's of the world in that that brand is called them. All is well I believe.
[32:00] And I think some of the new brands are interesting they also announced a couple of redesign so earlier this month they they did a pretty substantial redesign to their mobile app. And what they did is they put a much more robust what I call in store mode they I think they call it the store system. And so this is the notion that if you have the Walmart app and you run it in your house you get one experience but if you happen to be standing in a Walmart store and you open the Walmart app. You get a very different experience that's tailored to the kinds of things you like to do if you're in the store so when you do a search it. What does the search against that stores local inventory they have maps in the app now for all the stores and they help you find products they connect you with the local customer service and the local service offerings like Walmart pay, and MoneyGrams and all those sorts of things in the in the store and said they're they're making the the in-store experience on the mobile app much more robust which is interesting and then.
[32:55] They the automatically redesign the home section and they made it you know much richer and content and you know they have some some new shopping utilities like. Shop for furniture by style for example and things that you know who's more likely Walmart was a pretty straight catalog site so adding this kind of, editorial element to their site was interesting and then they have teased that in the coming months we should expect to see a pretty substantial redesign of the whole walmart.com so I'm, I'm always super interested to follow big retailers when they do design refreshes and and see what some of the new thinking might be there.
Scot: [33:32] Yeah when I saw the all's well so an ounce of the witches the mattress and maybe think they probably went and tried to acquire Casper purple there's like six of these things now I can't keep them all straight Lisa, are there several others, and they probably didn't like the prices and then you know that it does seem like they're dime a dozen now so I think they're all coming out of a similar kind of a design studio and tractor in China somewhere and they just kind of said let's just do this ourselves I'm almost in surprise that Amazon hasn't done one hour or maybe Amazon hasn't really realized it.
Jason: [34:05] No it wouldn't shock me if we see that in the near future.
Scot: [34:08] Quick one. Since we just talked about Casper I did notice they opened a store in New York City which is continue that Trend we talked a lot about on the show with these. Digital native Brands getting a certain scale and then having to open stores are I guess they're more showroom me so the mattress you could understand that we're. You're the only so many people they're going to. Trust in store trial and then home trial in the return policy and it is I've enjoyed seeing them in Target stores and I know you care so much about them and, it is nice to have at least get to see one feel it I lay down on it and see what it's like before you take that did to me it's more the time risk of you know. That's another thing I have to ship it back and all that so that was interesting.
Jason: [34:52] Yeah absolutely Anna and as we talked about on the show number times I, brick and mortar stores are a great marketing vehicle for online sales and unlike a lot of other marketing Vehicles which are pure expense you know the store can often pay for itself or be profitable and drive a bunch of traffic. E-commerce business so you know, opening showrooms particularly in high traffic areas like New York City you can make make a lot of sense for bran.
Scot: [35:17] Couple quick hits so over on the pier Place side eBay has been pretty quiet on that position front and also in keeping with their timing today they announce who won the first positions in a while another Marketplace and it's pretty interesting so, eBay has a long history of not doing well in Japan they they had their own Japanese offering, end of the exit of Japan in 2000 they also didn't do well in China they really struggled with with Asia and general General, partnership with Yahoo auctions so if you look at the the Japanese Marketplace market today.
[35:54] Dominated by rakatan Yahoo auctions in an Amazon does really well in Japan as well and so they actually just acquired a startup called the starts called juices. And the name of the marketplace I don't know how to say it so I'll spell it is qoo. And then one zero I would she so I think you would be cute n. JP that's pretty interesting and I saw a rumor that they paid $700 for that, so you have to kind of thinking a why would you pick 2018 after you've been out of the market for 18 years. And my my reading the tea leaves on this is a really good job on kind of, cross-border trade and enabling people around the world to order from. Order from sellers across the world and then doing some interesting things with reshipping and, Google translate and just make the entire eBay catalog as much of it as possible available in areas where the extra don't have a presence so so I imagine when I read this stairs, there is demand for for you know. Probably cross-border trade product and this gives them a platform to kind of put that on where is before their Pi just doing this kind of localized and I kind of caught up it's kind of a, that's kind of a country page where you'll you'll go to eBay. JP but. The listings are all coming for the US and Europe in and they've been Google translated in that kind of thing so this will I think.
[37:21] Their interest must be that they're seeing something in the date of the newest in Russia for example some of the largest countries for them where they do this and Brazil in other countries.
[37:30] Another couple quick ones back to omni-channel Macy's was in the news this week because they had an awesome 4th quarter, and I hope you're sitting down Jason but they're same-store sales grew 1.4% year-over-year, so that was a no cause for celebration I think there was a Wall Street expectation that they actually have negative same-store sales for the last three years they have been contracting so it is good to see them having increased it just kind of interesting you know that.
[37:57] Walmart gets the snot beating out of them for her for 23% growth and e-commerce Macy's I didn't see what they split it out but you know they grew 1.4% and it's kind of like you know, the through the woods and everything is great. So you know that that is still growing shorter there are smaller than overall retail which I believe was in the high 3% for for offline so that was interesting, what other kind of couple things. take out of that announcement they now say they have a third of their skus are with a call Exclusive which to me means more like private label or if they have work with a brand it's only available at Macy's and that seems to be doing well which is at one of the things you and I buy stale retailers to to focus on. And then they required a beauty product called bluemercury at Sephora. And I'm not an expert on this and it's evidently to doing really really well and you know it is exclusive to them and I think they're starting to really kind of. Push that pretty hard the last one I saw that was pretty interesting kind of in the financial news there's been a lot of rumors are Nordstrom's going private and looks like. Now there's there's all these rumors that that deal is getting done the stock reacted to it so and I noticed that, Jason is added them to code Commerce which will be his little kind of Sideshow that he does array shop talk he added one of the Nordstrom store that so it'll be interesting you know you can imagine.
[39:25] Is there something going on that's all Jason's going to ask about so you can imagine hopefully maybe a deal will be done by late March or that you know that they're kind of have some timing setup that they can talk about it then or something maybe read too much into that but I thought that was interesting.
Jason: [39:37] Yeah I know for sure because they normally don't do a ton of publicity so far I think it's Eric Nordstrom that's going to the recode dinner it'll be interesting to hear what he has to say and I I'm sure you're right that you would certainly get some questions about the, they going private I would do just just one site week Macy's so bluemercury the Cosmetics company their brand that Macy's bought in it and it's killing it luxury cosmetics in general are doing really well it's one of the fast-growing categories and so I told to and Sephora these, two Standalone Cosmetics retailers are are growing really fast like you're doing much better than then retail in general. For all of our our cosmetic Savvy wesner's I'll point out that Sephora is a retailer that carries a bunch of Brands including some private label so, they're probably not the most direct competitor with bluemercury but you know you can think of like a Revlon or L'Oreal or or those those kind of Brands is competing with blue Mercury but evidently the analyst. I have talked about bluemercury being one of the the crown jewels and one of the great assets assets that Macy's is hat.
[40:46] So do you feel more more cosmetic aware now Scott.
[40:54] What notes are they both carry a bunch of national Brands they both have their own stuff but the the the real Innovation here is why. Before Sephora. If you are interested in shopping for Cosmetics you probably went to a department store when you are a young girl and you became a certain age your mom probably took you to a department store to get your first cosmetics and, all the Cosmetics were shop and Shop so you had the first and foremost pick a brand with your feet so you walked to the Mac counter or you you walked to the, repair counter or whatever whatever Cosmetics you had an affinity for and you shocked by brand, and so support I had this sort of game-changing notion that like hey people don't want to stop by. Brand necessarily they want to shop I use case so I had to put all the foundations here from all the brands and let's put on the moisturizers over here from all the brands and that, that concept played really well with consumers in and Trigger 2 for on this rapid growth in Ulta is a more recent competitor that is kind of followed in in support his footsteps, and done a really good job of adding Professional Services to the store in a salon and things like that so that's now you really have the whole Cosmetics history.
Scot: [42:09] Collective I was thinking we should do a deep that the boom you just did it right in the middle of news awesome the Deep dive delicious nugget inside of some e-commerce news.
Jason: [42:18] Exact just wanted to establish my Qualls as knowing more about Cosmetics than any dude should know.
Scot: [42:25] You die definitely bouncy.
Jason: [42:27] I appreciate it so going back to omni-channel there was also a few interesting news nip it's about Target so one that caught my eye because it validated smart-aleck opinion I had, you know a couple months ago Target acquired this company called shipped and shipped as a. A third-party delivery service that would deliver purchases from a variety of stores to a consumer's home and there.
[42:55] Yeah you pay an annual fee of like $99 and then you get free home delivery you know. Over some purchase threshold like 35 bucks or something so Target bought them and at the time I was like Hey that may be a good acquisition that may get Target some good capability for home delivery that they want but. They're likely to have overpaid because. Shipped was this two-sided marketplace where you know they tried to acquire customers that were customers of ship to not Target and they pay $100 to ship to be a member, and the reason that they would get a bunch of customers is that the utility those customers get as they get free home delivery from the bunch of retailers to ship Ted 2, appeal to a bunch of retailers and they had to appeal to a bunch of consumers and when one retailer buys them suddenly it's much less appealing. For for ship to work with all these other retailers in that you know it has this negative Cascade effect on the whole two-sided Marketplace model, and at the time of the announcement that I've no no no we're going to contain around another standing in entity and we're going to continue to. To try to support all those retailers so you know interesting side-note 60 days later shift is no longer delivering goods from Walmart so.
[44:12] You may have paid your $99 under the belief that you could get free home delivery from Sam's Club and ship just pulled that that rug out from Target has pulled that rag out from under the ship's customers. You know which in my mind means shipped is at the end of the day going to end up being a convenience delivery tool for Target purchases which.
[44:30] Maybe super useful but it's it's a different model than the original ship model so I found that you know interesting or self validating made me feel good about myself. And then there was kind of an interesting interview that we saw with Brian Cornell the CEO of Target I think he was on Squawk Box and you know who's making the point about.
[44:52] The value of Target stores and how you know they're very successfully shipping from stores and they're making major investment and remodeling stores and how how important stores are Little Mix, all stuff that I wholeheartedly agree with that I'm glad to see Target doing and if it's I think that the Marquee quote out of this whole thing you know the kind of got the headline was. Brian Cornell says e-commerce is in everything most us Dale Sale still happen in stores. And I have to be honest I don't love quotes like that because in my mind you know half of all Target sales are digitally influenced. And you know dis deciding that a sale is a store sale or an online sale at this point is kind of silly that 70% of all their online orders they ship from the stores and now they have this ship thing to deliver from. From the stores like you know I don't think Brian should be talking about his e-commerce sales versus Is Us sales and the my sort of. Smart aleck metaphor is it's like the old retail Guy saying the only profitable part of our stores the POS because that's where all the sales are driven in the shells don't drive any sale so they're less valuable we should not invest in the shelves. Obviously like it doesn't matter where the sale is consummated like the whole customer experience is super important.
Scot: [46:07] Feel like there's a joke in there but I didn't get it some kind of old school retail joke.
Jason: [46:14] Yeah I'll put the laugh track in so people will think that everyone else got it even if you didn't. But we are up on time. Because I know we're trying to make the news episodes a bit shorter as a is an amenity to our listeners, I do a reminder when I get in to see some of you in Chicago at the path to purchase Summit Monday March 12th, Scot is going to be part of the Great track on Marketplace in Amazon selling and I I'm going to be. In the audience learning from that one and we'll be podcasting some live shots from there so. Hope to see some of you then as always love to continue the the conversation on Facebook so if you if you have any questions or comments about this episode or 100 out some of the many things. And I got wrong feel free to jump on face. And we'll keep the conversation going and as always if you loved the show we would greatly appreciate that five star review on iTune so this would be a great week. Finally jumped on the website go finder show all you have to do is type e-commerce in the iTunes where the first one they don't show up. Click on that 5-star review and we will be forever indebted to you.
Scot: [47:23] Thanks for joining us everyone and also when you're on iTunes hit the Subscribe button to lock people just download each episode which is fine but his subscribe it also helps us on the rankings and we appreciate that.
Jason: [47:34] Absolutely so until next time happy commercing.