EP121 - Shoptalk 2018 Recap Part 1
ShopTalk is an annual trade show held in Las Vegas focused on retail and e-commerce innovation. In it's third year, it has become the fastest growing can't miss event in our industry. This year 8,400 industry professionals attended the event (up from 5,400 last year). The 2018 version took place March 18-21, 2018 at the Venetian in Las Vegas.
There is so much content at the show, that we've divided our recap into two parts. In Part 1 we cover:
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Episode 121 of the Jason & Scot show was recorded on Monday, March 19th 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 episode is being recorded on Monday March 19th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scot Wingo.
Scot: [0:38] Hey Jason and welcome back Jason Scott show listeners Jason and rare time when we're together and this is actually the second week in a row so pretty exciting where live live live here from the Venetian in Las Vegas.
Jason: [0:53] I know I feel like I have won the lottery getting to hang out with you this much.
Scot: [0:56] I know you're you're a very lucky man that's all I can say. Show listeners we are we recording this at the end of the day on Monday consumed 2 out of 4 days of content so I can call this the shoptalk halftime show. And the show this year is really dense and we thought it be important to give you guys, real-time update of what we're learning about the show some of the more interesting ass, so that we can kind of have at least have two updates with me actually put a third depending on what kind of content comes out in the next couple days so. Just a quick overview of the show this year it looks like the attendance is about double I think we decided Jason is that right, so I think they're saying somewhere north of 8400 attendees definitely feels like it the show outgrew the Aria and is now at the Venetian, I'm in I guess it used to be called The Sands conference in your butt and now they caught this fancy Palazzo or whatever it is Conference Center. And another thing that's really interesting this year is they've added a couple of new tracks there's there's a grocery talk track which I know is near and dear to your heart so there's this kind of acknowledgement that groceries undergoing digital change really kind of in a bike. Not only that but actually on the show floor and then there's a whole track around Ai and machine learning which is been one of our favorite topics. The the big me coming from the vendor world the show floor is absolutely huge this year last year there was like these little mini meeting room kind of things and this year they went full show room and they've done it I don't know the square footage of that but it is as big as.
[2:32] Shoptalk it's as big as shop.org it's his maybe half the size of a retailer I would say. But for a shows for sure you're having an exhibit floor it's pretty impressive I would say that. You know they've done a really good job with that another thing I really like is it under that they've done is a lot of the food and then to get to the general Keynotes you have to walk through the exhibit floor, I and the vendors are well aware of that and they are lined up and ready for ready for action that's who hugs so that's that's interesting and any other kind of, the macro things you want to talk about that you notice this year before we go into the details.
Jason: [3:12] I mean just said the one interesting thing the way they were arranged the the exhibit floor is in these sort of subject-matter Pavilion so there's like. AI Pavilion that you know is largely companies focused on a and a grocery Pavilion so if. If you're looking for a particular type of vendor they've sort of Consolidated those all together which I like I think it makes it easier to find relevant stuff. And then. If you're a retailer you could come to the show for free if you agreed to take a certain number of meetings with vendors so the program that other shows have done that I've never seen it done on the scale they've done here so they. Paid for a bunch of retailers to fly here in the end their hotel rooms they arranged a bunch of meetings with vendors and as big as the trade show floor is there's a whole huge back half of the trade show floor, they just all these meeting tables that are like speed dating between exhibitors and vendors and it's it's a little bit like Tinder, the vendor had to say they wanted to meet with this particular retailer in the retailer had to say they want to meet with this particular vendor.
Scot: [4:23] Double opt-in.
Jason: [4:25] Exactly.
Scot: [4:26] Swipe left swipe right.
Jason: [4:27] Yeah and so the the BD people for my company we did several those meetings and felt like they were all all valuable in in favorable so. It's approximately.
Scot: [4:38] Does that come with the exhibit space or is it kind of separate.
Jason: [4:40] Yeah there's a bunch of bundles you could buy that were like this amount of space in this mini meetings.
Scot: [4:45] Is there a popular in Europe I know are European Folks at Channel visor participate in these meetings and always felt weird from the US perspective that you were kind of like. Paying for the vendor to meet with you but I. They've always worked worked out pretty well for your PIN folks it's interesting to see them kind of bring that over date they did just do their European show shoptalk I wonder if that's something a best practice they brought over as part of that.
Jason: [5:09] Actually it does appear so they did a Europe shoptalk last year and it and they cancel that show so I didn't get to go I assume it wasn't. Quite as well adopted as the u.s. won and now they're calling this the global show and they're trying to get all their European attendees to come here. But you're you're absolutely right like they could have definitely lifted some of those best practices and I frankly I came here a little skeptical about the meetings because. There there were some logistic hiccups weeding up to it like if a vendor opted-in and we opted in but it didn't fit in one of the time slots they had available. I think we bought more meetings than we got so they had to give us some credits back and and not to sound too vain but where. Better known brand than a lot of vendors on that floor so if they struggled give us the meetings we bought you could imagine some smaller lesser-known vendors.
Scot: [6:03] But it seems like the space was constrained not the demand.
Jason: [6:07] Exactly yeah and then like once we got here it sounds like it went real well so agree with you like this feels like one of the few shows in our space that's vibrant and growing.
Scot: [6:19] Yeah yeah and that's what sticking to some of the content highlights I got in late Sunday night super late and then you were here all day so why don't you could get off and tell us some of the highlights from Sunday.
Jason: [6:30] So I am in back taking residency here in Las Vegas I'm here for 16 days. In the hotel room that you and I are sitting in right now so that's a new experience for me and Sunday night had some good key notes that I was looking forward to hearing the first one was Jeff can that who's the CEO of Macy's. And so he was talking about some of their progress they had their first. Favorable quarter and I want to say like 11 consecutive quarters and and so you know he was very optimistic that that they're there. Turn around program that they called the North Star is starting to work since we talked about a couple of the the upcoming initiatives they have a program they're calling growth 50 which is essentially. They selected these 50 Macy's store. The Dare going to. Put all of their best practices and capex investments into in 2018 in the idea is to see which of those things work best and deploy them into all there the rest of the Macy's Fleet in 2019. So it'll be interesting to figure out what those 50 stores are and keep an eye on them.
Scot: [7:40] What does 50 stores are and keep an eye on them and it goes Herald Square.
Jason: [7:45] Seems to be somewhat shocking of that was not one of them.
Scot: [7:48] Does that mean like the giving up on the other 50 is at Macy's shutting stores.
Jason: [7:54] Closed a bunch of stores but they're still in business will check me on this but I don't want to say that it's going to be like 2000 store so that it's still a lot of stores and what you don't do is just. Do a bunch of expensive things and I'll mm hope they work so so picking 50 stores as Pilots kind of makes sense.
Scot: [8:11] , complex offline av-test.
Jason: [8:14] Yeah as we caught a match Panel test actually but that's sort of the original Navy test. So that's interesting they announced that they are deploying mobile scan & go check out to all their stores by the end of 2018 so what that means is. You've installed at Macy's mobile app you you scan the items you want to buy. For it on the mobile app and you walk out without ever having to get in the checkout line if there's loss prevention tags on the apparel which there is on a lot of the apparel. You have to walk by a security desk show on a digital barcode on your on your phone and they'll remove your tags but that potentially eliminate. What date Macy says is the number one complaint about Macy's which is hard to find a cashier or too long a wait in line. So they were they were pretty bullish on that.
Scot: [9:13] Surfin you're doing that or that's just like part of their point of sale and stuff.
Jason: [9:16] They did not disclose that they were partnering with the vendor to do it it seems like something they built or not ganic Lee you are you are absolutely right there are third-party vendors that you can hire to facilitate that for you but. I somewhat suspect that Macy's is not using a third-party to implement it another one that was interesting to me and I haven't seen the meteor really pick up on this year. But he talked about their desire to clean up their promotional calendar and.
Scot: [9:43] Sounds familiar.
Jason: [9:44] That's retail code for we want to get away from all of the crazy promotions were doing and he specifically said we want to eliminate the need for a Shoppers to do quote on quote Macy's math. To figure out how to get the best deal.
Scot: [10:01] This is longtime listeners will know this is kinda killed JCPenney right.
Jason: [10:04] Even more more funny it it absolutely kills Ron Johnson's 10-year JCPenney they were highly promotional he tried to dramatically clean up their promotional calendar and. Just didn't work. A time a lot of us criticize Ron Johnson because we were pointing out that retailers like Macy's had tried this in the past and it didn't work for them so it's even more ironic. That Macy's that has frankly past experience trying to move away from from promotional pricing models is going back to it and we we talked on listener question shows about the fact that. Everyday low prices seems like the future pricing and because of transparency these promotions aren't as appealing as they once were. But it's really hard to shift once you have a customer base that used to promotional pricing.
Scot: [10:53] Now so Terry Lundgren so he is transition. His big thing was to add that discount store inside of Macy's but I didn't hear you saying about that is that stole, is that the kind of makes sense if your have this discount like Dollar Store jammed inside of Macy's or TJ Maxx is probably more appropriate analogy then I think it does make sense to then you could have at least kind of a, a way of balancing out the promotional things is that still tragedy but or or is that off the table.
Jason: [11:21] I I think that still is a strategy Macy still does have these off-price stores that I think the most Perfect Analogy is that are you notice or to Nordstrom Rack equivalent but they were mentioned it all in the keno. So either you like they didn't double down on it or say they're moving away from it you can interpret moving waste and promotional calendar that you know they're there. Trying to Jack the margins up in the main line Macy's stores but you're exactly right like they could be to differentiate it from the discount concept Moore, so we'll have to see how that plays out the next keynote was Target so this is Brian Cornell is the CEO of Target there another retailer that you could kind of say is in the midst of. Turnaround strategy and he spent he did a couple interesting things about his was a little more. West tactical in the Macy's keno and he talked a lot about. The their migration to digital and how they've embraced digital and he he talked about this he didn't called The innovator's Dilemma. That's essentially what it is he's like you know there's this natural inclination when you have all these stores in the stores are profitable in these new shopping behaviors come in to say you like why would I ever invest things that discourage. Customers from going to the store that that's just your natural instinct. And he claimed that like Target had overcome that instinct and was now short of embracing.
[12:55] Digital and they were largely converting the stores in to fulfillment hubs and that they they ship something like 70% of all their eCommerce orders from the store. Brought on stage with in the CEO of shipped which is a logistics company they just bought. You said that they bought them specifically because they wanted to be the first national retailer to offer same-day delivery in all markets.
Scot: [13:19] And then just last week they announced they're growing that out and more stores.
Jason: [13:24] So I think their intention is to get eventually get it in all stores that are also experimenting with curbside pickup which we've talked a lot about here. So a lot of interesting things there and then he pivoted to another topic that I think is going to be very common this year which is there they're doubling down and reinvestment in owned brands. And this used to be the thing we call private label the the purple an hour when they talk about own brand they're talking about Brands they created offense. That in some cases they even sell it other other channels of distribution I'm so potentially sell on Amazon. And target has been very successful own brand they're also talking about brand exclusives so we'll sell stuff from National Brands but. Excuse that are only available in our store and will sell limited edition stuff so the stuff you know that there's a constrained Supply Target some what famous for that with promotions they've done for people with Lilly Pulitzer in others. So that is one of their big plays that's most retailers big play against Amazon has to sell stuff that Amazon can't sell. So that was kind of his big talking points.
Scot: [14:42] So I know they room essentials is there like furniture brand and then what is a jack and. Kids one cat jacket are there any examples where they sold those other places.
Jason: [14:59] So I haven't as Machine Target sell their own brands in other places.
Scot: [15:04] Costco has.
Jason: [15:06] Costco very famous he does there's more Kirkland on on sold on Amazon than on Costco.com I think.
Scot: [15:12] Yeah but there are other.
Jason: [15:15] I'm trying to remember if Target invested in or owns method but method is sold elsewhere so there's.
Scot: [15:20] I swear Dakota velvet with that a designer Michael Graves Sr. Do one of our interns to research them.
Jason: [15:28] Yeah yeah yeah let me know how that works out for you so that was an interesting keynote and then. Sort of the perfect transition the third keynote on Sunday night was to VPS from Amazon that are responsible for the Amazon go store so this is Gianna Parini. Responsible for who started the. The business leader for Amazon go and then dilip Kumar who's responsible for all the technology used in the Amazon go store and is also responsible for the Amazon bookstore. So the very first thing they did which was just I thought hysterical after both. Target and Macy's had mentioned kind of Scan & Go. Amazon of course came on and threw shade at what a pain in the neck skin and go is and how we really built the store just because customers don't want to have to scan each item as their. As their shopping.
Scot: [16:29] Is that a learning from the book store cuz that's how the bookstore model works.
Jason: [16:33] Yeah well I don't know specifically I mean.
Scot: [16:35] Typically the kind of throwing shade at the bookstore.
Jason: [16:38] Yeah and I would argue the bookstore is in many ways the worst version because you like literally can't find out the price without.
Scot: [16:44] Face can't even find a price there's more scanning you would even get it at Macy's.
Jason: [16:48] I told you it was not a very hostile interview so let me just say that question was not asked. Either of them but it was a little bit funny this was the keynote I was most looking forward to Amazon Prime now was at the show last year and I felt like. They shared a lot of new information about the prime now program that they least I wasn't previously aware of. It was less through this time so I didn't do was not a lot of like major new disclosures normally trying to figure out his. How to get a roll go out to more stores are you getting to put it in Whole Foods your new announcements like that at this it is Keynote. They did talk about what some of the best sellers in the store was and apparently there's this chicken sandwich that's been there Perpetual number one seller but it is a lot of food stuff so that Amazon makes their own meal kits in that store in the doors are top sellers. Fresh fruit is a top seller there's an odd thing about Amazon and fresh fruit. This store is in the corporate headquarters in this corporate headquarters Amazon has way less employee amenities than almost any other big company. So the rare amenity that that Amazon liked out a lot is. Did they give free bananas to all the employees and apparently this has killed the market for bananas in downtown Seattle. The smoothie shops used to charge to put bananas in the Smoothie now they let you bring your own smoothie your own bananas in to put in a smoothie because everyone in downtown Seattle gets free bananas from Amazon.
Scot: [18:22] Does the banana thing so when Prime took on Arrested Development there was a big. What is running jokes I'm not a huge Arrested Development person but there's a banana stand thing in there and I think they started it as kind of like to celebrate that it's kind of kept going is that is that true or did I make that up in my head. What decimal burx Amazonian Institute election.
Jason: [18:43] Or just is this odd fruit thing with Amazon so then I found it funny that like this. The store which is largely the employee cafeteria is really what the Amazon go store is the number one seller is fruit so it made me wonder if they're going to stop by the bananas. They can monetize the bananas in the ghost.
Scot: [19:00] How we don't sell a lot of bananas in the guest room.
Jason: [19:03] No I imagine that it's fresh fruit other than bananas but there were a couple other interesting things so delete was talking about like. The ghost are we talked about a lot it's based on. Very Advanced machine learning around computer vision so this is mostly done with cameras and the interviewer asked why they chose cameras there all these examples in Europe in elsewhere of people trying to do similar concept with RFID tags. And they they felt like aspirationally a store model where they have to constantly apply tags and sensors to all the Shelf some product. Wasn't very interesting to them they felt like that the much more scalable long-term solution was to invent this computer vision model.
Scot: [19:49] Now I know you're very passionate about RFID tags how do you feel about that.
Jason: [19:52] I think he's right I think RFID tags are item level RFID tags for products in a store. Is a pain in the neck and unless we get to this thing called Source tagging where all the manufacturers put the RFID tag on in the factory it's it's never going to take off.
Scot: [20:09] Can you do RF IDs for like a fruit and stuff.
Jason: [20:13] Potentially yes so at the moment.
Scot: [20:15] Yeah at the moment.
Jason: [20:19] Yeah it there's a man.
Scot: [20:21] RFID on my app.
Jason: [20:22] So there's a sticker on every one of your apples now and that sticker could essentially be an RFID tag. That sounds like a Farfetch'd example like there's an argument in the future of food that you're going to want to know a lot more about that Apple before you buy it like how many, days ago was picked and all these other things and so like you you could imagine them wanting a tag each individual apple for a variety of reasons. All that aside it was just interesting to hear them talk about how they debated tags versus cameras and went with the cameras.
Scot: [20:55] Another nice thing with with cameras is once you get on digital then more law should kick in where RFID tags rising to this manual. Process that is not going to change the scale and will always be subject to let you have a robot that can put the tags on her which.
Jason: [21:12] What kind of software vs. Hardware really like an unlike General lease offers I have a lot more profitable because as as you scale at the the normal cost is very well.
Scot: [21:22] Yeah then you have the the nurse's other acceleration I don't know so Moore's logic we all understand that you don't processing power gets doubled every two years but then, you know I wonder if there's some correlated to that with machine learning like the system get smarter every X things that sees Pride another there's some pretty interesting thing there that also is.
Jason: [21:43] Yeah I mean there's a couple examples of that like the the. Accuracy of computer vision which is this specific subset of artificial intelligence this towards using has been improving faster than more as wise as a noun yeah.
Scot: [21:56] You think it would yeah and then I hit some kind of like.
Jason: [22:00] Resume wait I had some flat toe because it's unlike chips which could always get faster at some point your computer Visions perfect.
Scot: [22:09] How do they tell like a chicken sandwich in a tuna sandwich but do they have to put different containers on it to help her.
Jason: [22:16] So that was a good question that wasn't asked but there was a similar one that was kind of interesting so because there no sensors on on the items the camera has to recognize every skew in the reporter said like. Do you struggle the tell sugar-free Red Bull from regular red bull. And he's like yes we do it right like that those are the the the really difficult edge cases and I thought about that before they like different flavors or or subtle differences your chicken versus tuna sandwich being up in exacerbated version of that. Would be really hard and then he pointed out of part of the problem I haven't considered before. Not only do we need to tell sugar-free Red Bull from regular red bull the moment when we need to tell them is the exact moment when you picked it up and probably block the word sugar-free with your thumb. And so those sort of obfuscate abused that they get is obstructed views they get in the product is also a pretty tricky problem.
Scot: [23:12] No Amazon in kind of the play but they've done with frustration free packaging you can almost see them going back to the manufacturing kind of having you know, air visionfriendly packaging where you make this one purple in this one yellow or something other than a small kind of text word for sugar.
Jason: [23:29] And you've hit on one of the reasons like this works for ghost or the potential and other things everyone keeps calling at the ghost or a more accurate turn might be Go restaurant because they're actually is a big kitchen in the majority where they sell is food that is prepared. In that store and search your point they can solve their own problem by using square boxes for the chicken and round boxes for the tuna or whatever whatever they want to do. A minority of the skews in the store are National Brands so for their own Brands they can make the packaging distinctive enough. It does have that problem where has much harder to do a whole food store or something like that.
Scot: [24:11] Wonder if they could even do have seen some examples this in retail, I want to take an overlay some kind of a machine readable but not human-readable thing on the packaging to write so the chicken in the tuna come in the same package but the machine can see maybe the UV level or something you know that something that very clearly you know, 2 blinking circles versus a red boxer and things in.
Jason: [24:35] They can build cameras that seen in the infrared Spectrum or something like that yeah absolutely not discussed but interesting things to think about.
Scot: [24:41] Did they talk about when they first launched we did a deep dive on that the. They had a room right there in the store where people were kind of like both checking the AI and then also you know I'm sure they are kicks out and says does not compute and there's some air right there in a human has to go, like figure it out. Do they talk about that at all but the air raid and.
Jason: [25:04] Omelette no only very indirectly so they did not talk about how well the machine learning the Machine Vision is working or the Air Raids they were asked how many employees work in the store for any Dodge that question 2. She talked about. Three big classes of employees that they're like you seen how you been to the store you seen how many people are in the kitchen you seeing how many people on the floor helping and you've seen how many orange shirts there are. An orange shirt is if you been to the store is code for these employees that are working in the back room looking at the video displays and training the AI in so the implication was there still. An army of orange shirts watching a lot of people shopping and refining though I'll grow them.
Scot: [25:54] It's a nurse and they don't use Mechanical Turk for that because I'm a janaz be real time so after like you.
Jason: [26:00] Videos welcome to the store I bet you that video isn't like it was in real time going I mean it's a lot of cameras so even even Amazon would like love the 8 of us bills for doing that.
[26:12] So that was interesting I would have like to hear some.
Scot: [26:14] I'd like to hear some way you should have been the interviewer on that one but Amazon negotiates these things very carefully so I imagine there's a reason so that things didn't go to where we would like to see.
Jason: [26:27] And then the only other thing that kind of came up with a bit that was interesting to me.
Scot: [26:29] I put a bet that was interesting to me as they did talk about.
Jason: [26:32] They did talk about the fact that. You have to have an app to be in the store cuz you you have to have the go app to register you so to walk through like a Subway turnstile to get in in one of the. The peripheral benefits of that is did they allow Shopper feedback to be given real time in the. And so unlike almost any other store went to Shoppers in the middle of the shopping experience and something doesn't go how the Shopper wants they can in real time. Give feedback and that feel it feedback is tagged with a contact that Choppers in so that shows she said that that's been a surprisingly valuable. Data stream for them to improve their operations in the store which.
Scot: [27:19] You are using beacons they know where you are too or that the machine that visual stuff are knows where you are better than any bacon they don't.
Jason: [27:25] Visually light and again it's a tiny store so I you're in front of one of three gondolas so like so it's like probably tagged with with that kind of contact information.
Scot: [27:35] Now Jason Delray overtree code that you Commerce reporter he is kind of heard rumors are dug up some some data that indicates there's a plan to open for 5 more the stores and then did they talk about Whole Foods at all.
Jason: [27:49] Only in that context that they said they have no intention of deploying this Whole Foods right now and said two ways to introduce. Usually win on Amazon and play emphatically says they have no intention of doing something you should sort of assumed they're going to do it right like because they have no intention of offering a shipping service they have. There's a lot of history of them denying something right up until the moment they do it in this case I think there's a lot of logistical reasons that Amazon go dozen. Legacy Whole Foods Fleet of stores particularly well so I sort of do believe them.
Scot: [28:27] Let's talk about this I think it's interesting so why why doesn't it work in a Whole Foods is it just the cost or what.
Jason: [28:32] So in this very smart 2000 square foot store there's more than 50 cameras to make sure that they have complete coverage on the store and. What they need to do is from the time you walk through that Subway turnstile they have to maintain line of sight on you at all times and have to maintain line of sight on every skew in that store. I'm so there can't be any blind spots where no camera can see you in there camping spots where every camera in the store loses track of you momentarily because then even when they saw you again. They don't know that you're the same person that had the app when you walked in the store right so this store was designed from the ground up. The perfect lines of sight it's a very boring square store with no displays in the middle of the store in a traditional store you have this thing. And those Donna was in the aisle obstruct your ability to see certain angles you have lots of displays that. You know for fruit and things that like tree blind spots in the store you have vendor provided displays that aren't even provided by Whole Foods that block lines of sight in the store. The amount of cameras you would need to eliminate every blind spot in a 25000 square foot Whole Foods is. Almost mind-boggling and then you still have another problem you can't let a customer go into an elevator where they wouldn't be on a camera you can't let a customer to go to a bathroom there's a whole host of things that you know just taking off.
[30:06] The Whole Food stores that are D exist and retrofitting them with this technology doesn't feel very likely to meet could they build new Whole Food stores. They're intended to be more compatible with this yes could they use this technology in The Limited ways in that whole food could they use this technology to make you not have to get your wallet out when you pay and just charge your Amazon account.
Scot: [30:29] Or the most popular part of a Whole Foods is the prepared section in a lot people just go and have lunch at Whole Foods so you could see I'm kind of like yeah.
Jason: [30:36] Panda Express portion you can have an Amazon go store inside of the the Whole Foods or for sure.
Scot: [30:43] I bet that's kind of what he's hitting at because he said he also said something like stay tuned yeah we have no plans to put in Whole Foods but stay tuned with a lot of people took to mean either there an open more stores are there was some plan to do something at Whole Foods it's kind of like different than the question.
Jason: [30:57] And to me the most valuable thing that you can do with this computer vision that they could very easily do it at Whole Foods is just putting the camera at forget tracking the customer. Just putting the camera to see the shelf and to accurately track the inventory on the Shelf is hugely valuable. For the store stores are have very poor inventory and they spend a lot of money to maintain that poor inventory and leveraging the computer vision system to have more actor and inventory. That alone could be super valuable to Whole Foods.
Scot: [31:32] That's the really bad part of the delivery so I'm a big instacart I've tried I use them all over it regularly now because because it's a maintained DC, so you're having cameras that then watch them and Tori and see the last apples been picked by in-store customer so that me the delivery customer. Or that apple and then get a stock-out you know that you're some really big wins on all side of the equation there I think you're right that's it.
Jason: [31:58] Absolutely and I think that's going to come up again and some of the other Keynotes we're going to talk about as well.
Scot: [32:03] Cool so that any other highlights from Sunday you don't hit any crazy off the hook parties where you were dancing on the table.
Jason: [32:09] None that I'm contractually allowed to talk about.
Scot: [32:12] Or that you recall that takes us to Monday and then I got in late late late Sunday night so I was able to hit some stuff Monday, the way it works this morning is you had two tracks in the way they're running these tracks as there's five parallel tracks as a, 20/20 build these events and always frustrate people that that event planners do this but they do it for a reason it's designed so that you'll bring, five people you in for friends from your company so and then they there they're very somatic this year I don't remember being as the Mac last year so they're there was a grocery track for example. I was, I attended the first track it was really interesting it was about Brands as in the grocery track that could have been anywhere and there was a VC there that invest in kind of nascent brands. Consumer Brands 7-Eleven was there and and then another investor of his rule was entirely clear to me but he's really all about subscription kind of products. I think there is when we hit on the show a lot where, you notes create a brand used to be like a PNG level event where you would have to go spend $92 to kind of say here's this idea for a swifter and it can be this or going to watch on TV with a 50 million dollar campaign to do the Super Bowl ad now, the world is swimming in Brands and in fact this panel was there so many Brands out there that, everyone's really struggling to kind of like figure it out one of the more interesting things I thought you would like is you know the interviewer has 7-Eleven is all this digitally need a vertical band saw it bother you that she said no it's great because.
[33:50] Those companies you know once they get to certain scale we know they, control like it's when I have to test it in our store and then we can help them because most times if they're doing well digitally against the cpg they're selling cases and large volumes, they can help them a lot with itches and how to how do you single serve package these things and they talked about some they give a case that they wouldn't say the name of the brand, kind of the vibe it was. They are buyer how he said that one that they had a lot of insights Wednesday packaged it at 7-Eleven it did really well because the, the consumer they picked up a whole nother set of consumer because, there's folks that wanted to try it and they also wanted it served cold for their commute back home were or what not so it's really interesting kind of things there of they actually view the digitally native thing very positively because it actually kind of, you know already jumped the hurdle didn't have to build the brand in their stores pre-built and it made it easy for them to cherry-pick it down into the storm, then track two came along and that was your tracking for today I had a meeting and had to miss it but tell us about what you talked about.
Jason: [34:56] So you made an excuse not to not to support.
Scot: [34:58] Well I figured we would talk on the podcast I don't want to spoil it.
Jason: [35:02] Got it okay fair enough so I did one of the the panels in the grocery track in this was called sort of. The future of grocery our grocery Reinventing itself until I had three panelists the first was. Kind bars and so that was a Jared who's the VP of e-commerce there and and this is a very. Interesting traditional case for me that's a traditional. Cpg brand that that mix products and very successfully sells them through wholesale so kind bars are you not very successful there in every Starbucks store and a Whole Foods and Amazon, and they hired Jared and experience e-commerce gaido launch their direct-to-consumer offering. And we talked a lot of brands that are interested in doing that in the big question is always why would a consumer want to buy from you cuz generally. You have the worst with just sticks in you're the worst price for your product and so it's interesting to hear kinds of you about that. The a big component is. Assortment so they're offering exclusive flavors and skews that the wholesale Channel. Doesn't want to carry or is out of our limited editions their heavily relying on a subscription program that a lot of the wholesale Channel doesn't offer and they feel like they have. Unique brand promise and there's a subset of the kind consumers that buy into the be kinder to each other.
[36:41] Serta brand ethos in want to buy from the brand even though they're not going to have as good of a Justice or prices Amazon.
Scot: [36:50] Yep I think kind is one of these, classic examples of a new newer brand that's really kind of leveraging that assortment packaging everywhere you go it's different from a consumer sometimes it's like frustrating because you want to go to Costco and my wife likes a certain one and then, either can't find it at one of the wholesale clubs are bundled with like some really crappy flavor you're not going to eat so there is very clever on the brand side but but I do think sometimes, be a little too clever on some of that stuff that makes it really hard from a consumer to get what you want.
Jason: [37:20] And I feel like there's a bunch of brands that think they have that position with a consumer and they really don't kind I think probably does sit in the next episode.
Scot: [37:30] Did they say how much as directed like do they give you any indication is that like 5-10 15% of their business.
Jason: [37:35] They didn't but I I suspected the last than that right now it's it's it's it sounds like meaningful Revenue but it's still pretty nascent compared to their wholesale Revenue. So I would imagine it's it's south of 1% of their other two other total sales at the moment. The next company with Chef which that spelled Chef apostrophe D and they are. And some meal kids are at sort of an interesting part of the grocery echo system at the moment. A lot of people that think it's a fat and then it's not really going to be a thing or a lot of people think it's the future shopping whenever you say meal kids Denny when they immediately think of blue apron and Blue Apron famously. Has like apparently no business plan to ever be profitable.
Scot: [38:27] But earlier go sits when their top sellers right now so I'm in there Snoop the Timbers like these things.
Jason: [38:32] And shut his actual interesting that they do offer their own meal kits but what they mostly are. Form from young cats so they're actually the private label provider for a lot of grocery stores that are now offering their own meal kits and they have a lot of Big Brand Partnerships to offer Brandon meal kit so I, Campbell's is a major investor in Chef for example. Inside there you know there are so so that was interesting he had a lot of. Understanding and familiarity with that market. He talked a lot about the pros and cons of home delivery of meal Kids versus grocery store pick up a meal kits and the two takeaways I I had from his his. That were kind of new to me. She's very anti subscription in meal kits and he thinks that you know he's a fundamental flaw with most of these meal kits and most notably Blue Apron is you cantilever a meal and then reorder which is exactly opposite of how most of us. What are the spines in particular things we like and we repeat those over and over again. And he also believes that we all need a lot more personalization than the mule. Currently allow and so a big part of their platform is an infrastructure that allows highly personalized male cats and he eventually envisions. The distance can be highly personalized even. In the store on demand so you can get the the spaghetti with a lot of garlic or a little garlic and a lot of onions are all those all those sorts of.
Scot: [40:09] And deserve their delivery remix.
Jason: [40:15] They do have a a chef branded meal kit that they delivered recta home but mostly what they.
Scot: [40:21] On demand not subscriptions.
Jason: [40:25] Mostly what they do is facilitate a regional grocery store offering their own meal kit or someone else selling a meal kit through grocery store so it sounds like more of their stuff is in store pickup meal kids then home delivery.
Scot: [40:39] And my regional it kind of makes it seem like they haven't cracked into the top five or six big guys is not like a Kroger or Harris.
Jason: [40:45] So I think there is. I think it is pot like he was not completely transparent about who is Partners were so it's possible that he is white labeling for a big one and that part of their agreement is that they that they don't disclose that. , number of the big ones at this point now own their own meal.
Scot: [41:03] So Safeway bought I can't remember who.
Jason: [41:06] Albertsons bought placed plated plated thank you. Which is one of the biggest wins in history of Shark Tank by the way fun story there but so some of these guys out on their own Walmart owns their own. For just bought one car for the second largest retailer in the world they just bought one this week so. The market for the really big guys is probably smaller it wouldn't surprise me if they secretly have one but he certainly din-din disclose.
Scot: [41:35] I feel like musical chairs and some you don't want me the guy off without a chair and then the meal world have their own meal than his distribution mechanism is like maybe some A&P.
Jason: [41:48] Exactly so that was interesting and then the third panelist is this company I was also not familiar with call Daily Harvest and Daily Harvest I decided that milk it sounded too easy so they decided to do something.
Scot: [42:03] Getting harder.
Jason: [42:05] We're going to do direct-to-consumer home delivery of frozen foods. And so there's a strong.
Scot: [42:14] Prison meals are like blueberries so I can make a smoothie.
Jason: [42:18] Yeah so smoothie kits I think is the thing the best-known.
Scot: [42:21] I think it's the thing the best known for so all the.
Jason: [42:23] Show all the frozen fruit you need to make a smoothie but also like not not so much like complete frozen meals but like frozen fruit and produce that you might. I'm using a meal they seem very focused on. A lot of the altruistic we need to solve a lot of the problems in the food chain or we're all going to die of starvation kind of thing they talked about what you'd foodways there is in the world and how Frozen is a great solution to a lot of food ways. Throw away a lot of fruit just because it doesn't look perfect and nobody wants to put it in their fruit bin in the grocery store so what's what the industry calls ugly fruits and apparently when you freeze it and no longer matters that that fruit didn't love. Beautiful so. The bruised Apple tastes exactly like the regular Apple a lot of famous restaurants now try to primarily use ugli fruit. They're trying to turn around this trend of throwing away all this fruit that has cosmetic damage and so is interesting that they're they're trying to leverage ugly fruit as a big part of the next there's also this.
Scot: [43:32] Ugly frozen fruit.
Jason: [43:36] And another one was this concept that I never heard of called transitional organic. Say you're a traditional farm and you transition to becoming an organic farm you have to adopt a bunch of organic processes but then you can't sell your food as organic until you've been following the those processes for a number of years. Writer so there's a bunch of farmers that are in Linda where they're paying all the expenses of. Producing things in organic way but because they're only two years into their through your program that they're not allowed to call their product Organa. And so so she's buying a lot of this transitional organic. Products so that that was somewhat interesting and then because it's frozen and they've invested a lot in the technology to pack the Frozen stuff in dry ice and ship it through common carriers like FedEx and UPS. They're able to deliver nutritious food to a lot of places in the country that don't have convenient access to grocery store so we have a lot of these. Areas we call Food deserts that they're able to cater to so so that was somewhat interesting but they had to.
Scot: [44:50] Ugly frozen food to food desert that's the fish.
Jason: [44:56] They were able to raise money on it so. There's a investor for everything. But it was interesting thinking about all these complicated with Justice of the cold chain and. Yeah so hats off. Talk to her and if you think about it if each of these things are popular they just wrapped up portion of the traditional grocery business right so you know she pointed out the the. The Frozen I always the Wiest appealing part of a grocery store and that it discourages interaction with the product and I'll and all of these sorts of problems, and by the way you buy this Frozen stuff and then you throw it in the trunk of your car and it's not frozen by the time you get it home so. So if she's successful in direct-to-consumer with Frozen that potentially takes to rose out of the grocery store the meal kits potentially, take a lot of the individual ingredient shopping that happens today so so some interesting things thinking about how groceries Reinventing itself.
Scot: [45:58] Absolutely cool so after that after Jason second track there, then we went into the Keynotes so kicking off the show kind of the the opening keynote if you will, which kind of strange I think they realize that a lot of people come in Monday or Sunday zo winter who puts together all the content for shoptalk kicked it off, I thought I was a pretty good good kind of Esprit shortest like 5 minutes but the summary was you nowhere in The New Normal which is kind of you know, in in 15 and 16 and 17 we had all this disruption going on and when you're in the middle of it you figure it's going to be. You'll go back to the old normal but they have that never happens and then she called The New Normal and abnormal is essentially where, I know you're not really reacting to disruptive innovation it's just you've adopted it and said this is going to be happening going forward so she really kind of had two pieces to it for predictions, where we going to go and Retail and you can tell this that shapes the content obviously, the number one back in technology will create new efficiencies in expectations number to Shoppers will come to expect experiences that are Cutting Edge today I kind of took that to mean yeah once Amazon sets the bar at, today one day just walk out than the customers tend to expect that I called a zero friction it's pretty interesting, human thing I'm Number 3 start up some traditional businesses or more line where I think we're seeing that you know we just talked about several is very very big trending in our industry be a grocery retail where you have kind of the you know the.
[47:29] Analog dinosaur acquiring the digital DNA and smashing it together to create a new kind of, no I was using her language a new normal kind of combination. And then a wide range of new consumer product to hit the mainstream in this is kind of what was in the first panel where the cost to build a new consumer product is effectively gone down to zero and now you're going to see this huge swath of new products, your micro products micro kind of tribes that they appeal to and then she said those predictions field 7 trends, I never won the rise of Miss France number to the growth of experiential retail, we had a show in the can where will have some really interesting kind of examples of that and then the next keynote talk a lot about that, store associate will not go away but change what they do there so I can becoming an orange shirt or between prep and so check out and in the go example cashier list check out as a big thing automation to the warehouse, more transparent Supply chains in this goes to there's a lot of concern around food safety in that kind of thing, a lot of people talk about blockchain there I think there's a couple talks around that coming up in an explosion of AI machine learning. So after after yeah we went right into office of the CEO of Ulta was there and I don't know if it even some of these. These Keynotes they seem really interesting but then like there's kind of. People 20 minutes so you can't get into much detail and then the format seems to be show a video about the company.
[48:59] Talk about some high-level stuff most people are dino and then talk a little bit about, diversity and maybe the company's culture seems to be the kind of formula you lived up to that expectation couple points that they hit on, and we talked about on the show this kind of your beauty is an area that's doing really well and, then why you know she said they're 90% off Mall property so they were smart to be off ma that three different shaders the real estate location which is off Mall product mix and services, and then talk about the benefit of the Loyalty program they have 28. Million members in that program and it represents 90% of their sales, and the other day it's pretty integrated between online and offline so it's omni-channel loyalty program and then the other day she talked about the consumer changing this is interesting you know she talked about, gender fluidity and now that actually helps them so now you have more and more people wearing makeup regardless of their gender and it used to be all these social things around you then wouldn't wear makeup you and I wear makeup because, podcast but now the so you know it's okay.
Jason: [50:08] We're actually thinking about launching our own line of podcast.
Scot: [50:10] The Chase, spoiler alert, forward facing cameras at selfies has really helped all these Beauty companies cuz now people take more pictures of themselves and they want to look good for those she didn't mention that those with a freebie that will throw in there. The you know. Today's consumer wants a personalized convenient experience I'm certainly living that with my new company where convenience is everything for folks and then personalized as well. Nothing I thought was interesting to see where she broke the script a little bit she went out on a limb and really said that they know is in her she paid homage and she's talking about we couldn't do this without our Partnerships with Google Google Express Facebook and then Spruce labs, I end up that was interesting that you went to Old diversity thing which was good you know that they have. Have a board that has over 50% women which is great and then officers in the company are over 60% so makes a ton of sense you know you know kind of, older middle-aged white dude song makeup doesn't make a ton of sense and I think this is a great example of both aligning with your customer and then also having really good diverse kind of input in the company to make it better, then how the Nike net was up so would you take from that one.
Jason: [51:33] So that this was Adam Sussman who's the chief digital officer at Nike I think he's really tripping you in that really don't think Nikki's had a cheap digital out.
Scot: [51:41] He said he was the first.
Jason: [51:43] And so the heater is it Nike. When they spend a lot of time talking about was their membership program so they they have a thing they called Nike Plus Membership. And they probably have over a hundred million current members they want that to be 500 million in the next five years those members Ben Forex what non-member spend. And there's a number of specific experiences they have in the membership program that have even more dramatic conversion results so is interesting. I would have said that the general Trend in in Welty was that. The effectiveness of loyalty programs is kind of a roading in here we had to back-to-back key notes that were saying how successful their their membership programs are so I found that interesting. He also talked about their conversational Commerce initiative which is launching so this is called. Hertz on demand and you can use the Nike apps to have a text chat with a Nike brand expert that will give you advice and so you know. You mentioned that you get your running shoe advice from attend time Marathon winner. Probably doesn't want to be giving me advice about running shoes but but that's interesting in a bunch of the the conversational Commerce vendors that. At at the show were thrilled to hear him him supporting that experience personally I think the jury still out on.
[53:17] Particular chat base conversational Commerce I'm not sure if Facebook's gotten all that the traction that they were they were hoping to get but but it's still early so we'll see. And then they did talk a lot like his corporate videos. Nikes done some really interesting product launches so that you know Justin Timberlake debuted a new Air Jordan Super Bowl. And they made that available for purchase through their sneaker app like the second he walked off stage and it's sold out instantly a month later the next version of that screw came out and they launched it on Snapchat with a. I really enjoy Innovative kind of want Commerce experience and you know he didn't explicitly call this out but one interesting point. Used to be that they would watch all these products through their wholesale partners and people like Footlocker would sell these and kids with a line up in the mall. And now he's talking about all these Innovative direct-to-consumer experiences that are owned by Nike. And the drink late relationship Nike has with his hundred million users in their Affinity program so to me Nikes really the poster child for someone that's transitioning from. Predominantly wholesale to the majority of their sales but but predominantly direct-to-consumer from experience stand for.
Scot: [54:35] Yep sidebar I don't know if you fall or not but the average several Wall Street reports that to the shoe guys are really having a first company of tough, 2018 I don't know if if it's because they're losing a lot of these launches or what's going on but you're trying to see kind of the cause sneaker fatigue with with. That model seems like it would never run out but it looks like. The average Sneakerhead has X number of shoes that really interested in watches yet Brands like Nike moving that away from retail that could be sneakers have been kind of sustaining through them the retail apocalypse mall again so bit interesting to see if maybe the steps over.
Jason: [55:09] Yeah yeah I think of the inside tip. The thing that sneakers need to save them now is much wider angle front facing cameras on that smartphone because the moment you can't see your feet in the selfie.
Scot: [55:21] Yeah.
Jason: [55:25] So the next keynote I think I was the only one that said in on so I think everyone left after Nike but I was really interested in this next keynote this is Tim Stein or who's the founder and CEO of a company that. To her listeners that probably heard of called a Cato Cato is a uk-based. To Consumer grocery store so you order online they have fulfillment centers they they deliver the groceries to your home. And there are quite successful they sell the equivalent of 2 billion dollars a year in groceries direct-to-consumer. Is we talk about an issue and UK 6% of all grocery sales are are digital where is here were less than 1% to. So I was super interested there that the digital pure-play grocery retailer in one of the most successful markets in the world.
Scot: [56:16] Scot to be part of the UK but aren't there like I know our folks in UK almost they have like six people they can choose from that and some of her like Marks & Spencer.
Jason: [56:26] Grocery stores all out for some Marks & Spencer Tesco as though which is Walmart in the UK car for they they all offer.
Scot: [56:34] Is the only Pure Play.
Jason: [56:35] Yeah but these this is the Pure Play and these guys are bigger digitally than any of those those other companies so it would be a little bit like what a Peapod sold more groceries then Kroger.
Scot: [56:50] Amazon has a big mouth for Walmart.
Jason: [56:53] And I don't know what their ownership structure is it if they're in play or not those are interesting questions but he talked a lot about. The benefits of. Being a pure being built from the ground-up to deliver groceries versus being a retailer trying to transition to groceries so, I have talked a lot on the show about how I think curbside pickup is the ultimate winner in this space and largely because it's something that traditional grocery stores can do and so we have this concept in the industry called store pic, and that's what the traditional grocery stores have decided to do is will will pay our employee to pick all the groceries instead of the customer picking it. And then we'll make it convenient for the customer to get those that store picked order and so he like very self-serving lie but with some credibility. Talking about how he doesn't think store pick can work in the long run and how these. From the ground up for filament centers for home delivery are better and he alleges that they've tried curbside pickup.
Scot: [57:59] Pick up for their system in the customer always gives.
Jason: [58:00] For their system in the customer always gives is always choosing home delivery over herbicide pickup Which flies in the face of my advice by the way.
Scot: [58:07] So it's the. Customer experience not the economics of let me take this item put it onto a shelf in a convenient way for a shopper and then at Pea Picker to pick it in an inefficient way. It's not the economic so you saying it's when you give customers a choice they will choose delivery.
Jason: [58:25] Exactly at the same price which is a big caveat in this and so so one thing. Is he talks about is he he showed the math and he took all the things that have to happen when you place an order with Tesco and they store pick that order and you do a curbside. Tesco delivers at your house and it a typical order by his math take 75 min.
Scot: [58:51] And then.
Jason: [58:52] And then he does that same order in his automated grocery fulfillment center that uses Robata. And he picks that same order in 15 min. So hit his fundamental premise is where 5x cheaper in these purpose-built things so store pick you know is really cost disadvantaged.
Scot: [59:18] And if it's what the consumer wants regardless.
Jason: [59:24] And I I buy that the. Purpose-built fulfillment centers are way more cost-effective than store picking in there other problems with store picking then we'll talk about in that in the next Keynote. I totally buy that where I'm I'm not as confident as him is the curbside pickup versus the the delivery and that you could I believe in that his customers want delivery in the US. We find lots of people aren't home to receive that grocery delivery and one thing he. Very much points out as he says we are at Price parity with all the traditional grocery stores so we scrape all Tesco's prices and our price to deliver it to your house is the same as Tesco's price for you to drive there and pick it yourself. And so no one in the u.s. does that everyone in the US that's trying digital grocery have all kinds of premiums and added cost.
Scot: [1:00:21] Service is the dreaded Services yes.
Jason: [1:00:24] And it's it's worse than just service fees it service fees and they charge more for the same skus when they pick them for you. So so a big difference between the two markets right now so his presentation was super interesting. Then the afternoon Keynotes there were three more so the first one was was Ben Silverman who's the CEO of Pinterest. And I'm just going to be blunt. That was the most boring keynote to me of the show so far and large he did a great presentation about how important visual Discovery is. Which I agree with him it is there was no unique inside the weight like a very self-serving for you know the business that the Pinterest happens to be in.
Scot: [1:01:14] The governor there Rich pins and they also had a lot of marketplace initiative none of that no retail kind of tie on them.
Jason: [1:01:17] Talk about any like it was it was purely like people aren't going to discover new products via text they need visual Discovery and where we build a business provisional Discovery and it was literally that abstract.
Scot: [1:01:32] Go back on the K2 or however you say it one of the intern just came in they are a public companies are independent and they're listed on the footsie the London Stock Exchange and they're part of the foot C250 and have a market cap of about 3.6 billion.
Jason: [1:01:48] So that's a perfect segue to the next keynote is. In some ways the u.s. equivalent which is much more company is Fresh Direct so this is Jason acreman of who's the CEO and founder of Fresh Direct. Resurrect is direct-to-consumer digital grocery exclusively in the Manhattan area.
Scot: [1:02:16] I was going to confuse with hello fresh with their meal delivery company.
Jason: [1:02:20] FreshDirect is like Aikido a built from the ground-up to deliver groceries to your home. The most thought of is a grocery delivery company which annoys Jason to know in because he thinks of them first and foremost as a food company so so the big thing that happens is. He buy stuff from the farm and gets it to your refrigerator in half the time that Whole Foods does so. Pressure it's going to last much longer they do these promotions like a lobster day when you order Lobster to be delivered to your house in Manhattan. It's been pulled out of the water in Maine less than 12 hours ago so that so the supply chain is super cool. Like Ikeda although I don't think it's quite as automated like they built this. Purpose-built fulfillment center so they're avoiding store pics and Jason jumped on the same bandwagon about why store picking isn't going to work right and. Hey price structure is problem number one. Problem number to none of the stores have accurate inventory something we aren't we aren't we talked about earlier and so they just can't fulfill your order properly like they're missing stuff and they make mistake eggs. Phone number 3 store pic doesn't scale and so his point is is store pick ever got really popular the customers in the store would be. Derogatorily affected as they're competing with all those employee Pickers in the store so then the customers will get irritated that they're losing out on the.
[1:04:01] To the to the Picker and staying in line behind too many pictures in the cashier and.
Scot: [1:04:06] This happened the other day I went to Harris Teeter Saturday night and there was more employees picking and instacart people picking, then us and daddy's giant things that you have these relatively kind of pallet size cards that you haven't seen him and it is it is cumbersome, I can tell our grocery store is also throttling so they have you know, when I go like a Friday to get started delivery it's already sold out so I think they're really limiting the number of deliveries which is another bad customer experience you're stuck between you know who's going to have the worst customer experience in-store person or the outer person and that's a, that's a tough tough decision to make for the customer.
Jason: [1:04:46] For sure so that was all super interesting so this is two guys that were lobbying heavily in favor of dedicated delivery centers versus the the store picking model again there just are so many grocery stores that have all this investment like it's hard. They're going to be the best they can with the model they have but then he had another Insight which I totally haven't thought about it all that's super interesting. FreshDirect is launching a sub brand service call. And foodkick is 1 hour delivery normally FreshDirect is next day delivery. And so what are you wanting out is he said only about 40% of food purchases are planned purchases. So I'm going to do my grocery shop I'm going to shop from the list and it's fine that all those groceries get delivered tomorrow cuz I'm putting it in the fridge and using them all week.
Scot: [1:05:36] This could be a Manhattan thing I'll just put.
Jason: [1:05:41] This thing and that could be.
Scot: [1:05:41] Is all the bodegas everyone I know in Manhattan they like shock day then yes it's like.
Jason: [1:05:46] Is like this as well by the way but.
Scot: [1:05:47] By the way.
Jason: [1:05:49] So he's saying 60% of food sales are unplanned meaning like you just decided that your friends are coming over and you need an appetizer and so. Thick is this new business to deliver in one hour and it first you go why wouldn't you just have the same website and let. Next day delivery prison wait one cost in 1 hour delivery the different cost.
[1:06:17] Quickly pointed out that I hadn't thought about is the shopping context is wildly different. For that person that shot like how you'd merchandise. The the plan order versus the impulse order and what you would wood products you would feature and what pictures you would show. Turn out to be very different and so.
Scot: [1:06:40] They felt the experiences.
Jason: [1:06:41] Experience is different enough that it warranted literally a second sight.
Scot: [1:06:46] So it seems like if you're planning your very transactional and I need broccoli for the meal on next Wednesday but then I guess it's more serendipitous Discovery for the song I need an appetizer and innocent people.
Jason: [1:06:58] Swag to the plan shop is a lot more about the ingredients in your you're right like reordering off this list and all of these sorts of things. So that was interesting and then he alluded to one thing I already knew but maybe interesting to a lot of our users the other thing that people lose sight of in grocery is social proof and how important they are an e-commerce. Show ratings reviews are super useful for grocery. The traditional ratings and reviews would be worthless you don't care how people rated the bananas from a year ago. You care how they would rate the bananas that you're going to get today if you order a banana. And so what FreshDirect is done is they've hired subject matter experts to taste every. The produce everyday and rate that days produce so there's some poor dude who's bad job is the Taste kale every morning at 5 a.m. and say today is Kayla 6 out of 10.
Scot: [1:07:58] Just seems crazy expensive.
[1:08:02] Why would you store something that didn't have good ratings I've ever had.
Jason: [1:08:12] Question and I've actually asked Jason that question and the answer is sometimes you just need an ingredient in you're okay with it not being perfect sometimes you care about the ingredients.
Scot: [1:08:22] So
Jason: [1:08:23] You're making pasta and you need tomatoes.
Scot: [1:08:26] Yeah you'll take.
Jason: [1:08:27] I'll take the tomatoes even though they're not in the peak of season versus if I tell you that this week's tomatoes are the most amazing Tomatoes of the year it might cause you to decide to make pasta.
Scot: [1:08:40] Caprese salad or something.
Jason: [1:08:43] And so what they do is they will only promote on the site items that are highly rated but they still will sell produce that's lower-rated because sometimes it's just a utility they let the customer just needs a friend.
[1:09:00] Incident in the last Kingdom. Of the day was.
Scot: [1:09:04] Was.
Jason: [1:09:06] And that that Keno ended up being a little bit of hijack by sort of the day's news they were forced to answer a lot of questions about Cambridge Analytics. And so you said they did talk a lot about that maybe we'll do we'll talk about the podcast but it's.
Scot: [1:09:24] Florida Lottery issues around Facebook and privacy and things that kind of derailed the whole let's talk about retail on Facebook.
Jason: [1:09:33] Exactly but then they did briefly touch on this topic this very interesting to me. Because launched this Facebook pixel that stores can you use retailers can use to do online to offline attribution and they it's been a beta for a while. An out of beta but they talked about one of their clients that was using an in beta which was Michael Kors and Michael Kors was able to validate that they could buy a.
Scot: [1:09:59] They could buy ads on Facebook that increase traffic.
Jason: [1:10:02] Increase traffic in a Michael Kors store by 11%.
Scot: [1:10:06] And this is probably is not a pixel is it is this like their device ID thing where they can track you across every device and and did it does this they had a beacon program that seems if it's a surprise.
Jason: [1:10:17] It's a very internal facing reason they call it Facebook pics of your rights are they basically they're using an ID graph.
Scot: [1:10:24] But the one thing they don't have in the.
Jason: [1:10:25] They don't have an ID graph is the customer in the store.
Scot: [1:10:31] Facebook.
Jason: [1:10:31] So Facebook pixel is there like net.
Scot: [1:10:36] 44 let us.
Jason: [1:10:37] Let's put our pixel in your store it's it's actually not a pixel.
Scot: [1:10:42] That's like what.
Jason: [1:10:43] Them in a great where does integrate into your POS system. We can identify which is.
Scot: [1:10:50] Cleveland weather put a pixel on your side it's funny so pixels become almost like this this name for tracking versus like it's technically actually specs.
Jason: [1:10:59] So this is obviously all these ad platforms have a really vested interest in proving that they influence offline sales and so. After a lot of money in helping many marketers believe that they can do it. But it also is a really useful piece of analytics for a retailer to have and at least in the case of Michael Kors that appears to really be validating some of Facebook's claims.
Scot: [1:11:26] Zack gets us through the halftime just, I know we've used a lot of time we appreciate that a lot of content of the show I think it's important that if you weren't able to, or even if you were here, hopefully we picked up on some things that will help you kind of summarize that I know a lot of people come to the show and they get tied up in meetings or the very long Starbucks line so just quickly looking for.
Jason: [1:11:48] Starbucks twice during this podcast.
Scot: [1:11:49] Subsequently looking forward, the next two days we're going to have some key notes from Unilever others to be really interesting Jason Del Rey interview with Mark laureano in Indy done open oboes he doesn't ever pull punches so that'll be fun, there's Amazon talking about some International things house another Google or I guess this is the first Google Keynote, and then there's a Code Commerce event where Jason has a sidebar kind of a conference and does some really interesting interviews there will be reporting on.
Jason: [1:12:21] I think is in that one this year.
Scot: [1:12:24] And then looking forward to Wednesday on eBay will be talk about some things they're doing with machine learning and AI box that's interesting one cuz he's been all those reports that they've been looking to be acquired in one I saw. Yeah I saw they turn down a 400 million from somebody so that's going to be interesting hopefully you're over that was a smart decision on their on their side. So so a lot to look forward to hope you enjoyed this halftime report after the show we will be doing a second-half kind of overview to catch you up on all the things that happened at those Keynotes and tracks that are coming up.
Jason: [1:13:01] And I just like to remind our listeners that we're living in Las Vegas for 16 days so you don't have to so until next time happy commercing.