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