EP102 - Code Commerce, Shop.org, and News
Code Commerce (the first stand alone commerce event from Recode) was Sept 13 and 14 in New York City.
Shop.org was September 25-27 in Los Angeles, CA.
Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.
Episode 102 of the Jason & Scot show was recorded on Wednesday October 4th, 2017.
Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at Razorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.
New beta feature - Google Automated Transcription of the show
Jason: [0:25] Welcome to the Jason and Scott show this is episode 102 being recorded on Wednesday October 4th 2017 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host of lingo.
Scot: [0:39] Hey Jason and welcome back Jason Scott show listeners.
[0:43] Jason fall is go time in retail and I was looking in.
[0:49] You know it's going by so quickly that you and I've been so busy, we did our listener appreciation event we had indochino and it turns out we have not done e-commerce news and Analysis since early September so here in episode 102 going to be kind of a quick hit of some of the news that's come out in the last 30 days, I so kind of mid to late September that we thought. Maybe many listeners are experiencing the fall like we are where are your so heads down getting ready for that critical holiday season you'd want us to help our Steven and figure out what are the Nuggets of what has come out in the last 15 or 20 days, alright so we're going to focus on those two of the nuggets are really trip reports and on both of these. I have to admit Mia Copa to our listeners.
[1:42] Epic fail really I did not make it to either these events and I plan to go to both so the first was recode and that was in New York and the second one was shop.org in Los Angeles. And I have righty of things so hurricane kind of kept me from the first one then on the second one to scheduling conflicts between you and I and in a couple of. Things on the on my other day job side kept me from going there so I am on the edge of my chair to hear from you how those two events went.
Jason: [2:11] Yeah and let me first start by saying for the listeners that were participating in the pool Scott played the hurricane card at 1 minute 40 seconds end of the episode so, so can graduation to whoever one that, and yeah there's so much going on I feel like we're going to have to go faster this is probably a 20 lb in the 10 lb bag episode let's jump right into Rico door code Commerce more more technically so for listeners that don't know, recode is great publication they have a very famous show on the west coast every year called code, and more recently they've launched a series of events that were specific to Commerce and most of those events lived on top of another Commerce event so they would have a dinner and a few speakers at, a shoptalkshow or in a RAV4 when one of those sorts of events and they've all been great events, so this was their first effort to turn it into a standalone event it was a day and a half. I'm just dedicated to speakers that they lined up in New York and for a first-year show I think it was really successful they had a pretty good turnout all the logistics seem to work out pretty well and. As is usually the calling card for these coat events they were able to get some pretty impressive speakers that you know I was interested to listen to. So because your time we're not going to be able to cover all of them but.
[3:42] But really quickly a guy always look forward to hearing from his Andy Dunn who's the founder of bonobos there purchased this year by Walmart so he had a good good conversation with Jason Del Rey, you know a lot of it the usual ground was covered talking about like digitally native Brands and how Belushi Andy is on those and talking about how life is living inside of Walmart and, the cultural challenges that exist there andy is a guy that. Is is very bullish on the omni-channel experience and so living inside of Walmart and having access to their stores was. He felt like nothing that was a pretty big advantage and so you know I thought like he was well worth listening to. A little later in day one we had the CEO of William Sonoma water helper. You know a great brand great CEO I was a little disappointed at in her comments at a digital show she did not come off. Super digitally-savvy if I'm being frank and it's interesting because William Sonoma is a. Traditional retailer always relied on the catalog they Embrace digital early, and Gina today more than half of their sales are online and she spent the whole time talking about how stores were a differentiator and how how important the in-store experience was.
[5:13] And how you know they sold a lot of categories that they felt like people just didn't want to buy online. And I think Furniture was specifically one in wow like I absolutely think there's a huge competitive advantages to a store experience and I think it's super important to honor. The stores it it sounded like a little bit like one of the old CEOs defending their investment in stores against the onslaught of Amazon. And that just seems surprising coming from the CEO of a a retailer that's been so successful in digital I would have thought she would maybe be a little more. Maura balanced and nuanced and she just seemed to be a strong advocate for the stores. So at the end of that day one it was kind of interesting joint presentation with Adam Silver who's the NBA commissioner and. The famous calendar industry Mike Rubin who's the executive chairman of Fanatics he also happens to be one of the owners of the 76ers and.
[6:17] Famously started a number of successful companies in our space including GSI. And ShopRunner and I think was even on an episode of Undercover Boss. So my group has won the most successful guys in e-commerce so it's always super interesting hear from him you know you talking about Fanatics which is made to order. Jersey's online I think that's a super interesting category because I do think. Personalization is a a big up-and-coming play in.
[6:49] Digital Inn in retail I think we're to see you a lot more products personalized and you know I think there's a lot we can learn from an early player like fanatics. It was a little funny seeing the two of them on stage together. Because you know my grooming is very anti Amazon and talking about how to compete against Amazon he mentioned that that Amazon tried to do the custom jerseys for the NBA before Fanatics took it over and. Wasn't successful and an implication being that was too hard for Amazon but Fanatics was able to make it it it work at scale.
[7:25] And let you know I think there's there's a lot of interesting insights there and. You know he's sitting next to the commissioner of the NBA who sang Hey Amazon the super important partner and we're going to let you buy any of the jerseys you want customized on Amazon and essentially Amazon is going to be an affiliate for a fanatic so you know, what while Michael was talking about half and addicts had a differentiated experience from Amazon Adam Silver with saying, but if you prefer Amazon or your Prime member you can you can get anything that's been at Excel straight you know that's licensed by us straight from. From the Amazon and we understand that we need to be there because their big player and the the fall under that is, you know Amazon out punches their weight as a retailer in terms of mine share with with folks like Adam Silver the NBA commissioner because you know there's there's a realization that, Amazon is the content publisher and you know one day could own, the rights to broadcast NBA games and you know already has the rights to broadcast some some NFL games now and in so you know it's an interesting Dynamic talking about like. The retailer and the content publisher and you're sitting there next to Michael Ruben who's a retailer and an NBA owner so it was kind of a. Convoluted set of of interrelated issues but but I found it fascinating.
Scot: [8:45] Cool that's definitely a whirlwind tour of the did you get to stock and done much at all.
Jason: [8:55] I did not I left him alone, I will say props to Jason Del Rey Athena this is the reporter at at Rica that specializes in Commerce so this is really his event he I thought he did a bunch of interviews day one but I think yours also getting kind of, unfortunately he was under the weather so I think he was a trooper and most impressively he's a huge, long-suffering Knicks van and I sort of expected him to just have a lot of mixed questions for Brad I'm sober and he totally refrain from any personal comments so so Props to, previous guests on her show Jason Delray for doing a good job even shorter updates, Tim Kendall is a present at a Pinterest was on I thought he was really smart and it was interesting like you know he talked about how he thinks, a small minority of people on the Pinterest platform want to conduct a Commerce transaction on his platform and that's fascinating because most people would talk about Pinterest having the highest buying intent of any of the social networks and he's flat out saying most people don't want to see a buy button, on Pinterest he's right you know we have shoppable pins their increasingly successful but in most cases, what customers want is to get inspiration on Pinterest and then they want to go to the e-commerce site to actually consummate the purchase and so that that was interesting, you know there for many years there's been a lot of folks out there talking about how you know.
[10:26] Traditional e-commerce sites might not even exist as all the purchases move to Facebook and Google and in Pinterest and here's the president of of, the one that supposed to be most successful and he's saying hey you know that doesn't seem to be what our customers want to do, so I thought that was super interesting and then they too they move the venue to Hudson yard which is a.
[10:50] A really interesting new multi-use development going up in New York that's going to put a lot of retail can I have an Amazon bookstore, and they did a bunch of on-site opportunity so you could go to her the the newest Nike Town you could visit a couple digital startups, and one of the options was to visit an Amazon Prime now for filming Center that it's in Manhattan on 34th Street. And so I'm sad to say I did not get to go on the tour it signed it booked up really quick but I did hear from a few folks that went on them, and you know the reminder is is Scott reminded me right before the show there's 45 of these Prime now facilities. I'm out there and they're they're designed to hold the smaller sort of stuff that people wanted in one day and they do the one or two hour delivery, I said it's one in Manhattan is right in the heart of Midtown is on 34th Street which of the story retail street it's across the street from the Empire State Building it's on the same. Street is the largest Macy's in the world and what a lot of people were surprised by when they walk in this facility is, there are bunch of Pickers running around pulling stuff out of bins and there was almost no automation. In that the facility at all and I and you know most of the attendees expected to see a bunch of Kiva robots or, you know at least some sort of out of me to picking system and what apparently they were told is, that at the moment like every one of these facilities is a different configuration and that it's still too early in the evolution of this concept.
[12:24] For Amazon to cost-effectively Skillet with automation, and so I I just found it interesting that they already got 45 of them out there and in their world that that's not enough yet to automate it and that that, you know these things you know I have a lot of clients that have automated fulfillment centers for e-commerce that that looked a lot more advanced than apparently this Thing 2.
[12:49] Did I surprise you at all.
Scot: [12:50] I think even know where that. Offering isn't its life cycle it doesn't suit so Amazon always going to start some the customer works the way back and what that means is, you're okay being inefficient on the back end as long as you can still deliver a great customer experience or I would say they probably put the. The bulk of their effort like 70% or effort into the front end and the front end is getting better all the time and you can tell they're just like really iterating that super quickly for example when they close the whole food food steel that stuff was in there a day one and in that kind of thing so it does fit in with the, the Amazon DNA to to hide sometime hamsters in the background going on there.
Jason: [13:35] Yeah well and sure enough you are correct so then you can barely get home from that show do a little bit of client work and then back on the plane to Los Angeles for shop.org.
Scot: [13:50] Yep and so fun Jason fact you truly are the retailgeek you met your wife for the first time seven years ago was that Dallas.
[14:01] Did she see you kick a I remember that one vividly because we got to go to the the Cowboys stadium in kick field goals did your wife like see you kick a field goal and say if that's the man I'm going to marry is that kind of how it went.
Jason: [14:13] So partly I did go to that event with my now wife she did in fact see me kick a field goal and it's highly unlikely that that. Favorably influence her in any way and it's equally unlikely that she she at that point realize that she would one day marry me I took a little more work.
Scot: [14:35] A lot more feel quotes.
Jason: [14:37] Exactly yeah it is true that my right leg maybe one of my my best assets but it's still not that good.
Scot: [14:46] Okay well congrats to you on seven years meeting go meeting your wife just shows you that shop.org anything can kind of happen when you're there.
Jason: [14:55] Exactly I remind people you know I want talks about you know how important the networking is if he shows and you know I certainly agree with that.
Scot: [15:03] Cool suicide from relationship status changes what was going on at shop.org this year.
Jason: [15:10] It was an interesting year a lot of changes in, you know what what to me is that I could sort of the one of the quintessential shows in our industry, I said that she was in Los Angeles at the Los Angeles Convention Center, the show is in Las Vegas next year the shows always moved but after next year they haven't answered it's permanently going to be in Los Angeles so this is kind of the new home of the show of the Las Vegas Convention Center is is, is a great facility it's very large in the whole downtown area around the convention center that used to not. I have any amenities and you know frankly wasn't very nice and, are you leave wasn't very safe has been heavily gentrified and it was a super interesting Vibrant Community that's kind of. Popped up and in a most importantly for the professional trade show attendees amongst us there a lot of good hotels now to stay out there, so I like the venue the production values of the show where you know felt like they were like you know Franklin upgrade from past years and I suspect that you know what some of the newer shows like shoptalk out there that they can raise the bar for everyone and it felt like, like shop kind of followed suit, the Treaty of Paris interesting because the what they now down as they've taken all the content and put it in like auditoriums, all around the trade show for so the trigger for a sort of the Hub in the whole event they set up this really comfortable garden with like casual seating and free drinks in the middle of the trade show for so people could kind of loiter.
[16:49] I know there's a lot of concern about like, noise pollution from from all the the content being around the trade show floor and I would say that stuff all worked out really well, if anything the convention center was so spacious that even though the the booth space was apparently a sell-out it just felt really roomy, In-N-Out on the good news that felt really comfortable on the bad news it made the show feel less busy. Because the tiles just weren't as crowded as you you might be used to from previous years, but they did have this new section on the floor that I really like it's sort of the technology Pavilion so it's a bunch of small or newer exhibitors in many cases a lot of exhibitors from other countries and instead of being extravagant boost that you had like pods in this area and so there was a lot of the the cool Innovation stuff was in that section, I think it was like an expanded version of something we saw at in a rough this year so I like to see that Trend continue, and then I did not get to catch all the content I unfortunately had a pesky client that, wanted to meet in the middle of shop.org in another city so I actually had to fly in for the last day. So I didn't get to catch all of the presenters Wednesday was a good day. The Adam Grant is a professor at NYU and wrote a great book called The Originals he's actually a. An organizational psychologist that sort of helps figure out the most successful organizational structures he gave us.
[18:21] A really good presentation in the morning and you know one of the key themes that I that he talked about is.
[18:32] What a negative effect of the wrong people in an organization or in the wrong roll or on the wrong team can have any organization so he had to start a quote that resonated with me. It's nice that the right people on the bus but it's much more important to keep the wrong people off the bus and he was he was talking about how that's a common organizational mistake. I just liked his presentation because I really feel like. Organizational change management is one of the most important things for any any retailer or brand in surviving digital disruption. And it's kind of one that people don't think about it very much so it's interesting to see an academic that's exclusively thinking about that.
[19:08] And then his the presentation right before him is a Scott Galloway who's super well-known in our industry. Professor at NYU does very funny does a lot of really. Thought-provoking controversial humorous content and so for the most part I hate him because he's generally just like a better version of me.
[19:33] Funny are better-looking right more often kind of thing and he has a book that just got published yesterday. And the book is called the four and it talks a lot about the that these the sort of you know four horsemen. That are in his mind Google Facebook Amazon and Apple. And he has this notion that each of them in a sort of appeals to a particular brain part part of the body so. Google you know it appeals to the brain and is really associated with our rational self. Facebook is not associated with the heart and is associated with our emotional sale. Amazon is associated with the gotten really in a deals with our sustenance and needs and Apple has by far the best position they're associated with RR reproductive organism. And and it sort of associated with sex in so you know I think Professor Galloway like. Basically would say an is on it or apple is likely to be the most successful most profitable of the four companies as a result of of there, you know picking the right organ to go after but he had a lot of interesting, content if I have a criticism of Professor Galloway he repeats a lot of content and he's so popular that like most of his stuff is on YouTube so I, frankly if you are a close fall of hers I'm not sure of his I'm not sure you saw a ton of new stuff at.
[21:06] Shop.org but if you're not super familiar with him you know I think it all is really interesting stuff that that would definitely makes you think, I have already purchased this book and I'm looking forward to reading it I got one book ahead of it in my queue. But I was glad to see him there and you know we probably should break down and have him on the show at some point even though I am kind of jealous of him.
Scot: [21:31] He seems to have it in for Amazon lately like everything I read he's kind of saying they don't pay enough taxes they should be split up.
[21:41] It's kind of interesting he seems to Canada if I have a an anti Amazon bias in the last like month and a half or so.
Jason: [21:48] So he didn't interview with Tara Swisher on recoat a couple weeks before Amazon bought Whole Foods and he, he mentioned that Amazon could easily get in a brick-and-mortar that you know I'd be simple matter for them to buy someone like Whole Foods and so he he's gone a lot of credit for correctly predicting Amazon's acquisition of Whole Foods which I think it's Toy Fair again I fall in lot closer than most people and I I know he just makes a lot of unlikely predictions, and some of them come true and his kind of and as you get it would expect a lot of them don't come true in most of us forget about those and, you know one of the funny ones that he he sort of makes fun of himself is, about two years ago he predicted that Amazon had reached its peak and was likely to fail and that their lack of stores was a, an Achilles heel that they couldn't overcome, International in his presentations he he likes shows a graph of their stock price in the last 2 years and he started marks that point when he predicted they would fail and of course they're the. Fastest growing stock on on. The market since he predicted they would fail so I think that may make him slightly negative on Amazon but I think you know she I think his position is.
[23:02] Doterra bad things for society about all four of these companies and that their you know are matters of great concern I keep you know he. He talks a lot about the. Facebook's influence on the election and that you know because Facebook to leadership is so young they probably don't fully appreciate the thread that Russia is to us I think he talks a lot about. Some of the downsides of all the power that's aggregated in Google I think you definitely likes apple the most of any of these companies and you're exactly right he's talked a lot about, the fact that you know for every dollar of Revenue Amazon generates they employ half as many people as a brick-and-mortar retailer used to so he thinks knitting at the really bad for jobs and because you know, they've been really successful in his mind it not earning a profit like he definitely believes they're very profitable company that manage their R&D to make sure that they don't, book a significant profit every year which I think he agrees is a smart play but that that's resulted in them not having to pay a lot of taxes and so it you know he shows a graph of. Amazon and Walmart over the last 10 years and Walmart is. Has paid 84 billion dollars in taxes in those 10 years in Amazon's paid 1 billion dollars in taxes and of course the market is rewarded Amazon you know with with. Vastly more market cap growth in those 10 years than it has. Walmart and I thank you rightly points out you know there's some of these Trends there they continue you know have some. Meaningful social impact so I'm looking forward to hearing more about that when I read his book but you know he definitely the guy with strong povs and and he generally has a.
[24:43] A pissy way of sharing them.
Scot: [24:47] Cool any so that's good any broader Trends you picked up on has this machine learning thing kind of have we gotten past that or is that still everyone's banging that drum.
Jason: [24:58] Nope that is the drum, like the big train that all the presenters are talking about it both shows that you know a boy Tori got had to get stamped on every booth at shop.org is the whole deep learning cognitive Computing thing, and you know we've done a couple deep dies on that so I'm not going to rehash all that territory right now.
[25:23] It is a super important Trend butt, like in my mind a lot of its importance is getting diminished by the fact that it just being treated as a throwaway buzzword by so many people in our industry for so many different purposes.
Scot: [25:39] That it on shop.org.
Jason: [25:41] Well the one and I did not get to see this line but I got to watch a recording so Mark of Lori did an interview Mark does not do a ton of public speaking and so that like there's a great gift for shop.org so you get, Andy done at Rico Dandy reports to Mark market reports to Doug mcmillon the CEO of Walmart. You know which I imagine has to be a funny Dynamic cuz you know Marcus is probably worth multi billion dollars between. Selling of Quincy to Amazon and selling of Jetta Walmart it was kind of the one-year anniversary of the sale and it was just it was interesting to hear his his POV on the Acquisitions he talked a lot about another, all the Acquisitions that he's made and when he's continuing to make find a kind of falling into two camps so he would say he purchased a bunch of these companies. Just for their merchandising chops and their access to product lines that Walmart didn't have access to so you by ShoeDazzle to get more shoe expertise and to get more shoe lines that the relationships with the vendors and and smart merchants, alone make that sort of an immediate Roi acquisition for Walmart and then he would talk about their acquisition of the digitally native Brands like bonobos and ModCloth, being a much longer term strategic play and, you know this this goes to a a show that I think we're going to do next week about private label an Amazon private label in particular Walmart and most big retailers have a big strategy to.
[27:15] Build more important house brands that you know used to call private label but in some cases these far surpass. Private label and it seems clear that you know part of Walmart strategy to build this portfolio of valuable brands of consumer want that you can't get on Amazon is through acquisition and so you know he I think you would categorize ModCloth in Bona BOCES. The first of of presumably more Acquisitions in that space so it just kind of interesting to hear his framework for the acquisitions.
Scot: [27:47] Awesome any other shop.org updates.
Jason: [27:51] I think in the time we have that's probably going to have to cover it because I feel like we, you know it's been a busy just news months since we last did news and I know there's a ton of the Amazon news and some other industry news we want to jump into that.
Scot: [28:09] Yeah and it wouldn't be a Jason and Scott show without.
[28:27] So the first big piece of Amazon news is what is commonly referred to as hq2, so on September 7th that Amazon I just kind of randomly put out this announcement that they were accepting. Rfps for their second headquarter City and these are peas and courage cities to be. Aggressive they had to kind of till the end of October to submit their bids and and it also is very detailed. Unlisted what Amazon was looking for in a city and important things and and how to highlight your city and whatnot then that is really just dominated the the the. The new cycle for for the last 30 days so probably actually be glad when they make their announcement some kind of will tired of talking about HQ to be honest.
[29:18] What it was now so I kind of felt like Austin was a good one because the biologic is Amazon. The retail business is Amazon is relatively mature and really got a core density. Both in Seattle and then the most number of employees for retail are in the phone at centers so it seems like you're going to open another headquarters level kind of operation is mostly going to be. The the newer generation Amazon things I'm sure they'll be some retail folks there but it'll be the minority let's say 10% so they're going to hire.
[29:54] 8000 people maybe 800 will be kind of retail random people and then the people that are in HQ around retail tend to be buyers and and developers of the site.
[30:03] So then you're left with like who else is going to be in there and where I kind of come out is the echo family the AWS family and these kinds of folks and, when you look at Amazon's R&D budget I think that ends up being a lot of Engineers so so I think you're going to let you know if I, if I kind of play that out Amazon near needs to be near an engineering Hub and. Austin's really good one we have one here in Raleigh-Durham Boston's another area and then, like that Carnegie Mellon quarter there so. The Northeast has a lot of negatives that so I don't really think it hits a lot of things they want to do there so I coulda ended up with Austin it's kind of his is where I think it is so did you give it a lot of thought to this one Jason.
Jason: [30:44] A little bit like there's been a lot of interesting talk since they want us if it's a scam if they already have a location and that in that this is just a big PR stunt that. Did they ran soda. Be interesting the people speculating that all think that the the foregone conclusion is a different city so they're not unanimous in that which is funny.
[31:07] Austin certainly seems like it's in the running I jumped on Twitter early on in this and you know trying to make it out of the box call Houston it just been hit by the hurricane and I I really think the whatever City wins is going to have to pay a fortune in Economic Development funds to Amazon to get them there so there's going to be, huge concessions Amazons not going to pay any, property taxes for for 20 years and whatever this headquarters is and it's it's frankly probably going to be an economically bad deal for whatever city does it, it's a little bit like bidding for the Olympics, and so it has to be a city that has a bunch of money to waste on that and I informed that criteria I think Austin might struggle to come up with a package and it occurred to me, Houston's going to get a bunch of federal money they're going to need to rebuild the whole city they have proximity to a lot of the same universities that Austin does and so I thought it could be interesting that could be a way you know a great PR move for Amazon to help, rebuild that you know the hurricane damage City and in Houston I haven't heard anyone else jump on that bandwagon so if I'm, if I'm right that'll be great but the lack of people that agree with me has me a little nervous about that prediction you know the. The sort of emotional favorite for me would be you know they really want to win the pr bad all they had to go to Detroit and Revitalize Detroit and Detroit actually does meet a bunch of there. Their criteria so it's going to be interesting to see how it all plays out like you know I don't know.
Scot: [32:44] Yeah yeah I don't think Detroit has enough engineering people there so we'll see.
Jason: [32:49] University of Michigan though.
[32:57] So that I did see some interesting press releases about a potential new Amazon device which was a wearable they were glasses that had Amazon Alexa built into them in so that, when you first see what about glasses you think about a. Yeah heads up display and Google Glass and all that it was actually the glasses were. Convenient way to deliver the earbuds to your ear, and the idea was to have a in a persistent access to this always-on digital assistant in Alexa and so it'll it'll be interesting to. To see if that product ever meets the light of day as we record this Google just just made their big announcement for the new pixel phone and one of the accessories they announced was I said that your butt, that are specifically designed to put the Google assistant in your ear at all time so it seems like like that. Yeah I could be an interesting battle grams of you know what year based personal assistance.
Scot: [34:01] Yeah and that's my big ass cuz I know, dresses listening so mr. besos the big ask I have for a new platform for Echo Alexa is wireless earbuds so I have airpods in the Syrian or face is just terrible I can never get it to play music on Spotify or anything else but Apple music. So would love for you guys to salt that for me. What it was I was excited about so it shall advise over the years I've gotten a lot of these folks that sell refurbished product and there is there's a big set of consumers that love the option to trade down to this kind of product to that has been. Retail certified that it is it is I've been.
[34:44] Yukon to a process usually by the manufacturer certified that it's like new and it has a warranty, I also know this refurbished so Amazon's had kind of weird policy on this that kind of let it you do it but then they don't give you the tools as of that kind of seller to be successful and is it not really meeting the customer's kind of needs so.
[35:04] They announced that a new kind of marketplace area called renewed and that that's exciting cuz I think.
[35:11] That's a really big area Amazon hasn't nailed yet and it's going to be good for a lot of the larger sellers to do that. This is just kind of like super not sexy but it's really important because this is where Amazon is really kind of. Dominating your woman that's first phone is in her build out so just kind of looking at some that we haven't talked about on the show quickly and just starting kind of. Towards the end of August to August 28th announced a million-square-foot Facility in Oregon in the Salem area. And then they also at about the same time the Ohio so organized Ohio in those are about a million each and then they are doing their first fulfillment center in New York and that's going to be in Staten Island that's 855. Thousand square feet then on the 14th of September the announcements again with a million 3rd or 4th in Michigan. And then in the day it's kind of funny like a literally 20 days after they announced the second fulfillment center in Oregon they announce the third and this is going to be in Portland and it's going to be a million square feet. Something's going on in Oregon's so there's there's a lot of Amazon love in Oregon right now on their building fullness centers as fast as they can just kind of find land. And then the kind of in that Vein on the 18th they announce that yet another Ohio one this one's and Euclid so it was kind of.
[36:36] Smaller is 600000 square feet which is kind of a.
[36:39] Effort by Amazon Sanders and some microphone the center that must have been some function of the land I checked and it still a normal FC it's not up sortation Center or prime now or anything like that the other one is.
[36:52] The Washington Wizards was kind of talking about the Indian e-commerce market and just kind of.
[36:58] Dropped the Amazon now has 44th element centers in India this is priced me because I don't think they would announce a lot of new filling centers in India that I've seen this is pretty well researched I thought they had like 10 so. Does a little surprising to me.
[37:14] Pretty sure the Cialis would not say that without having fat checked it six ways so I think that's a new data point that's pretty interesting that that indicates that the the level investment. Amazon's making India who sings her hundred million bucks to build out so that that kind of feels like. I was surprised 3 to 4 billion dollars there which frame signs effectively nothing but you're pretty interesting that that India is releasing stupid wrap up as well.
Jason: [37:44] That is crazy I wonder is there a way to make money on the stock market I feel like tons of investors forget that Amazon is going to spend a fortune every Q, 3 opening a bunch of fulfillment centers to get ready for the holiday season and just seems like there's always that's always going to be a negative profits quarter for them as they say is they. Spend all this capex on these fulfillment centers in I might surprise by people being surprised by it.
Scot: [38:09] Yeah what it does is it kind of likes all these ones that are now it's still kind of a crew and they won't hit the piano until they launch they opened is my understanding how the accounting work. Listening to your point it's like they take this really big non-cash hit the Dave I've been doing out the cash overtime and it will create this kind of you know negative accounting thing on there their typical leave it on this one of the reasons, they really like to focus on free cash flow and versus because you have cash cash is cash and accounting rules don't change the cash coming in and going out and so, when your building dis many phone as soon as you can imagine that the accounting rules really start to add up on you.
Jason: [38:48] Yeah I can only imagine I maybe should have mentioned in the shop.org announcement that, that are recapped it was a surprise event that Amazon put on Indian asked a bunch of new Alexa devices and the first thing I found interesting about that was unlike Apple or Google it like, you don't announce the event several weeks in advance and build up a lot of anticipation. As far as I know Amazon didn't give anyone any morning they sent out an email in the morning saying hey we're having a press event in Seattle in 4 hours.
[39:21] Which which means you know there's a bunch of reporters that now have to live in Seattle and they announced a significant refresh of the whole. Alexa line in so we mostly driving cost down so.
[39:38] They took what used to be the bass Alexa and they shave $50 off of that they improve the speaker improve the Aesthetics a little bit. They they put a new product in the line at the the price of the old or Oxo that now includes a home hub so the ability to control a lot of home automation devices without a third party hub. And so what that means is. You you don't even need the Philips Hue White kit you can just buy individual bulbs and you can control them direct from your Alexa and so you know clearly one of the things Amazon that has has. Noticed is that setting up.
[40:17] That configuring home automation is still too difficult and plugging in and getting interoperability between all these products is difficult so it seems like they're trying to address that problem directly and make it. Easier to unboard new products and add new products to your smart home.
[40:33] So that'll be interesting and in the goofiest product that they watched in this thing is a set of buttons that are designed for family games and I think particularly designed for like a version of. Of a trivia in Jeopardy that that you can play on the Alexa where each family member has a button and you hit your particular button to buzz in and get a chance to.
[40:56] To answer a question that Alexa asked so like I thought it was Goofy but I'm sure I'll order it said about them.
Scot: [41:03] I'm surprised you haven't preorder this.
Jason: [41:06] And I guess I forgot one important when I have pre-ordered some of the products in advance I can't even remember which ones are pre-ordered there's a new version of the echo. That has a screen on it. And this looks like it's predominantly made to work as an alarm clock so. You know it's a small form-factor device with a smaller screen than the. The Echo Show and it seems like much better ergonomics and it's designed to sit next to your bed and you know I can have a persistent clock face and do all these different things. You know that you I know we both have lunch echoes in her house the you're my wife and I each have a clock next to our side of the bed like the last thing I'd want to do is add two more Echoes to my bedroom and I feel like they'd all be competing here are commands.
Scot: [41:51] Yeah yeah that's what I guess.
[41:56] The did you see that there are another car OEM at Alexa at the BMW they're going to have the Alexa capability.
Jason: [42:05] Yep and that seems like a pretty cool car to have the Alexa in you know voice interface makes sense in a lot of places, but for sure you know one of the places that makes the most sense is in the car cars of Ed, natural language interfaces for a while and they all hip hugely sucked in so you know. Seems like a pretty big competitive Advantage for for BMW to have what everyone you know feels like is the you note for this along digital personal assistant and the best natural language interface, in their vehicles. The book side is if you're any retailer other than then Amazon you know it sure sucks to keep seeing Echo win all these OEM deals, you know if anyone ever needs to do any add any products to their shopping list or do any auto reordering or any of those kinds of things while they're driving, you know Amazon certainly going to be in pole position for all the all those orders which is not good news if your Kroger or Walmart or Target or any of those guys.
Scot: [43:11] Yep I the most controversial Amazon news he recently was Cole's announcing they're going to take Amazon returns about half the folks I kind of saw a comment on it said this is genius this is going to drive foot traffic to Kohl's you know people come into Kohl's they'll drop off their Amazon returns in the shop and that that's a genius thing the other half said, this is a deal with the devil they are going to know the coals is simply paying to to run Amazon return center sport where they fall out on that one.
Jason: [43:44] I think it's really smart, and the reason I say that is you like there's all kinds of opportunities to partner with Anna's on their front of me and almost always, there's some huge downside to partnering with Amazon you're exposing them to a bunch of data that they're going to use to compete with you you're giving him a bunch of Revenue that they're going to use to compete with you you know all these Frenemy Arrangements. by definition have have something in it and it's pretty unappetizing but the Kohl's deal as far as I can tell the super one-sided.
[44:19] Kohl's isn't giving up any data about their customers they're not sharing anything proprietary with Amazon they're creating a reason for a bunch of of digital Shoppers to walk in the cold store, during holiday season and there's going to be an opportunity for serendipitous Discovery there it just seems like. You know when one of the the most favorable deals I seen someone do with Amazon in quite a while so I thought it was smart what what.
[44:46] What do you see as the potential downside.
Scot: [44:50] Well that's good take a broom in the store so I imagined me an Amazon Locker kind of thing so it's not entirely clear how many. Ask me up a minute so you know if it's an Amazon Locker then that's essentially having a big amazon ad in your store. And then who's to say that people can't order stuff and pick it up there so that I don't know there's a trade-off there and if you have to staff at that's even kind of a little stranger so we'll see.
Jason: [45:19] I don't think we've seen the details yet so that's fair enough it's funny when I say that if you shop at Kohl's so they set up a bunch of extra customer service centers during holiday so that you know you can, do returns and and a half after checkout and.
[45:36] You know things like that and so I just sort of assumed that I would be an extra function you could do it any of those return terminals in the.
[45:43] In the store in Holiday would be to return your Amazon packages.
Scot: [45:47] Could be we'll see.
Jason: [45:48] It's been over a month since the Amazon took over Whole Foods and we're starting to see some interesting. Recaps on the how that's played out you know. Everyone of course made a lot of buzz when it look like Amazon was lowering a lot of prices, on day one when they took that over and you know Amazon got huge amount of PR credit for that which you know, probably negatively impacted market cap on how much other grocery stores but it's been interesting we're now starting to see some. Evidence that that. Does price reductions dramatically improve traffic in the stores and they drove a bunch more bodies into the store we certainly saw evidence that there they're selling a lot of the Amazon private label 365, on Amazon platform and maybe even sold out of a bunch of problem products and created some supply chain problems, but I've also seen some interesting analysis that, did all of the price Cuts early on were pretty strategic and that a month in it doesn't look like it's really cheaper to shop for a basket of 100 items at Amazon Whole Foods, then it was before the acquisition and so you know the way they've lowered some some prices that they actually raised some other prices and that you know it, it looked a lot more like a perception change than a fundamental pricing strategy change.
Scot: [47:17] Yep the one of them.
[47:20] More interesting reports was from Foursquare where they actually kind of can measure store traffic if they look at at check-in translate they believe that the traffic was up 25% since the acquisition so, whatever they're doing seems to be driving more people into the stores which which is I think the desired go there.
Jason: [47:36] I was also surprised in a day when they did something really impressive to me they had a car displays in all the stores, which is non-trivial to execute but a month in it looks like a bunch of those displays were even temporary and so it does not appear that they're going to be permanently merchandise saying Alexa and all the Whole Food stores at least.
Scot: [47:56] There's a bunch of interesting m&a so it was just kind of go through the sand and talk about it come out in a package so Walmart acquired parcel. Plated was acquired by Albertsons Ikea Acquired taskrabbit and there's kind of a definitely a delivery on demand theme there what do you think about those acquisitions.
Jason: [48:21] Yeah I mean that they all certainly make sense Walmart had already announced that they were looking to do same-day deliveries in New York I think that's primarily for Jet and so parcel is a, you know presumably the vehicle that used to do that you know meal kits are exploding category and in grocery home delivery of meal kits has a bunch of cause problems as we seen in, Blue Apron so so Distributing them through a you no pick up in grocery store makes a lot of sense so I thought that was an interesting play by Albertsons and then the taskrabbit one is kind of most interesting, one of the big big at impediments to Ikea stuff is Ikeas are in inconvenient locations with giant parking lots, and you know it's often not not appealing to drive out to and a Kia and then you get something that you have to assemble at home and so I don't know what percentage of taskrabbit tasks are actually buying in assembling Ikea furniture but, you know it potentially address is like you know a pretty big impediment to a key expanding their market so that could be really clever.
Scot: [49:29] Young speaking of m&a we're celebrating the one-year anniversary of Jet and Walmart so congrats to all those guys and when this happened there was enough. Kind of like the Kohl's return thing there was about half the folks thought this was genius another half thought this is going to fail this marketplaces tiny Walmart's just going to let you know not be able to grow it and yeah I think the results look promising so far as to certainly the stock like, stock market likes it so Walmart stock has reacted really well over that that. And then you know e-commerce has grown I think the last quarter they announce is about 63% growth so, I know that that's all pretty good news do you think it was a is it time to call it a success.
Jason: [50:17] Yeah well I'm not sure that one year is a short of time to, to make that determination on a three billion dollar acquisition but I actually think the first year was successful it clearly drove some cultural change at Walmart they did a bunch of other Acquisitions that it's doubtful they would have done, without my glory being there so that that certainly seems to add a lot of value in a Walmart just needed a good story to talk to the market about Heather competing with Amazon and, the jet acquisition certainly gave them that in and they've had this, terrific performance and I do think some of that is definitely related to to Mark in the new team in the directions they're setting but I also think, a lot of that growth is coming from Walmart's expansion in a digital grocery which is probably something that was underway, before Mark got there and so I'm not sure you can contribute all of the phenomenal e-commerce growth Walmart and last year to jet, but that the. The progress that they made that in many ways is most impressive to me is in the year that since that acquisition, they've expanded form like 10 million skews online to 57 million skus online which is, largely through the marketplace which I know you know something about but that seemed like, you know a pretty significant change and is apparently driven a lot of their success as the larger assortment and the the shift to focus on everyday essentials so.
[51:51] Add all that up and I certainly don't think anyone has indigestion about the acquisition it at Walmart at this point.
Scot: [51:59] Yeah yeah I'm a big fan of the selection stretchy nothing. Mark you mentioned it at the top of the show from the shop.org interview acquiring this Brands a lot of people look at that like it's crazy but I think you get access to anything that you can make exclusive like like the cost of for bonobos or any of those kinds of things that's a huge in this kind of selection battle and and, Alec Mark Clearly understands that and it's starting to play the game kind of at the same level Amazon has been so I think it would be fun to watch.
Jason: [52:29] For sure and speaking of that there was some new news like just this week which was the jet is launching its own private label grocery brand.
Scot: [52:39] Yeah this is so kind of a little teaser here, private label is a huge topic Laden's kicked off Mary Meeker had this presentation that she does every year and she talked about. Private label in the context of Amazon and showed the batteries Amazon private label battery is kind of taking a risk than one spot so since that and I kind of the spring, private label is really flared up and we're going to do a deep dive in our next episode so, I definitely stay tuned for that that topic will be specific to the Amazon private label offerings Sofer as as relates to judge you think. That's a smart plan or what what's going on there.
Jason: [53:18] I think it's a really smart plan for all of Walmart to own some successful private labels and I think relative to some of their competition that's been one of the area that they are areas that they haven't made as much progress as they like so I certainly you know I'm interested to see them try it like I don't know enough about the program to know the nuances of the brand is it actually branded yet or is it just something they're testing in jet first and, eventually go to Walmart like I think those are all going to be interesting things, things to watch but I certainly think in the long run Walmart in jet need to own some exclusive Brands and going to cpg space is certainly going to get a lot more, competitive before it's all said and done.
Scot: [54:08] Yeah and I know we're getting tight on time so going to kind of the lightning round the holiday forecast for coming on in RF always does it at shop.org and they said all in its going to be 3.624% this holiday which, it seems to be pretty darn bush, and I think in that call it at you implies that non-acidic caught non store Commerce is like they're kind of coded word for e-commerce you stay so I prefer e-commerce and I think they said 15% for the holiday. PWC is out with theirs and, they are showing that she didn't put a.
[54:46] Number they said people going to spend 6% more this year than they did last year and I don't know if that means like.
[54:53] The forecast is 6% because you got kind of like at all I guess you could assume more people will shop for less people show up an endowed chair that number. So and then does not like. Around 90% said they're going to shop in stores so I guess that makes sense with about 10 to 12% of sales online so. All good but I guess 84% said they also shop online so I guess this proves omni-channel is a thing.
Jason: [55:20] I think you might be right I think it is a thing yeah I feel like a number of the holiday for Castle come in and for stores they're all in that like 3 and 1/2 - 4%. And then you don't you see, Miss 15% like I'm sort of Ebenezer Scrooge on these things in a way it's a silly thing to predict because. That the growth is so dependent on the pricing in the promotions like you can grow much bigger by by selling stuff cheaper and losing more money in so pretty thing the growth without also predicting the the promotion levels is. Not super useful to me. But these guys are all burden by like data and scientific methodologies and You Know It dance mathematics and all that sort of stuff I don't have any of that stuff and so to me it seems like.
[56:08] Aren't you don't think your holiday season is going to be as rosy as these guys are all painting like I think if we get the 4% growth in all of retail, it'll be because it was a hugely Promotional and unprofitable holiday. I think we just have way less doors and so there's going to be blessed up in the pipeline which means manufacturers are going to, I sold the last stuff through I don't think it's going to be a bad holiday season and you know any hugely negative comps but, 4% feels a little Rosy to me and I actually think the account number could be higher but a huge caveat there, even though it's 15% you know Walmart's grown 60% the last two quarters, a lot of that from grocery and groceries opening super fast at Walmart so they're going to have way more grocery for this holiday so they could do 60% for this holiday and Amazon's going to do 25 or 30% for this holiday which essentially means the rest of e-commerce is down.
[57:07] If that whole industry only grows 15%.
Scot: [57:10] Yep yep I think. Abortion e-commerce said I think we're going to see kind of a high teens number from I think it's going to really be a year of acceleration on that one controversial speaking promotions promotion that's out there is the Marketplace Marketplace that focuses on bringing really super cheap Chinese Goods into the us there now says 30 million dollar NBA sponsorship and a lot of the NBA jerseys now feature the wish look up so it'll be interesting to see if that. That is very kind of in-your-face kind of promotion for an e-commerce company that we haven't seen before.
Jason: [57:45] Yeah and I mean it makes perfect sense cuz when I'm watching basketball something to happen to me all the time as I suddenly realize I need a particular color fidget spinner and only 6 weeks and so I think now it's going to remind me where I can get that.
Scot: [58:00] You have an emergency.
Jason: [58:03] A six-week emergency.
[58:05] I think it's totally interesting that they're making the investment and and like in a bylaw demetric switches making. You know it is an is a meaningful player like I do I'm not a big fan of the customer experience of 6 week delivery I think that like.
[58:22] Has got a limited appeal in in this world and which were we're getting to minute delivery from from our friends in Amazon.
[58:32] But I think that's probably a great final word luckily I didn't invite anyone from wish to have a counter perspective, and we have used all that a lot of time so, hopefully Wizards where will the stick with us through the fire hose treatment and got some interesting stuff as always weeding courage you to continue the dialogue on Facebook if you disagree with any of our positions we'd love to hear about it there's anything we didn't cover that you like to hear about suggestions are always appreciated, of course if you really enjoyed the show, we love you to go to iTunes and give us that five star review if you hated the show you know don't feel it necessary to leave a review at all. And thanks everyone for listening.
Scot: [59:19] If you need to show you can call Jason on his home phone number which is just getting thanks everyone for joining us and happy Commercing.