The Jason & Scot Show - E-Commerce And Retail News
News:Business News
EP116 - Industry News, Geek Week
SuperBowl News
Ad Coverage Amazon won the Superbowl Nike Launched a new sneaker direct to consumer. Nike’s SNKRS site for new releases (who’s name I couldn’t remember during the recording, sorry Kevin).Amazon News
SpaceX successfully launched it’s first Falcon heavy rocket, and recovered two of the boosters. The photos and video of the Tesla in space were amazing. And there appears to be a thawing of relations between Jeff Bezos and Elan Musk. Prime Now delivery from Whole Foods stores Expansion of FBA On-Site Amazon expands it’s airport plans from 900 acres, to 1100 acres The Spheres launched at HQ1 Private label continues to get traction especially premium denim “Hale and Denim Crush” Amazon Go store opened to the public Amazon is the largest spender on R&D, much larger than any other retailerWalmart News
Walmart acquired Spatialand out of Store 8 for VR Capability JD.com Coming to US Walmart – Rakuten partnership ads digital books to Walmart.comDrug News
Helena Foulkes becomes new CEO of HBC (from CVS) replacing Jerry Storch
Deliv launched DelivRX home delivery pharmacy service
Upcoming Events
Don’t forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.
Episode 116 of the Jason & Scot show was recorded on Thursday, February 8th 2018.
http://jasonandscot.com
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.
New beta feature – Google Automated Transcription of the show:
TranscriptJason:
[0:25] Welcome to the Jason and Scott show this is episode 116 being recorded on Thursday February 18th 2018 I’m your host Jason retailgeek Goldberg, and as usual I’m here with your co-host Scott Wingo.
Scot:
[0:40] Hey Jason and welcome back Jason & Scott Show Listeners,
well Jason her here we are on the first day of February 2018 is zipping by and today was interesting because it’s kind of like the Super Bowl of two companies,
well yesterday we had eBay in Facebook announced and then today we have the Three A’s Amazon alphabet / Google,
and Apple so a lot of news coming out of those results and the all these companies are announcing how their fourth quarter of 2017 went which is,
exciting in.
Jason:
[1:14] I did I was just in Boston I just got back a few hours ago in earlier in the.
Scot:
[1:17] To tonight we’re going to really focus in on Amazon on this episode and we’re going to.
Jason:
[1:22] Conference that’s the mask.
Scot:
[1:23] On some of the dialysis of their 4th quarter 2017 results.
Jason:
[1:25] Of Technology e-commerce Summit.
Scot:
[1:28] And then at the end we have some time we are going to hit a couple other highlights of some.
Jason:
[1:31] The local Trade Organization got to run into a lot of a former Jason and Scott show guests at the event were also.
Scot:
[1:34] 2 long tail lizards know this but it’s always important to refresh Aaron’s in memory when you look at these different results it’s important to kind of think about the bass line out there and looks like for the holiday Ecommerce came in at.
Jason:
[1:46] And and listeners yeah so there’s no there’s no such thing as a former.
Scot:
[1:50] Retail came in at like 4% Jason is.
Jason:
[1:52] Rob Smoltz from the Talbots was reading one of the panels and.
Scot:
[1:58] The benchmarks in the world is.
Jason:
[2:01] News on one of the panel so it’s fun to catch up with bow.
Scot:
[2:04] You’re gaining sure if you.
Jason:
[2:05] In order.
Scot:
[2:06] I’m slower.
Jason:
[2:07] A number of good speakers.
Scot:
[2:09] You’re pretty much toast in the role of e-commerce in retail.
Jason:
[2:11] A Guyana.
Scot:
[2:12] Let’s start outside with some big picture things.
Jason:
[2:15] Longtime retail exact at JCPenney’s and Neiman Marcus was there and I got to talk to folks about artificial intelligence.
Scot:
[2:20] A lot about conversational Commerce and the echo ecosystem and this is this is probably the most strong bases code I have ever seen in any of Amazon’s quarterly press releases for the last.
Jason:
[2:33] Yeah it was interesting a lot of the speakers were talking.
Scot:
[2:34] I saw read it in its entirety so Bezos.
Jason:
[2:37] Kind of like brick-and-mortar bites back in there was a lot of talk about omni-channel and.
Scot:
[2:42] Far exceeded them we don’t see positive surprises of this magnitude very often expect us to double.
Jason:
[2:43] Advantages of brick-and-mortar and I found that was I got slightly ironic because the the event was hosted by Wayfair so we were actually in Wayfarers office so we’re in one of the.
Scot:
[2:50] Pretty interesting and kind of like a you know if you have to read that while I look at that picture of Jeff Bezos where he is like you seen the meme where he was like super geeky on one side.
Jason:
[2:57] What I would have said is one of the you know a few remaining kind of pure-play e-commerce companies although they now have.
Scot:
[3:02] Just listen, saying that one they sold tens of millions of Echoes.
Jason:
[3:11] Exactly talk yeah and I in my slide in my deck I talked about some of the cool artificial intelligence things that house was due.
Scot:
[3:16] What’s a a good quarter of them were around Echo.
Jason:
[3:19] Awkward talking about that in front of them.
The kind box was the cinema box gave a cool presentation so it was it was it was a lot of interaction with the audience I was the last speaker of the day right before cocktail hour and still got a bunch of.
A good engaging question so it’s a lot of fun.
[3:44] I did a version of that the the the speaker right before me from box made a bunch of Blockbuster.
Scot:
[3:54] Yeah. If we assume so I guess.
Jason:
[3:55] And as as careful listeners might know I was involved in the early days.
Scot:
[3:59] 44. And then you’re the most you can spend is like 150 bucks.
Jason:
[4:07] I feel like it’s an advantage to get to my class though I may just say that.
Scot:
[4:11] It’s a wide range.
Jason:
[4:12] You like that.
That worked in my favor and then a woman who I had a mint before Devora Rogers is with a company called Murphy research and she did a cool thing on sort of,
omni-channel past the purchase and part of the reason I found her stuff really interesting as she was involved at Google a number of years ago when Google was developing out of concept.
Scot:
[4:34] Who run the Google side they were asked.
Jason:
[4:37] Zero Moment of Truth and kind of.
Scot:
[4:38] Start monetizing it and their CR Sue.
Jason:
[4:40] Online to offline.
Scot:
[4:41] He said.
It really just focused on the user experience and nailing that and monetization is very far away so that was interesting that the other day,
why do people read that quote is in committing their little bit behind and they can’t really worry about monetizing until they catch up with where Alexa / Echo are.
Cool so continue with the big picture Amazon’s total revenue in another footnote is if he heard me say some numbers that may be a little bit out of line with what you read and special leases or are seen in the news,
I always take the voice two sets of Amazon numbers there’s the ones that are just the wrong numbers and then there’s the ones that taken to the consideration,
the effects of foreign currencies in Wall Street sign that’s XFX set of the excluding the foreign exchange changes so if a British pound oscillates 20 or 30%,
that will just your earnings so if you strip that out it kind of is more apples to apples so I was going with the Apples to Apples numbers,
so that being said Amazon’s revenue accelerated in the fourth quarter.
Jason:
[5:47] A teaser of the trailer.
Scot:
[5:48] And that’s up from a 34% growth rate in Q3 and they came in with a 60.5 billion dollar Revenue number which is not too shabby and you know every,
every quarter public companies tend to give guidance in this was very much at the top of Amazon’s guidance Wall Street was expecting,
let’s see.
Yes so this was also above wall Street’s expectations are expecting 59.8 and so does exceeded by it looks like .7 which doesn’t feel like a big deal but that’s like $709 so,
that’s pretty pretty nice beat.
Jason:
[6:27] Yeah and there hasn’t been any imagery from that movie out.
Scot:
[6:29] Quarter where Amazon web services which is the cloud computing and then they have this tricky category called other Revenue,
and moose while shooting let’s agree the biggest Chunk in there is ADS so that business we talked about a lot on the show which would include the AWS and AMS and AMG businesses,
That Grew that also accelerated growth and it grew 60% versus 58% the last quarter,
Amazon had a very high probability and prove pretty dramatically in the quarter,
Marjorie gross margins ticked up last quarter they were 35.2 and they took up the 36.4 so that’s what you would call a hundred basis point kind of move which is,
pretty substantial at these levels on the conference call to see if I owe attributed it to the North America business and Retail doing really well at scale eight of us contributed to that,
as did he actually caught that.
Jason:
[7:22] He stole the teasers.
Scot:
[7:24] News the needle on Gross margins here which which I think is pretty interesting because it’s actually pretty small I think it’s.
6 billion annualized so that would be like maybe 2 billion at this point in the 4th quarter.
Jason:
[7:37] I meant to ask was it known that there was going to be.
Scot:
[7:39] Sure margin.
The gross margins of the larger 60 billion dollar business you know any meaningful way enough for the CFO to call it out so a lot of folks are reading the tea leaves there and saying that it that ad business is really starting to.
Can I show up in ways it hasn’t before.
And hopefully they’ll be a day when it gets to be big enough that they have to carve it out like today w x and they crawl curious is really see what’s going on inside of their.
Jason:
[8:05] And then I think in between all that there was actually a football.
Scot:
[8:08] Since they also made kind of another one of these kind of things you have to parse where they said more new members joined Prime in 2017 than ever before which I think you know when your growing the rate they’re growing.
Jason:
[8:17] But we we don’t have to debate because there’s a independent judging us organization put together by USA Today that like.
Scot:
[8:23] Most estimates out there Amazon does not disclose the number of prime.
Jason:
[8:27] And they they raided the.
Scot:
[8:28] Most folks going to put it in about 60 million us households out of 250 us households so really good penetrate.
Jason:
[8:31] Who was the famous Hollywood actor Jeff.
Scot:
[8:36] I’m some surveys as you go up in the upper upper income levels you get north of 50% penetration and they did say.
Jason:
[8:43] It is an.
Scot:
[8:45] Prime over the year.
Jason:
[8:47] I know.
Scot:
[8:47] That puts Amazon 877 just put that prospective Walmart is at 400 billion so they’re not even half of Walmart when you look at.
Jason:
[8:55] I think that was like the best acting in the whole of all the car.
Scot:
[8:59] That’s interesting but no Walmart I don’t give a damn house yet.
Jason:
[8:59] Where’s the people’s reaction to his is that even possible and you can imagine or thousands of Amazon employees that all wanted to play that.
Scot:
[9:05] Another e-commerce is growing pretty strongly now overall they’ve been growing low single-digits so I would be surprised if they don’t know if Walmart comes in above maybe 5% growth All In.
Jason:
[9:15] Was what you would have actually gotten in the real world.
Scot:
[9:16] Doesn’t it was a nice surprise is.
Jason:
[9:19] But I ate a super inside baseball fun fact on that ad so it was a 90-second.
Scot:
[9:24] Yo you and I talk a lot to people.
Jason:
[9:24] You know it’s it’s five million bucks for every 30.
Scot:
[9:26] The number one thing.
Jason:
[9:28] So that’s a quite expensive ad.
Scot:
[9:28] You hear when you talk to Executives about Amazon is wall Street’s giving a pastor unprofitable there a money-losing kind of business the only thing inside of their that makes money is the cloud computing etcetera etcetera.
Jason:
[9:37] Reviews of all the ads and you know of course it says Alexa a number of times during.
Scot:
[9:42] Competing out the whole interview at Amazon still makes money I even.
Jason:
[9:43] Concerned you would have is that with a hundred million people watching the game half of them probably own an Alexa that would get activated.
Scot:
[9:48] Now it is true that you carve out the retail business that show your p&l for North America and international North America is quite profitable and then International is still losing money but that’s because they’re building.
Jason:
[9:59] Technology and at first it was a lot of.
Scot:
[10:02] Dollars in India there so dusty.
Jason:
[10:03] Equation that like oh there’s a way that they can kind of Watermark the ad with.
Scot:
[10:05] Australia you know there’s something going on down in Latin America Brazil.
Jason:
[10:08] You know it’s tough outside of the human hearing range to kind of tell Alexa to ignore this audio and that’s not what they do they actually use artificial intelligence and.
Scot:
[10:15] So not only did prophets come topically dollars for the first time in a quarter they came in at 1.9 billion this is really big surprise for Wall Street cuz I think there is.
Jason:
[10:22] The server when they see a bunch of Alexa’s all getting activated by the same audio at the same time in different.
Scot:
[10:26] So that is one time so Amazon did say that about 800 million of that 1.9.
Jason:
[10:31] They then.
Scot:
[10:33] The new tax plan that rolled out so they’re decrease in the corporate tax rate in United States helped out Amazon pretty image.
Jason:
[10:34] Ignoring the vacuum and sew a few households did respond to the ad in the rest of the household.
Scot:
[10:41] What’s interesting is you not talk about this but but.
Jason:
[10:42] Technology also means that like radio hosts and other things like that that are broadcasting to a lot of people.
Scot:
[10:47] The reason they don’t is when you’re public company it it’s almost impossible to.
Jason:
[10:50] So you don’t because we have such a large Wesner base.
Scot:
[10:53] Profits in a way that makes sense.
Jason:
[10:54] So you’ll probably only you’re in my personal devices are the ones that would active.
Scot:
[10:59] Yeah your Revenue gets spread out your cost gets spread out and all these things happen so Amazon believes a better measure of how the business is doing is free cash flow,
and that was 3.3 billion so a lot of cash getting generated Amazon even though they continue to invest in a torrid pace and fulfillment centers in those kinds of things,
so that’s the big picture Jason you want to look at the retail side.
Jason:
[11:32] It’s I mean School in a bunch of levels but it just it makes me happy that that like some engineer got assigned the like that they even recognize that that’s a problem that needed to be solved I think it’s pretty cool.
Scot:
[11:46] Yeah they didn’t say that on the cob but it’s possible.
Jason:
[12:23] Yeah,
so that was that was cool in that was probably my favorite at as well and then there were a few other ads that had a a sort of the local e-commerce Twisted them a Groupon I think Heaven ad.
Keanu Reeves was in the Squarespace ad did you see that he’s is riding a motorcycle by standing on the seat.
Scot:
[13:04] Yep absolutely and then,
look at the marketplace which is where I spend a lot of my time so the way I think about it is if there is a pie chart of Amazon or our kind of a,
diagram you have AWS and other if you pull those out your left with the retail business and the retail business has two pieces what we call one p which is the traditional wholesale model in 3p which is the Marketplace Mall Amazon is always historically been pretty,
kind of Silent about giving details about the marketplace the one the two things I do talk about our unit growth so overall in the entire.
Jason:
[13:40] A little bit of William Shatner s with a price.
Scot:
[13:43] Pretty interesting and it makes you kind of say all right if the retail business if you kind of look at the the midpoint of that 42 and 32 the retail this is probably true kind of mid-30s unit growth,
you 23% how did they grow mid-thirties,
and that’s just selling that’s an increase in average order value essentially so you know the value per unit that goes through is gone up so everyone gets a lot of nice multipliers in their model up because the scale they’re at so how these to talk about,
the number of users that requiring that slow down pretty dramatically and but then Revenue itself accelerated that’s another indication that the revenue per.
Jason:
[14:18] Yep that so he was in fact wearing a brand new Air Jordan that just.
Scot:
[14:21] Growing because of prime the other metric they disclose is they talk about a unit mix between 1 p + 3 P that is now 51% that’s not a highway.
Jason:
[14:25] And what was interesting to me is the only way to buy those the that sneaker was direct from Nike through there they’re sort of new shoes.
Scot:
[14:33] Q1 and Q2 as a 51% in Q3 a dip to 50% because of all the echo Prime Day Day stuff and it came back here to 51% for the holiday quarter so long.
Jason:
[14:39] During what it was but I’ll put it in the show notes but so the only way to buy the shoe is direct and not very long ago whenever.
Scot:
[14:48] Play Space is really important because you know to really understand the impact of Amazon there’s there such a nice.
We really only see the tip of the iceberg and that that big kind of mass underneath the water at Amazon is.
So here’s how it works on the canal walk you through the mail so if we use kind of round numbers they did $60 in Revenue,
5 billion of that was eight of us so you take that out and now you have essentially 55 billion in retail there’s like a billion or two of ads in there but let’s keep,
math simple at 55 billion now.
Well it says 51% of units were three p that doesn’t mean that you take that 55 in / 1/2 because the way Amazon a recognizes revenue for each this pisses pieces of businesses.
and a 1p world Revenue equals sales so I saw hundred-dollar widget my room is $100 easy reptile rooms used to doing it,
but in this Creepy World they County Road SE,
when a third-party let’s say we have I don’t know Jason’s audio shop and you know he has all this awesome audio equipment he sells $100 mixer on there a Amazon collect $10 as the commission so now what happens is you have the revenue is actually the $10,
and the transaction value of the item sold as what we called gmv or gross merchandise value in the world of Market places so you have this kind of,
this weird thing that happens where the actual transaction the volume is not Revenue anymore it’s a small percentage that Amazon takes his commission or we used to wear take red.
[16:22] So if you take that 55 billion for the quarter,
and when I do my analysis on this about 47 billion of that is first party so that leaves caught,
but that 8 billion for third-party is really just the commission rate and,
I argued if you wanted Apples to Apples this to other retailers you have to gross that back up,
because when someone bought the audio device from Jason store on Amazon vs Best Buy,
Best Buy lost $100 even though Amazon only made $10 if that makes sense to the transactional value is the Zero Sum game out in the world of retail,
so if we take that 8 billion that’s the revenue for third-party,
and we assume just going to keep it easy to take rate of 10% you have to effectively * 10 and you get 80 billion so first party was 47 billion and then third party is about 80 billion,
so you’re by my math when you had this up the total gmv for the quarter would include 1 p + 3 p is 129 billion.
This is all a very long way of saying essentially Amazon’s Choice as big as people think it is and when you look at that context you know if that’s what they’re doing it accordingly r800,
20 billion multiply that by four you get 480 million then Amazon Apples to Apples is as big if not bigger than Walmart at this point we actually look at the transactional implications.
[17:57] So did the other natural question is so if I’m saying 47 billion first party,
80 billion third party this kind of like 1/3 2/3 out of the total why is that unit number 51%,
and do you know the number gets very skewed the the bulk of one p units and Amazon her books and digital items they even include like if you bought a 99-cent app on your,
you know you’re your fire your Kindle kind of device that counts in there so,
it seems have a much lower aov compared to 3p so so,
but that’s the unit mix is 51% but the GMB mcscuse higher towards third party so usually kind of like how to get the ends up being like 62% this year versus 38 on the other side so.
Now.
other there’s other ways to calculate this an Amazon is is gives when they release their quarterly The Q’s which is there SEC documents that they had damn it. The annual one.
Toby some numbers in there that give us another view of that and when you look at, it while she puts out there in the ballpark might my way of doing it tends to come out a little bit high so I’m kind of in the nether 129,
I and I seen some of the analyst kind of looking more at like the 1:20 so we’ll see you don’t no matter how you slice it though,
pretty huge Amazon’s bigger than people think it is and this whole entity is growing at in a 38 36% year-over-year and they’re really just kind of.
[19:30] Destroying Shear I’m sure we’ll start to see articles coming out where you know I seen Art summer.
Jason:
[19:34] I mean my fun two takeaways are the richest guy in the world knows how to.
Scot:
[19:36] E-commerce growth I think it’s probably actually be bigger than that and I think they they definitely took up a lot of the.
Jason:
[19:41] And then you mention the original rocket the Falcon that.
Scot:
[19:46] Another last thing is it one of my favorite things every year is the Bezos annual letter that doesn’t.
Jason:
[19:47] They launched this week is the Falcon heavy and they’re working on an even bigger rocket that whose name.
Scot:
[19:53] Do their final SEC documents in the way this works little Insider baseball on your public company you put out his Corollary,
you do a very quick audit on that with Auditors to put them out but then when you do your annual you have to go back and kind of do a forensic audit of the entire year so that’ll go on and then usually in the first week of April.
Jason:
[20:13] It’s actually in.
Scot:
[20:13] Amazon publishes their annual numbers.
Jason:
[20:17] A debuted in Doom but it’s.
Scot:
[20:18] Delete an annual report and that will have the business letter so.
Jason:
[20:20] How to roll in Mineola.
Scot:
[20:22] Weight and Fortune until April tree that.
Jason:
[20:30] Yeah yeah so they announced it in for markets they’re going to be using Amazon Prime now delivery service to deliver items from whole foods,
so that means you know you can order food and some fresh groceries from Amazon now but it’s,
a limited assortment and it’s coming from a prime now for Film It Center in this new model you’re going to be able to order any of the products for sale in a whole food store and that that,
Prime now delivery guys going to go to the store pick up your order from that store and bring it to your house.
Scot:
[22:58] Yeah I saw one guy updated this model and he said 20 18 lb 234 billion and 2019 lb 284 billion so,
still still really big numbers one of the things that was you know making some of the Wall Street guys a little skittish is,
the revenue guidance like you said is pretty solid at kind of like a 38% growth point at the midpoint,
evidence of used Amazon coming at the height side there was kind of thinking it’ll be 40% so we’ll see but then their bottom line guidance was pretty light so it’s kind of like 300 million to a billion which kind of either is conservatism or,
Amazon saying hey we’re going to,
we had a great fourth quarter we’re going to go to another investment cycle so the Wall Street folks that that Paul Amazon the kind of live in fear of these kind of Amazon ghost these Harvest. Swear they’ll Harvest a bunch of investment state made this this year is very much a harvest year so you’re really good bottom line,
probably under spent on capex from an entry no overachieved on the bottom line as well and then Aaron lives in fear that they’re going to wake up one day and say all right we’re going to invest,
three-blade dollars in original content or you know a,
you know our whole load fulfillment system with trucks and everything or you know so so that’s that’s kind of the things ratchet up there the worry,
turn off the wall of worry gets higher and this is the one kind of negative that I saw everyone call out was you know what.
[24:28] What could they be spending that much money on that’s like an incremental,
billion and a half of spend and they’re going to want to lock color on that and they’re kind of elusive on the phone call about giving any details what’s going on there so.
Jason:
[24:41] Kind of a common model.
Scot:
[24:42] CU to the first quarter one thing I was watching.
Jason:
[24:45] I got a new service in the industry one of the ways to.
Scot:
[24:47] Number for Tobin Center.
Jason:
[24:48] Give away the software that that industry need so there’s a lot of.
Scot:
[24:52] In January which is kind of unusual.
Jason:
[24:56] Animations in restaurant.
Scot:
[24:57] So maybe we’ll see.
Jason:
[24:58] Give away in order to you know support their their food delivery services are there you know online reservation systems and things and so in a way this is kind of that same play by Amazon and.
One of the important jobs that most of the shipping software do is sort of,
text Beth shipping method and you can imagine that UPS FedEx and Amazon’s definition of best shipping method are not exactly the same and so if if the Amazons able to win a big footprint by giving away their,
their warehouse software then then that potentially gives them all kinds of competitive advantages in the long run.
Scot:
[26:54] Could you know there’s always this kind of it’s hard to keep track of these things are available to 1 p and summer 3p and summer both do you know,
is this is an on both sides or is it just for brands or is it is it also third-party sellers.
Jason:
[28:20] Yeah and of course the Cincinnati airport is home of Procter & Gamble so you know a lot of folks are fly in and out of that airport to do business.
Scot:
[28:23] Cool so that’s kind of some good Roundup of Amazon’s quarter any other interesting Amazon news before we kind of widen the lens.
Jason:
[28:30] You’re in that airport and you look out the window and you see a line of prime air Jets.
[28:39] Exact orator every vendor in the world that you know how to send some reason to go visit them.
Scot:
[28:46] Gulfport.
Jason:
[30:00] Yeah there’s zero a retard it’s it’s it’s predominantly been car companies and then there’s tech companies like IBM with you know tends to be in that top 10 or top 20.
Scot:
[30:13] Yeah one thing that was interesting that there was a lot of talk about is so a lot of the,
the business and world leaders were at Dallas and I think they use that platform to announce that this kind of interesting contortion of Amazon Berkshire Hathaway and JPMorgan Chase are going to pull their efforts and work on Healthcare,
and is very nebulous they’re going to start a company it’s not clear who’s going to owner run this company,
and it’s kind of going to be dog food in whatever this is they build for their own employees sounds like what they’re doing,
but you know this causes ripples throughout the world because that we talked on the show there’s been Talk of the Amazon opening kind of a pharmacy online and then you start to say,
you can Amazon nursing pieces that kind of think about your Amazon using the cloud services to kind of have health services so.
Jason:
[31:07] Yes I’m high in Den.
Scot:
[31:08] An ice portal for employees the ability to manage all the healthcare programs and then Berkshire Hathaway has a big division that does insurance so they could kind of provide that,
then you would also need some kind of a you know a financial service piece around that too so that’s could be something really watch but that’s good.
This kind of thing could disrupt the entire insurance industry or you know all the HR systems out there so or it could be a big nothing Burger so I have to kind of see where it goes it’s kind of a very nebulous right now but it was all the Talking Heads,
talk about.
Jason:
[31:42] And that would survive which is actually the company that used to do the bloomreach daddy I just think bloomreach Den sponsor at this year so essentially it’s this survey that,
people quit a lot and the percentage of people using Amazon you know continues to go up which is super interesting I just like to remind people,
it’s actually not a very big survey it’s like 3000 consumer so I wouldn’t necessarily.
Take those specific numbers to the bank but directionally the fact that the more people you know are continuing to gravitate to Amazon to start product search I certainly believe.
[33:15] For sure.
[33:23] Yeah yeah few things they hit on Walmart so they did another acquisition this week or late last week,
which was a space shuttle land,
so that this is a company that specializes in VR technology and they actually did the acquisition out of their incubator which is called store 8th so store it was the original,
a prototype store that Sam Walton built in so they walmart.com and Mark Lori of kind of launch this incubator and incubators a little bit of a misnomer because.
Walmart owns 100% of all the companies in incubator so essentially they’re buying companies are Technologies.
And then incubating them in this this this story structure so kind of interesting that they buy a VR company a lot of us have talked about how,
you know VR isn’t the most interesting technology for retail and commerce and that you know at least in the short run,
is much more likely to be traction with a are so either Walmart disagrees with me and sees a lot more upside of er than I do which is certainly possible or.
They’re they’re making some very long-term Investments and and bedding that in the in the long run there’s enough people using VR,
the Walmart wants to have some technology in in that game so so that’s an interesting acquisition it’ll be interesting to see,
what other companies get rolled up into the to the story incubator structure another interesting thing that came out last month.
[35:01] Is that jd.com announce that they were going to be coming to North America and selling direct to Consumers.
Super folks that don’t know,
JD is the second largest e-commerce site in China the largest site Alibaba is a pure market place so so you know they’re there all three p sales JD is a one-piece retailer in China,
and so and quite large so it’s very interesting that they’re coming to the u.s. Walmart is a minority investor in them and so.
Scot:
[35:36] It’s pretty complicated to because there’s a bunch of scenarios right there.
Jason:
[35:39] Their Frenemies in JD.
Scot:
[35:40] There’s a scenario where.
Jason:
[35:41] Launch a major e-commerce site in the US that would potentially compete with Walmart.
Scot:
[35:44] Amazon and I have Nexus.
Jason:
[35:46] There’s been a lot of speculation that JD might launch a site in the US.
Scot:
[35:50] So that’s one so what most sellers do there is they say.
Jason:
[35:51] Use Walmart’s for film it infrastructure.
Scot:
[35:54] Tax for North Carolina.
Jason:
[35:55] Is there an initial for filling.
Scot:
[35:57] Say say it up 7.
Jason:
[35:57] In the US so it could be a little bit more of a partnership.
Scot:
[36:01] The other states I don’t have a Nexus etcetera.
Jason:
[36:02] But how are you slice.
Scot:
[36:04] What’s the scenario.
Jason:
[36:04] Yeah there aren’t a lot of huge well-funded new e-commerce.
Us anymore and so Anatomy is going to be really.
Scot:
[36:12] And Amazon doesn’t really open on this Amazon says you’re responsible for figuring out.
Jason:
[36:16] Taylor the experience for the.
Scot:
[36:18] So so he was on his ass into saying we’re not going to your lawyers here we’re not going to accept any liability for you collecting you’re not collecting but you tell us what you want to do and they actually give you some.
Jason:
[36:20] User interfaces tend to be very different than the successful interfaces in China and it’s it’s going to be interesting to see if they have any any new spin.
Scot:
[36:27] Throw out some nicer apis that give you kind of that you know this this tax software used to be hundreds of thousands of dollars and now Amazon’s rolled out whatever they use sellers can have access to it for you so pay for it but not nearly at the scale it’s it’s pretty reasonable,
but then it gets complicated right because I’m using FBA.
Jason:
[36:44] And then another inch.
Scot:
[36:45] And you don’t there’s a PA is pretty much in Most states I think like 40 States and you.
Jason:
[36:47] Catan are doing a partnership that is enabling Walmart to start selling digital download.
Scot:
[36:55] Amazon where your product is once it gets kind of into that cloud of warehouses it gets distributed out.
Jason:
[36:59] Video another other media as well and so you’re trying to see a lot of these.
Scot:
[37:01] Y’all so don’t if you don’t have a lot of control over to a selling Amazon hey please don’t put my.
Jason:
[37:06] Largest players in Asia.
Scot:
[37:08] I really don’t want to pay state sales.
Jason:
[37:09] Partnering in the u.s. send you a lot of companies that would traditionally be competitor’s seems like our are more willing to.
Scot:
[37:12] Network works so what most sellers do is they just kind of say well you know I’ll I’m small business I’m kind of take the risk on that so this this could be.
Jason:
[37:22] The enemy of my enemy is my friend theory every everybody seems to be willing.
Scot:
[37:25] Having a relatively complex set of states that need to figure out and not a lot of great infrastructure,
figuring out where their products are the release valve on that would be so perfect Prime and there was a release a press release Amazon’s dusting more and more around giving sellers that are kind of larger scale the ability to have their products Prime enabled meeting their Prime eligible and our Prime does he like to say and,
and then using their own warehouses to.
Jason:
[37:51] Yeah yeah so there’s a lot.
Scot:
[37:52] Today’s that could be.
Jason:
[37:53] In about this.
Scot:
[37:54] It’s interesting Amazon’s doing a lot more around there obviously I think it’s primarily cuz he won’t wear Prime eligible product but you could see it as a way of kind of if seller.
Jason:
[38:04] I believe that instacart has some.
Scot:
[38:06] Wanted to have more control over Nexus.
Jason:
[38:06] Gusev contracts with Whole Foods to be the exclusive fresh deliver in some some are cats so.
In the long run you would imagine that that Amazon wants to deliver out of the entire Whole Foods Network which.
On what hand is very bad news for instacart it means instacart loses one of their best,
best supplier Partners in Whole Foods in,
Amazon’s either going to try to get out of these exclusive contracts or wait until they expire and replace them city-by-city the the flip side of this is,
if Amazon has successfully delivering in 1 or 2 hours it’s 2 hours for free one hour if you’re willing to pay 799 if Amazon is delivering,
in all of these markets it puts more pressure on the rest of grocery to also have a good delivery service and so well,
you know it’s bad news for instacart in terms of their future at Whole Foods,
it potentially puts more pressure on other retailers who are more likely to hire instacart to help them compete with Amazon so,
it’s going to be interesting to see how all that plays out I’ve been in a pointing out there all these,
Nuance details that are going to be fascinating to watch like the,
the Whole Foods inventory is not online right now like you can’t go to A Whole Food store and see everything that Whole Foods carries and Amazon carries a small subset of the total Whole Foods offering so,
companies like instacart build their own product catalogs,
on behalf of their clients so answer card has a Whole Foods catalog Whole Foods doesn’t have a Whole Foods catalog that’s public-facing and so it’s going to be interesting to see if Amazon.
[39:44] Is building the store Buy store catalog that they’re going to merchandise in each City if they’re doing that which it it seems like they are,
that’s that means they’ve done a lot of infrastructure work since the acquisition that’s not trivial to do and it definitely means,
that they aspire to scale this thing so that’s super interesting another.
[40:09] It was you know you figured they were certainly seeing that for taking inventory I’m not sure that those things are good enough yet to like make good pdp’s for every single product that’s in that store.
[40:26] Oh absolutely yeah.
So and there and you’re joking but they’re there are a lot of artificial intelligence and and computer vision technology that are being used to make it faster and easier to onboard new products for eCommerce sites because,
that that’s a big problem that a lot of of e-commerce sites faces its it can be very expensive to create all this product content so.
Be interesting to learn more about what Amazon’s doing there and how fast they’re going but the other one super interesting ones going to be pricing because,
Amazon is basically not charging for these deliveries right it’s it’s part of your Prime Membership it’s it’s there’s a threshold which I think is $35 but you know that’s one item at Whole Foods so you,
you get free delivery in 2 hours or you pay 8 bucks for 1 hour.
Almost everybody that’s doing fresh delivery is charging for it in one way or another fresh deliveries way more expensive than,
Amazon’s traditional model when that that Flex driver leaves a prime now for filming Center he’s probably got like five or more orders in his car.
Scot:
[41:35] The other two could be a bit of a tree.
Jason:
[41:37] Order to order remember that drivers using his own personal vehicle which doesn’t have.
Scot:
[41:41] Amazon’s growing infrastructure outside of UPS so it some point.
Jason:
[41:45] Daughters you probably can only take one maybe two orders and deliver.
Because you can’t have the perishables sitting in the unrefrigerated car for a long time so deliveries much more expensive.
Answer the car Walmart in a bunch of other people have done is they’ve said ain’t nobody like paying a fee for delivery so what we’re actually going to do is subtly increase the prices,
versus the in-store prices,
and so it’s going to be really interesting to see whether Amazon does that and and the goods are more expensive when you get them delivered then they are if you buy them in the store and once you do all these things the other thing you would expect them to also do is offer a curbside pickup,
option that potentially would be cheaper so.
[42:44] Yep.
Scot:
[43:04] Yeah they the CFO of,
PayPal is on CNBC any shows 18% but it was like their slowest growing peace there’s little shade there’s something going on between those two companies are definitely got to get zika nomics driving it but it seems like there’s some more kind of,
they are not really getting along very well right now.
Jason:
[43:23] Yeah.
[43:26] Yeah they’re trying to optimize that but those refrigerator pakhi things are super expensive and they’re not charging for those either right so so everything has.
Has some cost associated with it and what I think you’re going to find like the unit economics whether Amazon or not are going to work out that,
Amazon’s going to be more efficient than most other folks and they’re going to be able to cost effectively do this indents market so they’re going to be able to deliver enough stuff in Chicago to make it work,
but it’s going to be next to impossible to make that model work in less dense further Drive,
you know rules rural areas,
and so it’s going to be interesting to see if they try to scale that everywhere or they try to pick and choose the markets or you know if they subsidize the real markets but you know how all that plays out,
this is the first shot across the bow wow this is really like one of the first first steps we’ve seen Amazon you know fundamentally altering the the Whole Foods model since they took over so so it’s a setting for that.
[44:38] Yeah yeah.
[44:41] I think we got the big Walmart stuff the other interesting Walmart one is this kind of battle for Supremacy in Indian e-commerce in Walmart is currently,
one of the players in that space.
Scot:
[45:06] Yep thanks Wilson there buddy.
Jason:
[46:52] Yeah and the snakes are super high because the the market is only slightly smaller than China,
but there’s way less e-commerce adoption right now than there is in China and so there’s a huge potential prize and you know if you’re someone like Amazon and you feel like you,
you waited too long to compete in China and you gave Alibaba what at this point feels like an insurmountable lead I think I think Amazon and you know the rest of the other big players don’t want to do that in India.
[47:41] Yeah they just today I saw an announcement that deliv.
Transource delivery service they’re bunch of retailers have used Walmart uses them in addition to some other services target has piloted them,
and there now a jumping into the home delivery of prescriptions as we talked a little bit about the show in the past there’s a lot of competition heating up for either mailing the prescription straight to your house or delivering the prescriptions to your house,
and if you’re one of the traditional drug stores if you’re CVS Rite Aid or Walgreens boots,
60% of your traffic is folks that walk in that store to pick up a prescription and so that,
keep on going to your store to buy the the stuff that’s on your shelf they’re going there to fill the prescriptions if digital takes over and Home Delivery takes over,
those stores can survive and in general the prescription side of those doors is growing and doing well the retail side of those businesses is not doing particularly well and so like this has all the makings of,
digital being a huge just Raptor and fundamentally changing that business and that’s you know a lot of a speculate that’s why we’ve seen folks.
You know some of the traditional drug stores like put more eggs in the in the insurance and.
[49:17] Pharmacy basket and lessen the retail basket is there probably changing,
and along with that we saw a CBS exec a change rule this week so Helena foulkes who is running the pharmacy business for CVS,
has Leslie vs to take over as CEO of the Hudson Bay Company so,
that’s interesting for a couple reasons that the former CEO of Hudson Bay Company was this guy Jerry storky used to run,
Toys R Us in original and he was part of the management team that help really build Target.
Jerry abruptly left without a replacement being named so you know there’s nobody knows the whole story there but there was obviously some kind of falling out.
Did it happen there and obviously you know Hudson Bay Company is is in this you know.
Department store category that has a lot of head winds and a lot of challenges it’s facing and so interesting that they,
they hired a weeder that has no department store experience and you know someone argue that that’s a potential mistake and some would argue that it’s it’s an advantage that she doesn’t have the,
encumbrances of of being you don’t tied to this old Playbook that isn’t working as well as it used to work so it’ll be interesting to see how that all plays out.
[51:05] And when you say he uses the same presentation you don’t mean like a couple times in the same year you mean like over the course of 15 years he’s continued to use the second.
Yeah totally it’ll be fascinating to see where he shows up next in and see if it if it is presentation can get more mileage.
[51:54] Yeah yeah yeah so that’s an awesome went to so Les Wexner is like,
you know one of one of the stories merchants in the history and you know he’s kind of right up there with Nikki Drexler is as one of these long time guys that’s made a lot of really good calls,
and built a really good business,
but is the exact opposite of a digital native right and so he’s he’s doubling down on stores hey smartphone is kind of a fat but you know for 5000 years people wanted to go to a store and buy something so in his mind there’s five thousand years of history on the side of,
of his Bat and I I may have made some sarcastic tweets but I would say there’s also 5000 years history of,
you know him not taking antibiotics because for you no longer the most the last five thousand years those weren’t available and for sure those stores over the last five thousand years didn’t take credit card so you know we’ll probably see.
Victoria Secret stop doing some of those things too since we’re now using the the 5000 year history is the guide,
I might have been being a little overly sarcastic on that,
but I think he’s the last of this Old Guard and you know presumably it at some point his run is going to end and you know,
I don’t think stores are going away I don’t think it’s a mistake to be investing in the stores,
but that the notion that digital and smartphones are a fad is you know.
[53:26] Definitely a risky risky bet to play at this point that there was some other interesting articles this week,
like particular talking about these endemic changes in the apparel business and how much apparel has struggled.
The Crux of it is that we as consumers just need a less apparel than we used to need because we used to have a work wardrobe in a casual wardrobe and largely the work wardrobes going to way so,
consumers just need half as many garments as that used to need and then of course,
the garments have gotten a lot cheaper and a lot higher quality so they last longer they cost the last so you know buying half the garments,
cost way less than it used to cost and we’re seeing less new fashion trends that force people to buy a new garments to chase the latest Trend and there’s this whole school of thought that,
in the modern era with all these micro influencers you know replacing the Mickey Drexler is in the west wexner’s as,
as kind of style leaders,
there are a lot of little Trends kind of microtrans instead of one big Trend in so that doesn’t drive and Nationwide we all have to get rid of the skinny jeans and go to bell bottoms or something like that and so you add all that up and.
Whether you’re good apparel retailer bad apparel retailer at the top of the market bottom of the heart Market,
the read apparel is getting way less wallet share than it used to and one of the things we’ve seen is.
[55:06] Consumers are now spending more of their discretionary dollars on technology than they are Apparel in that that,
you know used to never be true so you know people are buying the new iPhone every year and you know that keeping their jeans much longer.
[55:26] Yeah and that we’re all grateful that is the podcast as a result of that.
[55:48] Yeah.
Yeah yeah we’re going to be at a number of these shows are your my exact schedule are still a little up in the air and hopefully we’ll be doing some podcast from some of these shows but want to make listeners aware of all of them in case you’re making some plans to attend some of the industry events this,
this season so the first one up the end of this month in lovely Palm Desert California which is adjacent to Palm Springs,
is the etail West show so that’s February 26th through the 1st I don’t believe either of us are going to be able to make it there this year but that’s a great excuse to get out of the,
the winter for a lot of e-commerce folks and then there’s a,
oh I’m running retail,
Shopper marketing show in Chicago at the beginning of March called the path to purchase Summit and this is all the sort of traditional retail marketers that are all kind of,
evolving to add digital to their Play books so that’s in my hometown of Chicago I think there’s a rumor that you and I might both be there.
At the path to purchase Summit which is March 12th through the 14th in Chicago.
The following week is pretty crazy because in Las Vegas are two shows this is the shop talk show.
So I’ll be reading a panel on on grocery e-commerce it shop talk.
And across the street from the shop talk show is at the Venetian.
[57:18] Down the street at the Mandalay Bay IBM has their big sort of Watson artificial intelligence show which has a big Commerce component.
IBM just launched a huge new version of their Commerce platform called Webster Commerce 9 which is pretty interesting.
Anto a shoptalk is March 18th through the 21st in Las Vegas and IBM think is March 19th through the 22nd in Las Vegas so you can kind of.
Attend both shows if you really want to and then stay over the weekend because the next week.
March 25th through March 29th at the Venetian is adobe’s Big Show which is.
Another show I’ll be at and that tends to have a lot of interesting Commerce stuff then of course a ton of retailers use the.
Adobe marketing Sweden and in particular Adobe AEM as they’re their content manager so.
Lot of good e-commerce content there and usually some really good speakers despite the fact that all I’ll probably be one of the speakers there.
And so if you survive March and you’re still looking for more events there’s a couple more events on Horizon just to put on the end of your radar screen,
NPD which is a market research firm that that tracks a number of Industries like consumer electronics sales for example have their big show,
NPD idea that’s May 15th through the 17th in Austin which is a great City to visit in May.
[58:52] And I know you’ve been one of the highest rated speakers.
In history of that show and so I’ll be looking to to follow in your footsteps and and carry on that the Jason and Scott show torch it at this year so I’ll be talking I’ll be waiting a panel about the Last Mile and e-commerce delivery and we got some.
Some cool panelists.
[59:16] Shocking that that’s a topic that you would you would pick I feel like you need to stretch yourself a little bit sometime exactly,
and then just rounding out the season in June June 5th through the 7th,
is sap is Big Show which is sap Sapphire so they they own the other big e-commerce platform hybris so that’s in Orlando and I just want to give a shout out to my friends at sap,
because sap used to have their event the same time as shoptalk and IBM and it was super annoying so if nothing else I just want to say I’m grateful to them for moving moving their show to June.
[1:00:18] And you need to can’t be on the show if you need some private beta testers we know some guys exactly,
and with that it’s happen again we’ve used a perfectly good hour of our listeners time so if you have any thoughts or comments about the show would love to continue the conversation on Facebook as always if you enjoy the show the biggest favor we can ask is for you to jump onto iTunes and give us that 5-star review,
exactly until next time happy commercing.
EP319 - Amazon Q1 2024 Recap
EP318 - Temu Deep Dive with Earnest Analytics
EP317 - Amazon Q4 Results
EP316 - Annual Predictions 2024
EP315 - 2023 Turkey5 Recap with Salesforces Rob Garf
EP314 - Shawn Nelson, Founder and CEO of Lovesac
EP313 - Holiday 2023 Preview with Rob Garf of Salesforce
EP312 - Amazon Q3 2023 Earnings
EP311 - Video Commerce with Qurate's Brian Beitler
EP310 - Sam's Club VP E-commerce, Sabrina Callahan
EP309 - Instacart IPO Filing
EP308 - Amazon Q2 Earnings
Amazon Prime Day, Commerce Next, and NRF Nexus Recaps
EP306 - Apple WWDC announcement, Generative AI, and Holiday First Look
EP305 - Amazon and Shopify Q1 2023 Earnings
EP304 - ShopTalk Recap
EP303 - Amazon, Walmart and E-com Q4 Results
EP302 - Kasey Lobaugh, Deloitte Chief Futurist, Buying into Better
EP301 - Annual Predictions, NRF Big Show, Year End Recap
EP300 - GoodwillFinds CEO Matt Kaness
Create your
podcast in
minutes
It is Free
Pharmacy Podcast Network
Børsen Morgenbriefing
Sarah Westall - Business Game Changers
Wall Street Breakfast
Money Talks from The Economist