Jason & Scot Show Episode 84 Amazon News, Walmart Earnings, Rumors

A weekly podcast with the latest e-commerce news and events. Episode 84 covers Amazon news, Walmart earnings, and industry rumors.

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Amazon News

  • Prime day – 30 hours long, sometime the week of July 10t
  • Amazon market cap crossed 2X Walmart
  • 20yr anniversary of Amazon IPO – A $10K investment then would be worth $6,410,000 today
  • 1 click patent expiring
  • Amazon expanding into Pharmacy and Furniture
  • Amazon B2B impacts Grainger (Now predict that 80% of the sales by 2021 will be online)
  • Brands moving ad dollars from Google to Amazon

Walmart

  • Strong Q1 earnings- Ecommerce up 63% (40% organic), GMV up 69%
  • Same Store Sales up 1.4%
  • Went from 10m SKUs a year ago to 50m SKUs today (Amazon has 355m)
  • ThisIsStory opens Jet.com Fresh themed story
  • Walmart files IOT Patents

Other News

  • As earning season wraps up, discount retailers, dollar stores, and warehouses are up, while department stores are down.

  • Samsonite purchases Ebags  for $105m
  • Google IO – Google is all in on artificial intelligence
  • Target tried to buy Caspar and settled for an investment
  • Target may be trying to buy Boxed

Scot will be hosting “Amazon & Me” an all day workshop on Tuesday June 6th at IRCE, he can be found in the Channel Advisor booth #607 for some of the show.

Don’t forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.

Episode 84 of the Jason & Scot show was recorded on on Friday May 19, 2017.

New beta feature – Amazon Automated Transcription of the show:

Transcript

Jason:
[0:25] Welcome to the Jason and Scott show this is episode 84 being recorded on Friday May 19th 2017 I’m your host recent retailgeek Goldberg and as usual I’m Scot Wingo.

Scot:
[0:39] Hey Jason and welcome back Jason Scott show listeners Jason spend a little over maybe a week week and a half since we have chatted how have things been if you’ve been how many cities have you had since we last caught up.

Jason:
[0:55] This may be the first time I’ve been able to see this all year but I have hit zero City since we last chatted I meant home in Chicago for almost two straight weeks.

[1:07] She is she’s at she has helpfully packed my suitcase and is eagerly awaiting my departure to the West Coast on Monday morning.

Scot:
[1:16] Put it right by the door there.

Jason:
[1:17] Exam.

Scot:
[1:19] Cool so I guess we can’t talk about any trip reports any other things going on you want to highlight before we jump into it.

Jason:
[1:29] I do you know where you like to talk about the fan mail we get on the show but I got some angry fan mail this week.

[1:39] Well it’s always the same angry fans Jason Delray of recode.

Scot:
[1:47] What did we do to engage mr. Del Rey.

Jason:
[1:52] Yes what’s the argument sorry about don’t get an argument with people that buy their ink by the Barrel in there.

Scot:
[1:59] DigiLink.

Jason:
[2:00] The digital anchor pixels by the barrel.
So if you recall last week we had a great conversation about Amazon with Andrea and the.
Topic came up of jets and I did mention that the Jason Del Rey.
I had written the article that sort of implied that that perhaps jet.
Close I’m sorry that the Amazon closed Quincy.
Out of spite for Mark Lori you know who’s not competing with them at Walmart.
So we had a little conversation about that and Jason me actually very kind note to clarify that I had I had soda misrepresented his position and then.
He’s really doesn’t think that,
did Amazon close Quincy because of Mark Glory but he does think that some animosity for Mark Lori might have played into,
the communication around the closing of Quincy in the fact that they said like what we closed it because it was too difficult or not possible to make it profitable and so so Jason series more of that like the communication may have been a little more of,
negative as a result of the of the.
The Jeff Mark animosity then then the actual business case then I suspect that he’s probably right like that certainly does make a lot more sense.

Scot:
[3:28] Yes it’s almost like you know Amazon kind of crap that if you will.

Jason:
[3:35] Exact exactly that I quickly showed up on a crap report and they in the shutter shutter down.

Scot:
[3:43] Google that’s said there’s been a ton of news in industry and as I always like to say it wouldn’t be a Jason and Scott show without some Amazon news.

Jason:
[4:07] Yeah Scot it feels like there’s another interesting stuff going on and Amazon this week I think we finally got the announcement about,
Prime day for this year and I’m I’m struggling to even call it Prime day because I think it’s now Prime days plural.

Scot:
[4:27] Prime day is prime day 30.
Yeah Dave it’s weird because there’s several news reports picked up and said they’re hearing from Amazon that it’s going to be the week of July 10th through 14th,
betting person was in 11th that’s kind of where I’m going to put my money and then it’s going this year it’s going to be 30 hours were just kind of interesting which is like kind of random it’s a,
day in 6 hours so I guess they’re trying to pick up another nice 18 hour window and then.
The six-hour window when when most folks are asleep and then pick up a morning would be my guess.

Jason:
[5:09] Yeah you could you not yours you could imagine they’re just creeping it ever every year and that eventually it will be like in always on promotion.

[5:22] Or cynical person might say that they’re making sure that they dramatically beat last year sales numbers.

Scot:
[5:28] That is now it should by its nature since the six hours longer to see that’s going to be one sick so the 18% more juice from hours assuming a linear distribution.

Jason:
[5:42] Thanks for doing public math on the show that’s always impressive to me.

Scot:
[5:46] Yeah yeah this is why we have to delete the other two shows.

Jason:
[5:50] I was just going to point out no editing involve folks.

[5:54] I think also someone exciting we had talked about the the likelihood that this was going to happen but Amazon had a nice little uptick in their stock in their valuation is now officially twice that of Walmart.

Scot:
[6:12] Yeah yeah and I haven’t seen anyone else who visited the word perilously close to that point that I’ve calculated again in real time on a show probably around midnight a caveat there,
that’s a basis would be,
close to the number one richest person with over a thousand in the stock is kind of hovering around the 965 970 so we’re not too far away from when I think that too so,
let’s see I think I have some kind of a strong showing in Q2 or some kind of catalyst gets it over $1,000 I think we’ll kind of see some articles about the.

Jason:
[6:50] Yeah that that is going to be fun to watch regardless that’s a really high tax income tax neighborhood with with Jeff and a Bill Gates end up there.

[7:04] And I will one doesn’t even that same neighborhood does I meant within a mile and a half you got two guys paying a lot of income tax.

Scot:
[7:11] I thought you meant the neighborhood of the top five on The Fortune 500 not the physical neighborhood.

Jason:
[7:14] No I’m just saying that that police force in Seattle is well-funded is what I’m.

Scot:
[7:21] Absolutely.

Jason:
[7:22] The PTA is is the coppers are overflowing.

Scot:
[7:27] Yet another nursing one is this week was the 20th year anniversary of Amazon’s IPO and you know when that happens with these accessories is he always interesting data points and if you put a dollar in your every dollar you invested in the IPO 20 years ago it would,
each of those dollars would be worth a $641 today so if you done a thousand that would have been worth 641000 and if you done,
you can continue the math 10,000 will get you up to 6 million and that’s why Jeff Bezos is at the heading towards the top of that list because he owns a lot of Amazon.

Jason:
[8:05] He invested about $2 in in that original IPO.
I think that’s mostly true but when you say when you invested or you might get that I would point out that back then you probably get a paper stock certificate and I would have lost the certificate so I wouldn’t of came the money but.

Scot:
[8:24] Even 20 years ago the paper was really just about sibo and you’re registered and it’s okay if you lose the pay.

Jason:
[8:30] Oh thank God I was losing a lot of sleep over that.

Scot:
[8:33] So you should actually check there’s every state has a place to go look to see if there are someone looking for you to deliver that lost share of Amazon stock.

Jason:
[8:44] Luckily right after the Libyan Prince they’re usually calling me so I don’t I don’t have to look it up.

[8:50] It’s odd anniversary year for Amazon it is also the the.
Anniversary of the Amazon one-click patent and the reason that’s interesting is it’s the the final year of the Amazon one-click patent so that expires this year.

Scot:
[9:09] Who do you think will see a rush of people kind of coming out with one click now that they can’t.

Jason:
[9:17] I suspect that we will like I feel like you’d only on Amazon like.

[9:24] Exercise the pageant really aggressively and I think that you know they got a licensing fee from eBay if I’m.
If I’m remembering right but I feel like people had been skirting the line on that patent more and more in recent years and so you know maybe it won’t be a,
a watershed moment but I think it in certain sites it’s certainly going to make sense and so I do think we’ll see more of that.

Scot:
[9:47] Nothing eBay doesn’t license that’s why I have this weird kind of two-phase commit it’s kind of like you know,
buy and then you can go to the PayPal flu and even unit they try to integrate those things are there still a two-faced but apple is one of the biggest licensees of one click.

Jason:
[10:05] Okay so I may have remembered it wrong I thought eBay was the company that the Apple actually prosecuted the pastor that Amazon prosecuted the Pats and again and there was some settlement or something but I’m a.

Scot:
[10:17] This will be a fun thing for Lester’s to help us research Sean I definitely do Apple license is a very large licensee I don’t know who Amazon tutor.

Jason:
[10:27] Answer those guys I’m certain are looking forward to that patent expiring if nothing else.

[10:33] And then there was also some news that it looks like Amazon is getting more serious about a couple new categories,
Furniture in potentially most interesting the the Pharma industry the Pharmaceuticals.

Scot:
[10:48] Yeah.
You know what’s what’s fasting about these rumors are Amazon announcements I think they a lot of them come out of job postings so the two I read kind of hit read between the lines of job posting this and then talk to me Amazon source,
but each of these days so CVS was down pretty materially the day the farm and news came out and then Wayfair and a couple other Furniture companies for down pretty substantially the days the furniture.
Sucking out so.
Yeah it’s kinda it’s really interesting your last 20 years to see this work like 20 years ago I run laughed at Amazon and if they announced we’re going to come out for my run be like or if they even if they acquire drugstore.com NC,
I care too much about it oh no sorry the other guys did but they weren’t investor drugstore.com and.
We’re playing in that area and everyone scoffed and now when they’re just so with that they’re getting there they put a job putting out stocks go down to 20% so pretty amazing.
How much to move the needle here in the last 20 years.

Jason:
[11:48] That alone is a very powerful in both these categories are interesting cuz to your point.
Superficial like there’d be a reason that both of these categories are.
Difficult and obviously there’s a reason that neither one was the first category that Amazon went after and there you know there’s only going to be reasons that the Legacy in that the incumbents in those two segments,
are saying here’s why we don’t think Amazon will be as successful in our segment as they have been in all these other segments and and that of course,
you know I gets the hashtag Famous Last Words Furniture is interesting because it’s not likely that the.
The enormous of fulfillment center infrastructure that Amazon has is very well suited to Furniture in so that you know there are some third parties that have built these these Furniture distribution Networks.
And they often require like white glove deliveries and you know very regular size stuff and even though.
Amazon has built a couple of distribution centers or Phillips centers for a regular sized items but the really design for things like big screen TV’s not necessary sofas.
Inside of Amazon where to get really serious about furniture.
It would be interesting to see if they would build a new fulfillment center infrastructure or how they would it would handle that that whole part of the thing because it doesn’t seem that could leverage all the existing FC’s.

Scot:
[13:16] Yeah and that’s that’s one of the keys they report so some of the job postings are 444 falmont centers that are going to be designated specifically furniture and Appliance so so but they never been contact with that.
Name an end to point and never to my knowledge I know they got a pair of them at centers that have kind of steaming and ironing and kind of some very apparel they have a grocery footprint,
they have a small item that return footprint that have a large item that’s largely is for large Electronics this is the first time I’ve kind of seen,
any Donuts Center tag with furniture and Appliance in and then certainly it sounds like they’re building for sale that’s.
Pretty interesting and going to be a whole new new them footprint to see what they’re doing.

Jason:
[14:04] Yep and that that is a category that you look at and say has not been very digitally mature a lot of the the.
The traditional Furniture retailers would say like oh gosh people aren’t going to be able to aren’t going to buy furniture they can’t come in and see it and so they hid them under invested in.
In digital in e-commerce there’s certainly some exceptions out there so that’s an interesting category and then potentially even more interesting is Pharmacy again bunch of unique challenges about.
The distribution Network for that and in that case particularly the delivery and dispensing has a lot of regulations attached to it.
But you talk about disruptions you know you have three very large chains in in the u.s. Walgreens Rite Aid CVS.
And the something like 60% of the revenue from all three of those chains is Pharmacy.
I said that literally is their reason for being that drives all the trips to the stores and then they hope to sell all that all that stuff on the Shelf as a,
serendipitous Discovery when you’re coming in the store to fill your prescription so so it won’t have Amazon was able to disrupt.
Pharmacy in and you know really really own direct-to-consumer.
Fulfillment for pharmacy that that would be those those chains could not survive without walk-in Pharmacy.

Scot:
[15:31] Yeah do you think the whole prescription thing in management of that is insurmountable or you think there’s actually a better customer experience to be had in there.

Jason:
[15:40] Yeah I know I think it’s exactly the opposite I think it’s inevitable that the majority of prescriptions that people are going to want home delivery like it just is a better experience it’s a chore to have to go.
Pick that stuff up like there’s a subset of that industry that you need kind of on-demand fulfillment so you just had a medical procedure and you need to stop on your way home and.
And get some pain meds or something like that but the overwhelming majority of Pharmacy are these.
The stuff that the majority of Americans now take for for chronic conditions and so you’re just.
Virginia if your whole life and it’s a heck of a lot easier to have that stuff,
show up at your door there’s some really Innovative companies that are tackling individual markets like I think of capsule and in New York for example and you know Amazon certainly has the resources to.
To go after that and saw that on the national basis and you know if and when they do that that’s going to be a scary moment for other traditional drugstores.

Scot:
[16:44] Another category that’s interesting we talked a lot about on the show and I know it’s kind of a hobby for both of us to follow this one and it’s kind of the B2B industrial category,
and I’m just kind of the brief history here on this a deep dive cuz this is definitely out,
that we should go deep run but that the Amazon piece of this is what she back in.
April I think it was April of 2015 Amazon launch time.

[17:14] Amazon business they used to have the thing that preceded it was Amazon Supply and it really signaled.

[17:21] That Amazon is getting pretty serious about B2B and you know it’s funny a lot of the B2B players really kind of laughed and said you know we have this network of.
A thousand stores we have same day delivery there’s no way you’ll be able to counteract that and I would maybe think of this is Granger I was just one of the big players in this kind of B2B category and Industrial.
Lovegood’s has had a really rough first quarter so it started out they they.
The mr. numbers worse than they ever have and then it took awhile for them to kind of come out and explain what was going on and they really just a simply said they’ve seen a seismic shift over Ecommerce and dinner.
They called out specifically but reading between the lines it sounds like Amazon strategy is really taken root and it is causing them a world of hurt,
one of the things I thought was interesting is when they came out and said kind of readjusted expectations they said they now predict that.
Over 80% of sales by 2021 will be online and that cause analyst to take because they’re so.
Built out in the stores and all their margin is kind of.
The accounts on people coming in the store analyst came out and cut their whole long-term margin Outlook by more than half.

[18:36] So there’s definitely see changes going on in that part of the market we haven’t had a ton of time to talk about it and I think it warrants a deep dive.

Jason:
[18:45] That we should talk I’ve been to that one either,
Factor there that seems really scary for Granger a lot of these B2B companies have contract pricing or negotiated pricing with each individual customer so there’s,
their tents and not be a public price and,
you know they rely on price application you not knowing how much anyone else is paying for the goods and so Granger’s had an e-commerce site for a while,
but they they charge like the highest possible price on that e-commerce site so today,
you know that the customers are buying online we’re paying the highest price and one of the other things that they announces that they’ve had to dramatically.
At as all shoppers are shifting the purchasing online they’re their price sensitive online and so you know how to say Amazon,
has the exact opposite pricing philosophy so they had to dramatically lower their prices and so it’s a double whammy you say like wait a minute all your stores are so your sales are shifting online away from this huge investment in brick-and-mortar that you have,
and you’re having good to dramatically reduce the margins you get for online sales you know that doesn’t give us a lot of confidence in your future.

Scot:
[19:53] Yep that’s when I want to talk about it really news but it’s kind of trend I just wanted to bounce off you and see if you’re seeing the same thing so so it’s my talk to.
Brands all the time.
And yeah I don’t really causality but because I think we talked a lot about Amazon comes up for really interesting conversations over the years used to be.

[20:19] What should I trade you be in that kind of thing,
now what I’m finding is in Pride like the last 10 to 15 conversations I’ve had with Brands there they’re really getting very serious about advertising on Amazon and I don’t really see this out in the press three much but no.
I now hear that stat come a come back to me that that I use all the time and that you no more searches are done on Amazon then for products than other sites like Google and it for she was the first service this like for five years ago and now there’s several sources for the data,
so
Answer the conversation goes you know what we’re doing is restarting it’s been a lot more on Amazon ad Platforms Night if I have to that AMS Nama and we can go into that on.
If I do Deep dive on this too and certainly you know it had gas like Andrea and most break talk about it on the periphery.
What you interesting is what I’m seeing is this very quick lifecycle where brands are starting to the test and then it is a brand that you know.
There their name brand so they have a lot of marketing dollars already in all kinds of different buckets,
and at least we’re starting to see them slash those at dollars it towards Amazon rapidly,
also some folks have moved north of 30-40 50% of their previously mostly Google ad dollars over to Amazon and it’s because of that so they can measure very.

[21:50] Easily how it is moving the needle on Amazon itself but they’re also seeing a very powerful spillover effect off Amazon.

[22:00] It’s hard to quantify that and I’ve talked to some of the other doing and its proprietary nothing.
I don’t want to go into it now cuz though I think it would reveal who they are but it’s really fascinating to see this and I would not have guessed this would happen this quickly and I just kind of wondering are you are using the same thing in the hearing the same discussions.

Jason:
[22:19] Yeah absolutely.
In it it it feels like for a couple reasons like certainly one is there is this like shift 2 more miserable,
forms of media and more more sort of green eyeshade evaluations of marketing spend and your point when you advertise on Amazon you can it’s Noah believe that that had resulted in the cell whereas a lot of other advertising Vehicles it’s not been so the KP eyes have to be more,
more wishy-washy and frankly like there’s a lot of ugliness in the whole digital advertising space about like when you measure things like impressions.
How accurate those measurements even are and is it about that sing that are person as that below the,
the the full the never invisible to the human eye on all these sorts of things come into play into the the ads on the Retailer’s site,
you know certainly have an advantage and measurability but I actually think it’s it’s two other factors that are really driving it like that.
The top on when you mention like hey if Google is been a traditionally effective way for me to advertise in particular. I’ve been really effective and then you start to hear that weight 55% of all.
Search traffic starts on Amazon not Google you say man my portfolio of of pieles should.
In 55% of those dollars should be going to Amazon not to Google in so you’re starting to see Brands want to make that shift.

[23:51] And then you have this third problem for the account teams that are particularly responsible for selling their own products on Amazon.
There’s a Amazon has this great virtuous cycle for Amazon which is when you launch a new product on Amazon the only way to find it is inserts right like unlike a lot of other e-commerce sites where.
We’re about 90% of the users are using the nav and maybe 10% are using search Amazon is almost exclusively a search based.
Experience and the only way to show up in search is to have a high velocity of quick through on your product.
And when you’re a new product you don’t have a high velocity of quick through so.
You literally have to see the system by buying ads to improve your visibility so people could through to your product detail page so that you can get some volume so that you can start organically showing up in search.

[24:44] So it almost necessitates that you make that that investment and what’s what’s been interesting to me is.

[24:52] You know a brand of spending money on marketing like these tennis spend money out of a couple budgets and so usually.
The first thing you see is that there’s a sales team at you know Procter & Gamble or if you know you pick any brand.
And they’re responsible for selling the family care products through Amazon and they have a sales budget to invest in promotions on amateur Amazon that help himself just like that.
Promotion budget to invest in in-store Shopper marketing at Walmart tell them so.
And into those are the guys that originally are investing in these these AMS services to have their products show up so that they can start getting that search visibility.
But there’s a much bigger marketing budget that’s owned by the CMO and that’s the sort of brand building General awareness budget,
I’m in that usually the budget that’s invested digitally and things like like Google and so the interesting trim we’re seeing is a lot of brands have always had a presence on AMS,
MN other retailers advertising platforms.
From those account teams but now it’s becoming much more common that you’re seeing the CMO allocate part of the brand building budget to showing up on these retail or sites and well.
Amazon’s the by far the largest Network in the US the Walmart advertising that work W an ex is very big target has a meeting full of network,
Best Buy has a meaningful Network like almost every big sight there there’s a separate team that’s called the site monetization team and they’re focused on on selling these marketing products brands that that died.

[26:31] You don’t want visibility on the sites.

Scot:
[26:33] Young I’m kind of curious if this going to start to show up in a lot of the ad tectonic companies.
Results on specially Google because it does seem to be this,
the kind of destroyed the Google milkshake so it’ll be interesting to see if if we start to see him it back or maybe you could just big and diversified enough it doesn’t it’s not Material or something that we should if you’re interested in this maybe,
Too Deep dive ideas maybe we could get some Worcester feedback on you know which one of these is most interesting so we’ve got a Amazon marketing platforms and entrance and then we’ve got the B2B DS2 topics there.

Jason:
[27:15] Yeah good stuff and I guess one of the thing I would say there,
one thing holding Amazon back a little bit at the moment is there ad platforms are not nearly as advertiser-friendly as,
since somebody that their Core Business Like Google right so there’s lots of friendly api’s that all the Aztec guys can build products that talk to on things like like Google and the.
Technology you can use to interface and execute your ads on on Amazon and and you don’t even greater or stand on all the other retailers sites his is.
Relative William in church so that feels like with the one area that needs to change for it really to catch fire.

Scot:
[27:53] Yeah and we’ve had several guests on the show say that they’re pretty big kind of aspirations there so I think they’ll get there.

Jason:
[28:00] There’s their zero doubt that they could solve that problem and likely will.

Scot:
[28:04] Cool exit on Amazon you think anyone’s going to slow those guys down.

Jason:
[28:13] Well I guess it depends on what you mean by slow them down III I certainly think that they’re going to continue to grow and capture more market share in so if you’re if you’re picking a winner it’s it’s clearly got to be there,
but I don’t think it is a one-horse race and so I do think there’s some other retailers that you know of,
in a position to carve a pretty big pies for themselves and the one you think of the most in the one that you know frankly at the moment has a much bigger than Amazon is our friends at Walmart.

Scot:
[28:46] Yes yes oh Walmart had their first quarter earnings out and I think.
Most of the reaction I’ve seen has been really positive some some folks are saying you’re out of the woods and others are calling and green shoot so kind of,
yeah different levels enthusiasm but mostly enthusiasm the one metric everyone’s really excited about and I thought was.
Pretty awesome is Ecommerce was up 63% year-over-year to you as a reminder e-commerce cornichons going about 15% maybe at 2 gets 14 desktop in two or three said that night maybe.
Natural north of that but called 15 to surrounding and,
Amazon consistently as a company grows in the mid-twenties and then if you take out a bunch of pieces the egm part of Amazon instead of the marketplace are growing,
to clear around 30% so twice the rate of e-commerce so here you have something growing for X rated eCommerce witches witches great now Walmart hasn’t been consistently doing that they’ve been all over the map here,
so you’re one skeptic one skeptical think people could say as well.
The last year they didn’t have a jet so is this all inorganic growth into the Wall Street analysts have taken some of Walmart’s comments but I gave him enough data to back into it and,
no the ones I’ve said have estimated that the organic growth was 40% your beer so still a really good showing ahead of Amazon’s growth rate and then when you later in the jet would she have the Dell 23% or you get took up.

[30:21] Pretty significant growth number so you have it too early to call that the strategy is working but there is definitely this is better than – 5%.

Jason:
[30:30] Absolutely and you know it,
a huge warning sign for everyone else in the industry Let’s Pretend analysts are for sure right in his 40% organic growth so the whole e-commerce Industries growing at 15%.
By far the largest player in the Commerce industry that alone is is like 30 or 40% of the industry,
is growing at 30%,
and this and like most likely the second largest player in the Commerce industry is growing right now at 40% so that actually does not leave a heck of a lot of growth,
for everyone else to get to that 15%.

Scot:
[31:10] Yeah there’s there’s two kind of outcomes if if the industry keeps going at 15 then.
Online people to share will what I actually thinks going to happen if I grinning kind of a golden HD Connor Square I think if you don’t just ties into the mall again theme I think we’re going to actually see the,
Tire e-commerce sea rise and we’re ghosts are too.
Bump up from that 15% we’ve had for years and start to get up towards the 20% that that’s kind of yeah I think that’s what’s going to happen because and then the,
and what that’ll do is the percentage of sales that are online is going to start accelerating it’s been kind of if you look at the comscore data in the Census Bureau data,
it’s in the sky like straight line for a while and it.
I feels like the elbow the curve so I think this between q1 and Q4 I think it be a attic will start to see the really interesting inflection point there.

Jason:
[32:01] I think that’s totally possible I like to think of it is,
the really isn’t an e-commerce industry like they’re a bunch of product categories that are each a different places in there,
certain maturity or adoption curve in in general across all the segments we see you once they get about 20% of their their Sales Online like it becomes a major disruption for the the incumbent model in so I think they’re just,
a heck of a lot more retail segments that are that are rapidly approaching that that 20% threshold in so like I do think that you can,
that you could imagine a bunch of those crossing over that threshold then driving up the overall industry average.

Scot:
[32:46] Coupler just two bits of so if the first time they just close the DMV number in that was up 69% so when,
when Revenue grows slower than gmv that mean to take rate is going down at I don’t think that’s enough of a Delta to be concerned it usually that can be explained and mix so all these marketplaces have.
No a different mix a different take rate for electronics let’s say is usually some 10% and then some of that jewelry is north of 15%,
what is a nursing kind of trend watch over time which could indicate that there’s some price pressure there or something like that,
I’m Sims 4 sales improved 1.4% in the physical stores so that’s good and.

Jason:
[33:29] And that beat analyst estimates.

Scot:
[33:32] Yes that was an improvement and you know it.

[33:37] Walmart’s been on about a year Journey may be teaching months where they’ve been investing in stores in hiring people and raising their,
wages and cleaning up the stores really focusing on you have the day today blocking and tackling at the store level and that’s an indication that that seems to be working and as we know later than other same-store sales numbers out there and 1.4% is,
printable right now it’s going to got a plus sign in front of it which I think many retailers would,
really like to have on their teams for sales the quality of earnings growth improves which is good and then what the guys always measure on the sun and this is I’ve been being this drum for.
Pearl every 15 years is at this point in time Amazon has you know,
over 3 and 55 million skews so when it comes to selection no one comes close to Amazon it’s that marriage of the one p and 3p model that does it Walmart seems I’ve got religion around this and it’s widely reported,
that they went from 10 million skis a year ago to now that 50 months can still drop in the bucket kind of 1/7 of Amazon but you have to go up 5x in a years is pretty impressive when for you know.
What was yes 15 years and be a Walmart has been kind of in single-digit millions in here the last couple years they’ve they’ve really started to get very serious about adding selection.

Jason:
[34:59] Yeah absolutely in it it seems to me I mean when Amazon or when Walmart first wants to Marketplace like you know they didn’t get immediate Traction in there you know they were kind of,
judicious about who they let on to the marketplace and I know the sellers like really complained about.
The platform in the the the tools and how many schools you can on more than all these sorts of things when you see that jump from 10 million to 50 million my section is that they fix the bunch of those problems in the third,
they’re much more seller friendly than they then they were originally.

[35:39] Couple other little things in the Walmart world there’s a great store concept that I can’t remember we never talked about on the show,
call the story or or formal name this is story which is a retail space in New York City and it’s kind of an interesting concept they they.
Are a great mix of Commerce and content,
they come up with a theme every month or two and they redesigned the retail space.
Based on that thing so the theme could be.
A category product like health or you know measured self or innovation or something like that,
and you know they design a complete retail space around that theme in so,
when you go there from month to month you you wouldn’t expect to find the same product you’d expect a completely different sort of Rich immersive experience,
from the original concept they have been able to sponsor a number these stories so they had Brands come in and say hey we want you to develop a whole store concept around,
are our particular brand and this month’s story debuted a new A New Concept in the space and it’s it’s jet.com fresh.

Scot:
[36:58] You and I have been to several shopping at work meetings at at that store it’s really cool it’s kind of.
Antiques curation to the the Instagram think because the store is the simply just wipe and replace every wish you do every 2 or 3 months is it courtly.
Every month with what’s that site.

Jason:
[37:17] I think it tends to be about every 2 months but I don’t think it did so I got to fix schedule.

Scot:
[37:20] Come on Sia yeah yeah so are you going to go I think you’re going to be in York City going to go stop by.

Jason:
[37:28] Yeah I haven’t been to this concept yet it just open I think my next trip to New York is maybe end of next week or two weeks from now and so I will,
definitely look forward to checking it out and hopefully we’ll be able to tell our non New York westerners about it after that.

[37:45] And then no one other piece of interesting new Walmart news this week is that Walmart’s I filed for a number of Internet of Things past tense,
in the, space so like everyone’s really familiar with Dash buttons and dash Auto replenishment Walmart has patented and number of sensors.
Detect when a consumer is likely in need of replenishment so it sort of,
implicit is a replenishment instead of explicit so you don’t maybe it’s a toothpaste holder that can tell you when you’re out of toothpaste,
but other interesting play with some of these sensors are designed to tell you when the product you bought the perishable product you bought is about to expire so I could warn you that your.
Your milk is expired or your cheese or something like that I don’t know she’s never expires now that I think about it but you get the.

Scot:
[38:44] Cheese expire this green stuff on it.

Jason:
[38:48] That green stuff in cheese I’m just getting I think it’s penicillin no that would be bred never mind.
But in any case interesting that the Walmart is investing in that in that ipspace we talked about.
The internet of things and Auto replenishment on the show a couple times and it is very likely that five or ten years down the road sort of 40% of the goods that you.
You buy in the grocery store today are likely items that magically show up at your door because your house knows you needed him so,
I think that the retailers that are investing in returns and brands that are investing in that technology now are are wise to do so.

Scot:
[39:32] Yeah yeah one news item to kind of break out of the Walmart side that we were remiss and covering and so we had this flurry of activity there were Walmart bottom of Oaks in between shows of one of our gas company was acquired so Samsonite acquire D-backs was cofounders Peter Cobb is good on your end we’ve also had John Norma,
two of the three or four Sounders on on the show.

Jason:
[39:59] Acquire.

Scot:
[40:01] Yeah yeah I’d say so.
I don’t think it’s a huge stretch to say that we basically put this deal together but anyway so it was acquired 405 million,
that’s great outcome for everyone in and you know this trend of,
brands of accelerating their digital footprint by buying e-commerce players is as fascinating in its.
A shout-out to our friends at ebags and congratulations on that one.

Jason:
[40:27] Yeah absolutely it’s going to be interesting to see I got his bags has a lot of that digital expertise Samsonite now also owns to me so it’ll be interesting to see how they’re able to leverage all those those new digital chops,
across like you know both of the stores brands.

Scot:
[40:47] And then I’m also in news so we’re,
Walmart usually one of the last folks reports or kind of heading towards the end of the q1 reporting cycle and I saw a really cool chart where well one of our joint Twitter friends Ryan Craver has been tracking the sand,
what is he shows kind of graphically same-store sales Trends and you know this was fast about this chart is.
Yeah he has what he has kind of groups without call value-oriented retailers or their counterparts so things like Burlington Coat Factory which is a discount on Nordstrom Rack.
The Nordstrom Rack piece of Nordstrom Rack shoes TJ Maxx,
Dollar Generals in the dollar stores then there’s a grouping for department stores and there’s a grouping for wholesale clubs and it is a tale of three cities so wholesale clubs in generally the discount guys are doing well with positive same-store sales results and.
Department stores are doing really really poorly with with severely negative same-store sales.
So we’ll put this in the show notes or check either my handle or Jason’s on Twitter and by the way both retweeted this so you can see it there but it’s really,
interesting graphical display out of this where consumers are spending their money is actually an end the feast and famine that’s going on and offline retail right now.

Jason:
[42:15] For sure I mean it plays perfectly into the,
the retail Armageddon that we talked about that but you know protect those department stores are super distressed as consumers are making different decisions about where to shop been increasingly it’s at those those more value-oriented retailers.

Scot:
[42:33] Yeah and one of the young,
no one of the folks that did not make it out here in the last week or so as a retailer or rented towards team some all based retailer oriented towards teams called rue21 the file for bankruptcy so remains to be seen if they’ll be closing all their stores or what’s going to happen to the bankruptcy but usually it does mean store closures.

Jason:
[42:57] Yeah in it.
I mean then we talked about the number the earlier bankruptcies a doing some interesting buzz on Twitter one of the bankruptcies was Gander Mountain and what kind of interesting,
that Gaynor was bought out of bankruptcy by Camping World in the reason Camping World might be interesting to some listeners is the CEO of camping world is the star of retail Park a profit show on CNBC if you ever watch this.

Scot:
[43:30] Leon’s Marcus Leon saskia.

Jason:
[43:35] Exactly and so Marcus has been Super Active on Twitter and he’s been super transparent a gander had a.
If memory serves like 60 stores and campers world is going to reopen like,
20 of those stores in so you know he’s been like sharing real-time data on Twitter as they make the decision as to which stores they can reopen versus which ones they they.

Scot:
[44:02] So that is really confusing because,
the stores all say the stores closing and we’re liquidating everything then he is saying no no no no the store yes or selling all the stuff but the stores going to stay open so I guess they’re going to,
no they have their own supplier relationships and Logo replenish the stores and then they’re also rebranding them the brand is like.
Cinnamon Big Gander Mountain it’s just Gander outdoor but he wanted to create a bunch of distance between the brand but it’s like the same essential name side,
Nas represent tracking.

Jason:
[44:36] No I think you got it,
exactly right I think he did not buy the inventory the distressed inventory in the stores so the Liquidator the did has the right to sell all the stuff out of all of those stores and then the stories he reopens he’s going to have to replenish your point prison while using the campers world supply chain that he already has.

Scot:
[44:56] Yeah that’s commuter Sting If you can make that work because it’s certainly very confusing consumers I forgot it’s pretty in the weeds try to explain that to him.

Jason:
[45:05] Not for sure I just found the thing interesting you know if this had this this kind of thing plays out all the time when returns go bankrupt and I’m played out you know 15 years ago or 10 years ago when when Circuit City closed.
They give you work in a Circuit City store you have no idea if you had any potential for a new job or what was going to happen and you know you’d be waiting until you read something in the newspaper and now you’ve got like.
All this this real-time information you jump on Twitter and the you know Marcus is out there tweeting list of stores and saying like Hey we’re going to hire people in that store so I did.
I think that’s another interesting ramification of the of digital disruption.

Scot:
[45:47] Yeah that’s good point I think it is super helpful for the employees to have some some in real-time information what’s going on.

Jason:
[45:53] Absolutely So speaking of digital disruption another big guy digital event this year or this week is Google IO.

Scot:
[46:05] You would what you think about that I was not able to watch it real time I read several the summaries and,
yeah it sounds like Google went from in the early days being kind of search for Sony search to than mobile first and now everyone’s saying there AI first so the AI Buzz was a Google IO and you have to get excited you’re going to be in it’s like,
you know,
this thing you can hold up your camera and it’ll decode something in the real world and Google’s had several iterations of this and they’ve all been kind of you know nice demos but not like,
game-changing cell I don’t know I felt like a real use cases so interesting to see if something was like changing for you.

Jason:
[46:50] Yeah we’ll see nothing I would call life-changing but I do think it’s interesting,
why is one of these double-edged swords and we we for sure need to do a deep dive in there if you turn on on AI for Commerce because it is over hyped Buzz thing right in and so you know all the big,
Big Rita a big big guy technology companies are talking about becoming a I first in and innocently that was the big play from from Google in,
you know my argument is no one should be excited or buy something because it is or isn’t it,
bike was not an outcome and you don’t people like I need some of that good at so so we’ll we’ll talk about that a little bit on the Deep dive,
but I do think it is true that the AI is enabling a bunch of,
much more interesting user experiences and much broader a digital user experiences then have been possible here to for so so I do think that is on the cusp of enabling,
huge of systemic changes to how we shop across a bunch of categories and I am excited about that and you know that,
but I would,
I would encourage people to get much more excited about this specific use cases that are likely to affect them and why they’re going to be a better experience than that it has the AI label or doesn’t have the a highway.

[48:21] So I think it be fun to do a show where we talked about what some of those near tournament fart termed use cases are but I know one person that’s in my camp on this is our our number one listener Jeff Bezos.

Scot:
[48:33] So she possible Deep dive so if you want to let us know your thoughts,
tweet at us or I’m Scott Wingo Scot Wingo in Jason his retailgeek.

[48:49] Or go on her Facebook page and let us know which of these deep-dive topics is most interesting for you so to recap we have business kind of with an flavor of Amazon business what’s going on we have.

[49:03] Artificial intelligence and then we have Amazon advertising and and that platform so let us know what’s interesting to you.
Jason one big retailer that’s been pretty active here in the last week’s news that we haven’t talked about his Target have you been tracking all the I don’t know it’s news I think it’s more like,
gossip at this point now have you been tracking what’s coming out at Target and interesting macro things going on there I’d love to hear your take on.

Jason:
[49:32] Yeah so I think there’s some gossip and some news I think they also did have their earnings call this week,
and I did not write it down in the note so we’re going from memory so don’t hold me to these numbers I think they basically beat the analyst expectations but they definitely had negative same-store sales so,
in my head I want to say that that the animals were pretty thing that be down like 3.7% and they would only down like 3.4% or something like that so.
Definitely not the you guys want to beat analyst expectations but definitely not the kind of thing you claim victory on and and pound your chest about.
When you’re just just the shrinking a little more slowly than an analyst. Yes.
They also did an ounce pretty good e-commerce growth I think also above that average so again from memory I want to say.
Then I was like 20% eCommerce growth.

[50:33] But it’s interesting like all of those things at Target are in this backdrop of news we talked about in the last several months that the target is really curtail the lot of there.
Forward-looking initiatives in program so they.
You know they have these stores of the future that we’re half built then they they announced that they were closing they had this big goldfish initiative.
And now this this Innovation officer westering feel that you know they’re working on all these Innovative things and they hired a bunch of people to build them.
And they they abruptly pulled the plug on all those things and parted ways with Wes.
Their Chief digital officer you know they left the company.
Maybe 4-5 months ago they’re cheap Innovation officer Casey car of the company this month so it really feels like.
Target is investing all of their chips in their near-term fundamentals like they’re they’re trying to improve the guest experience in the stores,
and they’re all in on the winning in these five signature categories that they’re focused on in store.
At the expense of a lot of these these other initiatives then like obviously there.
Their results or to belittle why that you know they don’t have an unlimited amount of money to invest in all these initiatives.

[51:56] So it’s going to be interesting to see how that played out but in that context we we got some some rumors from her friend Jason Del Rey that he wrote an article about today.
And that was all that they announced that they are selling Casper inside of Target stores,
and that’s that’s not rumor that that’s news they’re not actually they’re selling the mattresses on the line but they’re selling a lot of the accessories in the store so so the Casper have a footprint in the store,
and if you want to buy a mattress you can buy it direct from Casper but you can also now buy it from target.com and the ship it direct to your home,
for people that aren’t for my red Casper you know that that is clever combination spring foam mattress that they’re able to.
Compressed down enough that they can actually ship it in a UPS box in so this,
this is kind of in line with a lot of other moves we seen Target they like to surprise and Delight their guests by having these popular brands that you wouldn’t necessarily expect,
Cabot Target in so regionally that was like designers that were too high in for that you might have thought were too high in for Target but more recently it’s been some of these digitally native brands that are showing up in Target so it was Harry’s razors and now Casper.
And what Jason’s article says is the target tried to go a lot further than just caring that they actually tried to acquire Casper and then when that was unsuccessful that they’ve taken some sort of investment and Casper.

[53:33] So that’s interesting.

Scot:
[53:34] Yeah and I think the number that was been thrown around as a billion do you have you heard what Casper is revenue run rate is how I remember when they crossed like a hundred million me was 2 years ago I heard an update on that.

Jason:
[53:48] Yeah I don’t have a number in my head.
Like for sure that they got to like a hundred million in like their second year of existence so I know there’s a lot of talk about that but I don’t know.
Where they’re at right now and it’s interesting for Target to take an investment in them right so.
If if I don’t know that makes Target a majority shareholder or a minority shareholder or what sort of you know board seats and all those sorts of issues but you could imagine.
Why does Casper sell on Amazon today and will they continue to sell on Amazon with with Target as a majority board member,
would any other retailer B12 Kay Casper with Target as a board member and might see,
sales velocity on those on those in those other retailer stuff like that like it can get messy for a retailer to have an investment in a brand that they’re not exclusive to.

Scot:
[54:51] Channel X the thinking goes if I’m going to make these guys are Rockstar.
And I can’t own it then I want to participate in that Rockstar creation cycle that’s probably what’s going on from Target side.
And they probably wouldn’t do the deal without investment and then there’s also stuff the offense part of it in their defense that kind of says.
And so you things can come with your pretty real needy right of first refusal kind of things so that you keeps one else from buying it are you have at least two by two that so I wouldn’t be surprised some of that was in there and in,
Casper.
Must have really wanted the distribution or her felt like it was worth it to accept the investment in any kind of other entanglements that came along with it.

Jason:
[55:35] Yeah and that does it mirrors Casper’s a prototypical did you need a brand.
You think about someone like both of those right like very similar,
they cut a deal to get distribution although their primary Channel distribution is direct they cut a deal to get distribution in Nordstrom and they’ll at Nordstrom to take an investment in them and so,
in that way this this deal doesn’t look so different from that and of course none of us as a sort of aggressively open guide shops at showrooms Casper has some some guide shops or not shops Casper has some showrooms.
So it feels like it’s falling on a pretty common playbook for these kinds of companies at this point.

Scot:
[56:20] Yeah and I don’t say it feels like I’m outside I don’t have any inside information on this it feels like a game of Music chairs is accelerating so,
now we saw Walmart scoop up a couple of these really quickly and the Rumor persistent rumor is bonobos is going to Walmart so then if your target your kind of like.
You know why I need to get in the chair here and we also have heard rumors that they were going to pick up boxed up which is more that Amazon Pantry style kind of competitor so so I think what you’re seeing is you know you start to look at the digital I need a vertical brands that are out there at scale,
your dollar shave club’s been picked up so now you have Harry’s in the Casper,
there’s it does to the three largest wins mod causes a lot of times mention of that discussion and bonobos those two are off the table so you’re really left with.
Pretty small number of scale over hundred-million-dollar companies there and I am I leaving any off.
Which puts two chicks in there I don’t know if that counts.

Jason:
[57:23] Yeah they’re slightly different animal but they’re like even you know probably larger in scale at this point I think there was some they publicly announced and you know we we have I can only take their word for it at this point but they clean a satellite.
760 or 780 million in annual sales so that’s that’s a pretty good size company of that church.

Scot:
[57:45] Yeah feels like a four five billion kind of a swing it back there so it’s pretty serious to me.

Jason:
[57:52] Exactly some of these might be a little more digestible then than Stitch fix at this point I do think you’re right like there’s no.
Diminishing number of these I think there is another interesting play where these guys are playing some defense.
Another piece of innovation is so fast now that all these companies that have disrupted Industries,
are not getting very long honeymoon before they themselves are getting disrupted so you think of Dollar Shave Club as disrupting Gillette and Shake.
And you know you could talk about the cool video in the subscription service in all that the real reason Dollar Shave Club disrupted.
Gillette is because you at sell $7 razor blades in Dollar Shave Club sells one dollar razor blades but now you’ve got dorco who’s the.
Razor blade supplier to Dollar Shave Club launching their own subscription service and selling $0.20 razor blades.
You’re like hey wait a minute like I was that young fun disrupter with the shockingly low priced and now I’ve got guys below me in the same thing as happened Warby Parker they’re a bunch of direct-to-consumer,
frame manufacturers that are even coming in and even let you lower price points than Warby Parker and the this mattress industry is,
particular competitive so either at the Casper wasn’t even the first they were really I would argue the first one to get sort of mainstream awareness.

[59:24] But there are five or six a significant players in this new digital direct-to-consumer mattress space and if you’re you’re Casper you know you would have had a big incentive to get,
eat a dick the kind of visibility in distribution you get through through Target to differentiate themselves from that competition.

Scot:
[59:45] Yeah there is a,
an interesting data source CB insights had shown when the rumors about Casper came out that there’s three or four other mattress companies that are actually in the neighborhood of sales is caspersen Target must be really enamored with Brandon and think that there’s some absurd you there with their there.
Fire door password.

Jason:
[1:00:07] Yeah yeah absolutely so it’s a it’s a fun spectator sport to watch all the stuff planned out right now.
So Scot we’re coming close to time but I know you have a pretty cool event coming up do you want to remind the listeners about it.

Scot:
[1:00:24] You know one of the biggest shows the year for e-commerce,
internet retailer Conference & exhibition which is commonly abbreviated IRC and last five years I’ve been doing a Amazon Workshop they’re called Amazon and meet so I’ll be at internet retailer love to meet up with any letters that happened to be there Channel have a booth and I’ll try to spend some time there,
I’m a bad founder and don’t know the booth number but I’m sure it will be in the guide there so I’ll be at the booth and look for to see you there and then I’m also speaking at a venture capital friends about,
what’s going on in Destin DC and that’s June 7th so look forward to seeing everyone as I’m starting to hit the road here in the early summer.

Jason:
[1:01:12] Graco I love it that you are potentially traveling more than me.

Scot:
[1:01:16] Yes I may have to I may be able to a trip report so it’s going to be pretty darn exciting.

Jason:
[1:01:21] I tried to be a cool and find the booth number for you while you were talking and I sent you exhibited in too many hours to eat.

Scot:
[1:01:28] Yeah her for quite a while.

Jason:
[1:01:31] Exact,
I still have to put that on the show notes and with that it has happened again we’ve wasted a perfectly good hour of our listeners time so we certainly want to thank everyone for listening and encourage you to write us a review on iTunes of you enjoyed the show and we would love it if you’d come to our Facebook page and give us some feedback about which of those deep guys would be interesting to you.

[1:01:58] Until next time happy commercing.

 

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