Jason & Scot Show Episode 117 Listener Questions

A weekly podcast with the latest e-commerce news and events. In episode 117 we answer listener questions and cover some recent Amazon news.

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News:

Amazon launches”Ship with Amazon”

Listener Questions

Q1: Amit Agarwal- Thanks for the amazing podcast. What is the future trend in pricing ? EDLP or coupon based pricing?

<Jason> Most new retailers will adopts EDLP, promotions aren’t as effective in the age of transparency, but it’s very hard for existing promotional retailer to switch.  Eventually we’ll get to more dynamic, personalzied pricing.  Every Nanosecond Low Pricing #ENLP!

Q2: Kiri Masters – What are the coolest or smartest things that brands and retailers are doing with voice commerce? And, what is within reach for smaller brands who don’t have a $200k+ budget to drop on developing skills, etc. Where are we on the maturity curve?

<Jason> Transactions are limited to recurring and replenishment purchases, so Pizza places and Starbucks have the early lead.  Brands like Patron and Tide have made good use of voice skills for top of funnel marketing.  Small brands should think about voice for on-site search, and voice SEO on search engines.  It’s VERY early in the maturity curve.

Q3: Patrick Paroline – Hi guys I love the podcast listen to it every week. When the numbers say that e-commerce revenue is up 17% does that include Amazon? If so what would be the e-commerce industry revenue increase if you took out Amazon? I believe you guys said that Walmart.com growing and 60% and Amazon at 30%. Would this mean if you removed these two companies then e-commerce as a whole is contracting

<Scot> Good question!  If you take the top 3 retailers out, e-commerce growth is very modest:

Most e-commerce data is based on or correlated to the US Commerce Dept data, which is somewhat suspect.  Jason and I both believe the total market is probably a bigger, which means “Other” is probably bigger, and growing faster than 2% but still much slower than Amazon/Walmart.

Q4: Ari Nahmani – Mobile payments in 2018 – can we hear more about Android Pay / Google Payments API, Apple Pay, W3C Payment Request API, etc? Do we have any data that shows that when implemented properly, these things truly reduce the ‘mobile gap’?

<Jason> Apple Pay and GooglePay have loyal but small user bases.  Paypal and Pay With Amazon have proven that digital wallets do improve conversion.  W3C Payment Request is great, easy to implement and likely to improve conversion, most sites should have it on their roadmap to implement.

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

Episode 117 of the Jason & Scot show was recorded on Thursday February 15, 2018.

New beta feature – Google Automated Transcription of the show

Transcript

Jason:
[0:25] Welcome to the Jason and Scott show at this is episode 117 being recorded on Thursday February 15th 2018 I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-host Scott Wingo.

Scot:
[0:40] PJ’s women walking back Justin Scott show listeners,
will Jason’s covellite Newsweek to our couple things want to cover before we jump into listener news we warmed up the old Facebook page which,
is my responsibility and I have to have a met a couple that I have not been very active posting to our listeners there so one of my New Year’s resolutions I know it’s so late for those here.
Late February is to try to be more active on there and then gauge hook so we are going to be able to handle on some pretty great listener questions so we got today.
I before you jump into that you have a new gadget on here about.

Jason:
[1:19] I did I’m a very romantic guy so for Valentine’s Day I got my wife a apple home pod.

Scot:
[1:25] Wow nice that will last longer than a dozen roses.

Jason:
[1:30] Yeah it will although I don’t think it was a big hit I think she appreciated the gesture and my super artistic wrapping you can you can’t even imagine how impressive that was.
But the homepod itself I wasn’t personally very excited about like I had read a bunch of mediocre reviews as we talked a lot about on the show I have a house full of Alexa devices.
Extra Alexa devices at the moment.

[2:01] Into the really wasn’t anything I was looking forward to in a homepod but my wife is heavily steeped in the Apple Echo System she had mentioned it a few times.
And she is very heavy Apple music user so I figured okay well you know what I mean it’s present for her she’s been talking about so we’ll we’ll go ahead and get one and I’ll surprise her.
And I’m sorry to report that all of the mediocre reviews we sort of experience first-hand right I guess.

[2:33] Like I don’t think Siri is as useful as as Alexa in general and the version of Siri on the the.
Homepod is kind of a dumb down version of Siri so it was kind of annoying it seems to understand us a less than.

[2:49] Then the Alexa does I will say the audio Fidelity is great like the audio it’s definitely a higher-quality speaker than any of my Alexa devices which are all Amazon first-party ones I don’t have any of the.

[3:00] The third party speakers sounds great but the voice interface sucks and it’s it’s just not compelling to have this.

[3:09] Extra Gadget in your house just to play One music service.

[3:16] And so I think even my wife whose Apple fangirl and kind of disposed to like their stuff I don’t think she likes it enough to keep.

Scot:
[3:25] Man do you have the so I’ve read a lot of people that compare it to the Sonos Sofia what their name is for the one with Alexa.

Jason:
[3:32] I think it’s the soonest one that has Alexa in it and I played with it.
I haven’t had it in my house and I think those are mixed bag so I could this has really good audio quality in general I actually have a bunch of Sonos speakers.

[3:49] And people are saying that it’s comprable audio Fidelity to the homepod if anything it’s maybe,
a hair lower-quality there’s some pretty sophisticated auto-tuning in the Apple speaker that I’m not sure the Sonos matches but that sentence is a hundred bucks of alas,
you know it’s it’s debatable whether it has worse audio Fidelity and it supports Alexa and there soon going to add Google Assistant to it as well so way better value way more utility the only reason I even bought one.

[4:23] Is it actually Amazon slightly neuters all the third party speakers so,
the only music service that the third party speakers. Port is Amazon music which is mostly what we use in my family on the Alexa devices but if you’re a Spotify or Pandora user and you know there’s a very good.
Spotify experience on the on the indigenous Alexis I think I think that might be what you use if I remember right.

[4:52] Spotify got yep good sapientrazorfish clients so we certainly like Spotify.

[4:59] But they’re the the.

[5:04] Amazon doesn’t currently make that available on the 3rd party speakers that have Alexa in it which isn’t like clearly an intentional way to disadvantage the speakers.

Scot:
[5:14] Directions to Sonos I have also a Sonos system and it’s pretty agnostic you know so I can like being Spotify to it XM radio I think it’ll do Apple music.

Jason:
[5:26] I think it will and.

Scot:
[5:29] Just weird that that one is going to be like almost a step back for them.

Jason:
[5:33] Well so whistler’s check me on this but I think the actual case the Sonos one speaker is a Sonos speaker and so it actually runs the Sonos firmware and you can use the Sonos app so so you can run Spotify.
Using the Sonos app on your Sonos one speaker what you can’t do is use Alexa voice commands to play,
Sonos to play Spotify music on that Sonos one.

Scot:
[5:58] Look up a lot about the speaker Market here and then I’ve seen reports that the homepod is leaving white rings on Aaron’s furniture did did it also damage your furniture.

Jason:
[6:11] So it is not where we have it on Formica desk so it may be a little safer but so it’s not on like a nice piece of wood furniture but I have seen the same report it is,
the speakers both slightly smaller than I expected it to be I mean it’s it’s it’s about the same height as my Alexa’s and it’s a little fatter and I expected it to be.

[6:33] Maybe taller but it’s it’s super heavy for its eyes like it’s very it’s very dancing it’s because it has this big subwoofer in the bottom then I guess it’s just now putting so much low.
Low energy that it’s moving around a little bit and it has like this white rubberized.
Donut on the bottom of it and apparently when that thing moves around it it’s leaving a mark.

Scot:
[6:59] So you’re just about the same size as the old the original XO kind of the cylinder or more like the little one that has like a felt kind of filter.

Jason:
[7:07] Yeah I know so it’s the same height,
patches I’m staring at them side-by-side it’s it’s like a touch shorter than an original of Alexa cylinder it’s much it’s much better than Alexa in fact it’s it’s.

[7:25] Diameter is probably like at least twice twice the diameter of the Alexa.

Scot:
[7:31] Well.

Jason:
[7:32] And it does have a weird it it it’s also covered in fabric but what’s it weird it freaked me out the first time I picked it up it almost feels like you can Dent it it almost feels like it squishes in a little bit.

[7:44] And then it seems like it it restores it’s ya.

Scot:
[7:48] Yeah that makes you were either going to punch her thumb through the thing you don’t want to do that.
Cool thanks for that Gadget experience report it wouldn’t be a Jason Scott show without some.
Amazon news new your margin.

[8:15] Okay this one dropped it was bad timing for us from a podcast perspective cuz we recorded our show last Thursday,
Idol episode 116 and then sure enough Friday morning so big amazon news dropped and this is Amazon you know.
It’s not clear if it was,
leader what happened but yeah they’ve been working with some third-party sellers for this full-on delivery service that’s called ship with Amazon so it’s going to Pilot in La it looks like and articles I read said.
It’s going to roll out in 240 cities pretty quickly and the reason that makes sense is prime now is in 40 cities and Prime now built this super like.
299 car delivery Network called Flex So reading those tea leaves you know what I’m thinking is happening here is.

[9:05] Amazon started Flex to work with their 40 Prime now the foeman centers which are a different footprint than their normal.
Fulfillment centers then they started doing some deliveries out of traditional fulfillment centers with their own network of flex drivers and also.
Actually Amazon employees and whatnot and then now it looks like they will offer to third-party sellers the ability to ship with Amazon where if you were a third party and La let’s say you were.
I’ll pick on my friend Jackson who’s I-84 city has a big Warehouse in LA and someone in La bought one of those products they could get that product in 2 hours and an Amazon driver would come to his Warehouse.
Pick this up and take it to the customer and so that would Leverage The flexnetwork so.

[9:52] That’s pretty nursing and you know I we’ve been talking a lot on the show it was my 2017 prediction that I react for this year that Amazon will get more into dolak Direct Delivery and here you see yeah it’s it’s not.

[10:06] That hard to jump from that part of the Venn diagram to hey you.
Retail RX Nordstrom’s here’s your fulfillment centers we can help you deliver as well and then you can even adjust that product into the.
Burgeoning Amazon Fulfillment system network with airplanes and everything and effectively have a full-on FedEx UPS competitor.

Jason:
[10:31] Yeah and I think that’s something that that you in particular but we’ve we’ve discussed on the show a number of times that that that seems like a likely play for Amazon to make.

Scot:
[10:44] Yeah it is there since internet retailer and I’ll put in there this cuz I know you how I feel about surveys but they did a survey of I think it was 200 retailers and when I looked at, the size of sellers you know,
you know and it but then like a good a third of them were more larger retailers and I are 500 types awesome like 70% said they would,
it was either strongly try or are we.

[11:10] Only 30% said they wouldn’t use an Amazon shipping service in the 70% said half of that 70% said it would have to be a bit cheaper than current offerings and I think it’s very very interesting.

[11:22] This holiday,
probably not because usually impacted but next year’s come you’re very interesting because I know you said when you draw the lines of the amount of shipping needed out there and what’s available Amazon will it consumed most of it and you know seems like Amazon’s read those tea leaves and is finding a release valve with this new ship with Amazon program.

Jason:
[11:44] Exactly and you know a couple of things kind of come to mind,
the day before and a podcast we we had talked about some of their seller fulfilled FBA programs and including a new program where they were putting their own software and customers warehouses in,
clearly like those two pieces of news are at least partially related you can imagine if a bunch of.
Shippers are running Amazon software to manage their shipment and you know that that,
Doppler could take that shipping method and and you don’t have sort of a biased towards Amazon shipping service.

Scot:
[12:27] Yeah yeah it’s good if it’s going to be interesting to see how this plays out and then you know a lot of people will say,
well you know this route is unprofitable that routes and profitable I was kind of stuff but you don’t have me watch Amazon kind of decompose other markets pretty quickly they were the prophet is so don’t go and you know it there.
Their profit is your profit is their opportunity right so they’re going to go and they’re going to find the routes that are most profitable for third-party shippers and they’re going to pull those in the house cuz it’ll by Logic if it’s.
Probable for for the shipper it will be.
Amazon will have the best savings by cutting that Loop out so so so we really interesting to see what happens when they start doing this you know you can only look at it from a low Amazon just overdid 1.1% of volume because that .1% of volume could be like,
8% of margin of the deal that people have one with Amazon supposed to be really interesting to watch the positioning here.

Jason:
[13:26] Exactly I think like they think they don’t have to completely match,
UPS and FedEx is Network to disrupt them right if they just take some of those most profitable deliveries and bring those in-house you know that that can create enough of an inflection point that causes some new unique paying for UPS and FedEx and I think,
I don’t think Amazon wakes up in the morning and goes how can we ruin UPS is life and I think they’re more thinking about how they can make their own lives better you know this,
saw some of their their Peak demand problems that solves like controlling one of their fastest growing expensive lines which is shipping and in the long run you could imagine then building all kinds of.
Reverse Logistics services that UPS and FedEx just might not be that interested in but that are.
Really important customer experiences for e-commerce right like so easier returns.
You know you you hypothesized that hey there’s a bunch of warehouses that are all all the Feeling by Amazon and they all have Amazon software in there like Amazon could have literally trade a new Marketplace.
For warehouse capacity and sort of flex store Amazon Goods in other people’s warehouses that are running their software you know you in a two-sided Marketplace exactly.
Like they do for for 3rd party selling so so lots of interesting new things that could evolve from here that make the super interesting.

[14:55] A couple of things like that that I had to point out,
I do feel like you have been talking about this for an awfully long time I know calling Sebastian was one of the first analyst to talk about this but I did have to chuckle a little bit like I feel like the entire all of Twitter broke their arms congratulating themselves.
Predicting this.

[15:14] And I’m not sure like that you know it you had to be the cleverest person in the world to predict this 3 months ago that Amazon would eventually try to monetize this like you have given that that’s the model they’ve.
They followed with so many other things so I did I do think it’s funny I may be made a joke that like the only person on the planet that didn’t fully predict this is the CEO of of ups that kind of had a.
Last year that we don’t believe that there is for Amazon strategy is to do it themselves and the reason we believe that is is we have this huge infrastructure we’re investing in technology we have a great Mutual relationship with Amazon.
Like you don’t obviously that was a bad day at UPS when when Amazon when SWA week.
And coincidentally enough this is the month when our friends at FedEx and UPS do their annual rate increases and so this year if you’re a shipper.
You’re the base UPS and FedEx rate went up by 4.9% so that’s a huge.

[16:17] Operating expense for most e-commerce business is to absorb mini which are struggling to be profitable already.
Now they’re their operating costs are 5% more and oh by the way most of the shipping went up even higher because.
FedEx and UPS are really design for business-to-business shipping so they’re highly optimized for taking package it Parcels 2.
Businesses their least efficient at deliver at residential deliveries and so a number of years ago they introduced a surcharge.
For residential deliveries to kind of compensate them for the for the the greater expensive this home deliveries and those surcharges went up its kind of,
on a sliding scale so it’s there’s not an exact number but the surcharges went up like 8%.

[17:05] So very meaningful increases from FedEx and UPS and it’s cool you know they’re there.
Maxed out on capacity they’re not growing as fast as demand is growing and so they’re trying to you know maximize the value of the capacity they have by charging more.

Scot:
[17:21] Yeah yeah and a couple other interesting facts so FedEx says no one customers more than 3% of their volume so that you know a lot of people read that and say that’s kind of where Amazon is Amazon definitely sends,
you know the most between faxing UPS to UPS and UPS says Amazon’s about 10% of their volume so it’s not cataclysmic for any of these guys.

[17:45] To go to go to lose some of the Amazon business what would I think everyone underestimates though is Amazon just kind of you know.

[17:53] Picking these very profitable businesses and offering them even if it doesn’t involve Amazon it all eventually and then that’s going to be your just like cloud computing you can you can host Netflix host you know on 8th and it’s like.

[18:06] Competitor using their Cloud infrastructure which is the old world off on the world doesn’t make any sense at all,
but enough for Netflix economically are so attractive they’re willing to do that and you don’t so what if I don’t know,
I don’t Walmart would never do it but what if Macy’s start Cent shipping ring what Apple started doing deliveries using Amazon Network you know that starts to get.

[18:29] Pretty interesting and mind-bending of what some implications are.

Jason:
[18:33] The apps absolutely I will look like,
minor props like UPS and FedEx are well-run companies like there’s they’re smart to be making the most they can on the capacity they have and props to them for not having a huge customer concentration problem is that in most B2B business as you you have a much bigger concentration problem then your largest customer being 3% of your business.

Scot:
[18:57] Yeah cool so that was the big news let’s make sure we will make sure we cover these listener questions so let’s jump into him.

[19:10] Questions questionnaire questionnaire questionnaire questions Jason we got for really meaty questions,
and it was good news for me three of them were really in your alley and one is mine so let’s ask you the first question so this is from admit Agarwal and he says thanks amazing podcast so clearly am it has impeccable taste,
and and is awesome to begin with and he wants to know what’s the future Trend in pricing everyday low pricing or coupon base.
Pricing?? So maybe.
You know I know your ninja live on this but maybe give us a 101 on What is edlp what’s it mean online and then where do you think kind of retail pricing goes in and eCommerce pricing.

Jason:
[20:00] Yeah,
so so edlp is an acronym for everyday low prices in the retail Echo System the retailer that then most.
Support cdlp unit it literally is sort of kind of their their core value proposition is Walmart so in in general they they very aggressively try to get,
prices on all their goods as low as possible and in general the pricing does not fluctuate a lot based on sales and promotions.

Scot:
[20:30] The idea is the consumer doesn’t have to worry that they’re getting low price they just kind of know and and all automatically roll it back if if target has toothpaste at a buck you know you can count on Walmart to do a quick roll back and I’ll be at like $0.99 so.

Jason:
[20:45] NN light they don’t make as big a deal about it being their cultural diversity different reason Costco is a great example of edlp like they,
Costco literally has hard rules for the merchant about,
the maximum margin they can take on a product so when the price to them goes down they they are literally mandated to pass that price on to the,
the customer and so you know and you don’t answer I walk through Costco looking for sales you your condition that everything in prayer and Costco is a.
Consistent like you know good deal based on volume and and all these things and in so.
Those are the kind of retailers that are on the edlp side of the spectrum for a long time JCPenney was the poster child for promotional pricing and they still are very promotional but what made in the poster child is.
When the former retail Guru from Apple Ron Johnson went to JCPenney he tried to change them from their highly promotional pricing strategy.
To essentially edlp and said that that really raise the profile of how promotional.

[21:53] JCPenney had been before but you know I would argue Macy is very is very promotional.
And you know frankly most of retailers is pretty promotional said that the outliers are there.
They’re the largest retailers in in North America are the edlp retailers these new hyper aggressive grocery stores like Aldi and Lidl are also a deal.

[22:20] So what’s the future.
I think the future is edlp like a if you just do a survey of the most successful retailers.
They’re edlp another and this is straining the definition of edlp slightly but another hyper successful retailer that edlp is Apple.

[22:40] Like not not very promotional like the low price isn’t particularly low.

[22:46] You know it’s very rare that they have deals and when they have deals they’re not very deep.
Very very consistent pricing and you’ve never seen a sale sign has never popped up anywhere in an Apple Store.
So you work at all this successful retailers they’re all edlp you look at a lot of the struggling retailers there more promotional.

[23:08] You know I’m not sure that’s that’s a complete causation vs. correlation the reason I say that you DLP is the future pricing is.
Because of digital disruption right like thanks to all the research we now do online and you know are huge access to information and the fact.

[23:28] That you know there are no more secrets in the world anymore we’ve shifted from this world of what I call Price office gation where you essentially.
Only saw the prices the retailer wanted you to see and when they did this kind of like fake is was pricing where they show you a low price high price Market out and show you a low price.
You have no way to know that that high price wasn’t really the price that was offered yesterday.
Until you would believe the retailer today you read some app or some blog or you get some some.
Email newsletter,
and you you know exactly what retailers are playing what games with pricing until you we now have work this emerging world of perfect transparency.
And in the world a perfect transparency promotions just aren’t as effective.
As they they used to be a lot of the the promotions rely on the psychological tricks that don’t work as well when the customer is fully armed with all the information and who has a better deal.
And how much more or less you’re paying than the best deal in all these sorts of things so I sort of feel in general that transparency is.
Forcing the world to edlp the most successful retailers are edlp and then I have to throw a huge caveat out there as.
Both Macy’s in the distant past in JCPenney more recently have proven to us.
It’s next to impossible to transition from being a promotional retailer to and edlp retailer.

[24:58] So when customers are accustomed to those promotions they punish you when you try to make that transition and no return that I’m aware of his been willing to stick with.
That transition long enough to make it work,
so they all have tried taking an early hit and kind of reverted to the original pricing model in the same things are the plays out every holiday season when retailers,
rely on promotions to sell more over the holidays and to comp against last year when they were also promotional in so we like most retailers that like.
Have a history of promotions become addicted to those promotions and so far it’s proven to be a almost unkinkable addiction so,
don’t expect to see a bunch of retards Sayo Goldberg said edlp beats promotional pricing so we’re going to switch,
I think you’re going to have to wait for those business models to those retailers though to sort of expire or turn out and you’ll see the majority of new retailers emerging and it’s really all the Disney DeBrands adopting.
Much more edlp pricing strategies and then the one big caveat on all of this is the new replacement for promotions in this edlp world because,
personalized Dynamic pricing right so we’re just starting to see this but in lieu of a one-size-fits-all 30% off on these deals.

[26:29] Are all the custom offers you’re going to get when you abandon something in your car that’s based on,
your unique shopping behavior in your past purchases and all the evil data that the marketers have collected about you and so you know I think Amazon’s a perfect example of a highly dynamic edlp,
pricer.

Scot:
[26:52] Yeah yeah the it’s interesting because someone asked me Walmart,
Cyprus NASA you know how do you think about Amazon in a DLP DLP world and I think of it as like every nanosecond low pricing right so full disclosure one of our futures at Channel advisor is every pricing engine and worship to these things and this is a very popular functionality for sellers cuz once you get to scale,
you literally cannot keep up with the marketplace it’s effectively a stock market for products on Amazon every,
every sin is constantly repricing and sometimes it’s up sometimes it’s down.
So this is why you know the Amazon bookstore doesn’t have prices because they may find the,
book that you’re looking at 5 minutes ago lowered his price somewhere and they want to lower that price in a physical world you you can’t change prices that quickly because the infrastructure just not really quite there yet so.

[27:49] What is that do so.

[27:52] Select Plus use Walmart to pick on them so they’re they’re edlp but then online they’re going to be competing with Amazon so do you have these periods of time where your online prices are are very kind of more dynamic in your storage cuz of the,
the nature of the the store being slow to be able to change prices.

Jason:
[28:09] Exactly that is the common practice right now is that very few really Progressive retailers have adopted what I call Universal pricing which means.
They are for the same price to you regardless of Channel.
Because they’re edlp in the stores and they are there more to your point that you know there more Dynamic then daily online and then in the case of.

[28:38] Walmart specifically like you can even think about the you know as as they sort of Jetta fi the value propositions at Walmart right,
where you know jet will give you a custom discount based on your purchase as you’re buying a bunch of stuff from this particular fulfillment center,
so I’m going to make other purchases from that fulfillment center cheaper,
or you’re buying products from this particular vendor on the make other purchases from that vendor cheaper or you know that you opt out of some of the optional cost.
And those sorts of things a big version of Walmart adopting that strategy more more globally is when you order something online from Walmart.
And you’re willing to have that item shipped to the store instead of to your home.
Walmart has a very efficient delivery vehicle for delivering items to store and so.
You’re some of that savings that they’re getting by not having to use UPS there now passing on to the customer and so the the ramifications of that.
Greater Dynamic pricing online and then the definite ramifications of the personalized pricing online that your Point University retards have tried to do.
Personal product pricing in in store.
Has resulted in there being some unfortunate price fragmentation where you know there are now.
Multiple prices at at Walmart right and I I feel like that’s a imperfect compromise that Walmart has to deal with because.

[30:07] Technically part of edlp should be it’s the same low price everywhere.
But because they’re trying to offer this Dynamic pricing in this personalized offer system the pricing is different and.

[30:20] Frankly getting more complicated not less because if you order online groceries and you’re going to do curbside pickup.

[30:28] Should you pay the same price for someone to walk around that store and pick all those items for you as someone that bought them in the store and did the work them self like you could you could you don’t argue.
That there should be a different price for curbside pickup in a different price for delivery and in general we’ve learned from the psychology of consumers that they don’t like paying fees so they’d rather those cost be.
Built into the the product prices but then that means wait a minute there’s an online price at Walmart on a grocery pick-up price at Walmart and an in-store price at Walmart and you know that it flies in the face of the,
original Sam Walton edlp premise so it’s a it’s a tricky clean world at the moment in the long run,
I think stores figure out how to get more dynamic in the store and then we get back to more Universal pricing in the same offer everywhere and,
you know that my colleagues are laughing at their wissen to this right now because I’m famous for every year pretty thing that this is going to be the year when we start to see much greater adoption of electronic price tags in electronic bag tags.
Because retailers need to get more dynamic in the store and daily repricing is no longer Dynamic enough in these electronic back tags are the way to do that and every year I predicted in it it never seems to happen.

Scot:
[31:50] 101 interesting outcropping of this that I find really fascinating and if we run into this a lot of Channel visor is.
All this this topics that we talked about create and efficiencies in the system and when you have in efficiencies they can get to be pretty wide you have.
Product like all product arbitrageurs so for you it was classic example is.
The arbitraging between offline and online so someone will become an expert at something like a lot of these guys are involved in the sneaker world so that they’ll have a really good idea of what you know.
Every line of Nikes and Adidas and whatnot are worth more than they know that like Footlocker and the the stores they do their markdowns on Thursdays.

[32:34] So the lineup at the campout look at there and they will literally load up car loads of these things.
Take him to Warehouse sell them on eBay and Amazon for like 30% milk.
I brought that because you know the store is inefficiently running this algorithm and there’s these people that that are taking advantage of their their you know.

[32:54] Whatever I would argue it’s inefficient because they’re they’re arbitraging and getting the value from that in efficiencies.
And then you know it gets even more crazy because there’s people that will look at the inefficiency between Market places like eBay Amazon and Walmart and no actually take still discover a product on,
what’s a eBay bid selling for 30% more on Amazon that it does for eBay for whatever reason maybe eBay search engines kind of wonky or something there’s a variety of reasons these things happen,
that should take that product list on Amazon never touch it and then someone buys on Amazon and they’ll go then go buy it on eBay and then ship it.
To the Amazon consumer so it’s like a zero inventory Arbitrage that you can do and then they are.

[33:43] Adult for this kind of thing so most people build custom soccer for that but I’ve run into folks they’re doing hundreds of millions of dollars in gmv,
and you know what you take fees out and stuff it’s not usually look at it but they can maybe make five to 10 points if they pick their arbitrageurs right so these are these are $109 businesses usually without any employees that are run by robots that sit there and and do Wall Street level arbitration on products between stores Market places and things like that it’s pretty,
pretty wild funny when you think about it.

Jason:
[34:16] That’s I think that the crazy high-volume version of that below volume version I think it is pretty common it’s a common side hustle for college kids,
to do the online or offline to online Arbitrage there now I like three or four mobile apps that you can literally install on your phone,
go scanning go skin skus that are on sale in these retail stores or even better go to stores that are having bankruptcy liquidation sales and apple tell you in real-time what products are profitable,
to buy from that store and go list on the marketplaces in the App Store,
darn polished and sophisticated they factor in like all the FBA handling and return rates and everything is pretty sweater.

Scot:
[35:02] Scream isn’t,
well we could go on for pricing for the whole show but we have more questions this will probably be a short ones that’s hope so but will first of all thanks for that awesome question that was great hopefully we kind of dug into the the Rita we’re looking for question number to this one’s also for you Jason what are the coolest or smartest things that brand retailers are doing with voice Commerce,
and what’s Within Reach for smaller Brands who don’t have a hundreds of thousands of dollar budget to drop on developing skills and in that kind of thing and where are we on the maturity curve so it’s kind of three questions in there so so I guess question number one is what are some cool skills you’ve seen that the show what brands are doing with the,
The Voice Commerce guys.

Jason:
[35:43] I’m not that I want to answer your question but I want to take one step back and sort of highlight like a lot of times when people talk about,
voice Commerce they’re talking about actually doing transactions you know so like you know Alexa order batteries type.
Type of experiences and that certainly is one element of voice Commerce like I would point out there’s a lot of other parts of voice Commerce there are.
Marketing tools and so a lot of the skills in the Alexa echo system that are skills that are published by a brand are actually more marketing tools.

[36:19] Primarily trying to drive more interactions with the brands and more brand awareness and more brand Affinity than they are sell a specific product like you know immediately and so,
when you say What brands are doing the really smart things I actually think,
voice voice transactions are relatively nascent so it’s pretty small like in general we think there’s probably 30 million of these devices and in North America right now so it’s you know addressable Market compared to the,
190 million households online is smaller you know 8.

[36:57] Small majority so maybe more than 50% of those those devices,
have ever been used for a voice transaction and that certainly isn’t the most common way that those households do transaction so the total number of transactions on voice there’s no good data out there but,
but our guesstimate sorry that it’s pretty low and so I’m not sure I point to any brand other than Amazon and say hey good job,
selling a bunch of stuff directly from your voice interface so that the,
the ways that voicing most interesting are from one of these marketing things and so,
there are clever things Patron has a great skill for helping people explore in the stuff discover new cocktails that all conveniently enough.
Can be made with Patron tequila,
but it’s a relatively sticky skill that has like a high,
active user rate that helps Patron build a brand once once that skill you know gets into the Zeitgeist of those homes it’s hard for another brand to come in,
you know with an alternative Bartender app right and like to me one of the Marquee examples of this is the tide stain app which is kind of clever,
you know you if you spill some pomegranate seeds on your table cloth and now you’ve got this pomegranate stain and what’s the best way to get that stain out is it.
Vinegar as a club soda how should you pretreat away what should you do so this app gives you advice on how to to treat all the different stains.

[38:34] That you might come across and it’s branded by tide and remind you to use,
tide products to help laundry all this thing so I think some of those kind of brand Affinity apps are the smartest apps then you know there are a few categories were voice,
transactions are more common so I think the the Pizza Hut app is a good example of a highly recurring,
consistent,
transaction that people tend to do obviously in my personal Echo System the the Starbucks voice ordering app would be most useful,
because I travel so much I go to so many different Starbucks that it’s actually not super useful in my household but,
for many people I’m sure that the the Alexa app to trigger a Starbucks mobile order in and pay is is,
a relatively high volume app so I think those are awesome good ideas I would also remind users that,
there’s a significant amount of voice search going on so Microsoft has 20% of all Bing searches are boys I don’t know what the Google percentages is probably not as high because it’s not built in the Everett.
Every Google device but every laptop is running Google but.
It also is probably as a meaningful number and then more more e-commerce sites are building voice as an interface into their own website so if you’re,
a brand that has Shoppers shopping on your own e-commerce site and they’re heavily mobile users it off and is easier to say a search query then to type it on a mobile phone.

[40:09] And so you know we’re starting to see some meaningful adoption.
From voice search on your site and so when you say like hey I’m a smaller brand I can’t afford the investment the patron or Procter & Gamble made in there.
They’re Alexa skills.
And I would highlight is that she not that expensive to build a skill it’s pretty expensive to market the scale which both patronen and Procter & Gamble do quite a bit of.
Some of the the lower-cost ways to implement Voice or it’s it’s pretty inexpensive to have a third-party partner add voice search to your existing,
e-commerce search platform and it’s super low cost to start doing some voice SEO to start optimizing your keywords for the things people say,
into being instead of the way the things people type so I think it’s still super early days I think voice is.
A more useful tool for marketing than it is for actual transactions I think in the long run we’re going to see boys shoes for a lot of transactions but it’s going to be a specific type of transaction which are those.
Replenishment Auto fulfillment type orders I think you can use voice a lot to add and delete things from.
Your regular shopping list so you’re going to say Alexa cancel this week’s groceries because I’m going to Mom’s house for Thanksgiving.
You’re going to see a lot of those kind of things but I don’t think you’re going to order brand name dresses in specific sizes with particular Prince from,
you know your favorite dress designer via voice cuz I just think saying all those attributes and knowing the.

[41:44] The unique brand terms for each each designer is is super unlikely.

Scot:
[41:52] I saw this reminds me of a funny cartoon I saw the other day where someone says to the Alexa Alexa order me a Kleenex and it says ordering Amazon basic tissues and their said they spell out Kleenex and Alexa again says tissues and then they’re like,
Amazon Kleenex and it’s like I don’t understand what you’re saying.

Jason:
[42:11] I think that that ironically that could drive pups to be the second best selling facial tissue online because.

[42:20] Little problem with the synonyms at the moment but yeah it’s and it’s it’s going to be for that replenishment stuff there’s going to be huge fights to be the default brand and lots of interesting stuff but that’s probably a whole separate show on voice Commerce that we should do sometime.
I want to get to our third question which is from Patrick per line.
And Patrick says hi guys I love the podcast to listen to it every week thanks very much Patrick I do too when the numbers say that he Commerce revenues up 17% does that include Amazon.

[42:54] If so what would be the e-commerce industry Revenue increase if you took out Amazon I believe you guys said that walmart.com is growing it at 60% and Amazon at 30%.
Would this mean that if you remove those two companies then e-commerce is a whole is contracted.

Scot:
[43:11] Oh yeah thanks.

Jason:
[43:12] Can I have that has math in it so I’m proposing you answer that one.

Scot:
[43:15] Yeah thanks Patrick for the question that it is a very good question and this is one that I’ve spent a fair amount pondering so let me let me talk to you.
Talk you through some of it I’m go this pretty quickly will will put some stuff in the show notes if I lose you anywhere so first of all.
You know what what’s interesting is there’s a lot of sources for the data so that’s one of the big variabilities in this whole thing so you have the four sources I track and I’m sure there’s more but the the four main ones are comscore US Census Bureau,
Forster and emarketer.
What are things you always notice is the comscore US Census in Forester tendo line with each other they’ll be in the ballpark so silver example they’ll say.
2017 e-commerce the United States was around anywhere between 380 and 420 billion but any marketable say 800.
And to emarketer is very inclusive of everything so I think they actually put cars in their tickets grocery.

[44:16] You know Events maybe even hotels or something so so you know when you’re looking at these data sources it’s important to understand what’s in there and what’s not,
I tend to like the comscore the Census Bureau in the forest one because they they do not throw the kitchen sink in there and it makes kind of thinking about this a lot easier,
so
what I did is I took the Census Bureau data and I’m and if you look at 2016 they say us e-commerce was 359 billion and if you look at 2017 415 but I’m such a difference of 56 billion and to your point,
you’re 16% growth so so.

[44:55] That’s it that’s an important number so 56 billion increase your rear in the United States was 16% growth now let’s look at Amazon.
Amazon’s 2016 Revenue was 135 billion.
And in 2017 was 177 billion that’s the global number so you have to Amazon’s pretty much right down the middle of domestic and non-domestic,
and she have to give it a chops and it half and we do that you get the US is 68 billion in 2016 and 2017 88 million that’s a difference of 20 billion or 30% growth which you correctly called,
and so you’ll get that number that 20 billion and we had our 56 billion for overall Commerce then that means Amazon drove 36% of that growth.

[45:41] Then if you took if you took Amazon out then the remaining piece crew 10%.
So that’s interesting number.

[45:51] But this is the common thing that I think happened to allies numbers longtime listeners will know that Amazon’s revenues are essentially,
Banner reported cuz the third-party Marketplace and so we at the Jason Scott should like to look at the DMV so it’s kind of Handy is I took the.
Total Amazon numbers and I cut them in half to get to the US will you can effectively just kind of double them again to get ballpark GMB it’s little bit more than that but this will this will make you feel a little bit better because it under reports Amazon app,
I believe so when we do that we’re back to kind of you know.
Amazon’s gmv in the u.s. for 2016 being a hundred and thirty six billion then 2017 was 177 billion for difference of 41 billion okay so I think that’s the real number that we look at for Amazon and again.
E-commerce grew 56 billion Amazon Groove 41 billion now you have all you’re left with is 15 billion coming from other places or 4%.
So so you’re kind of left you know what that tells us is that and learn if he Amazon grew 30% then the rest of world group had to grow 4%.

[47:03] Just kind of fact check that when you look at eBay they just reported their 2017 numbers they grew kind of around 4 to 5% in the US so kind of lines up right,
do we have Walmart at in there I think they’re growing at 60% and then they want to go to 40% Jason you can fact check me on that one.

Jason:
[47:21] Yeah I think it’s like last week orders were like 60 62 and then 50.

Scot:
[47:26] Yes now what I think is going on is Walmart’s actually pretty tiny in the world were talking about that you know of eCommerce so you have something like three or four percent of Walmart sales are online which is there for near Blaine dollar.
Global retailer so there’s really not moving the needle quite fast is fastest of the other things were talking about so it’s what’s going on here.
The way I like to think about it is let’s build a pie chart and and this pie chart is a $400 pie chart that’s the 2017,
yo i e Commerce so of that Amazon’s 177 billion or 44% of the pie growing 30% eBay is 35 billion that’s their us GMD.
X autos and that’s 9% the pie growing 4%,
Walmart is 15 billion ish growing or 3% the pie growing 60% actually put the pool table will put in the show notes and where you left with isn’t other bucket,
that is about 173 billion which is a pretty big slice of Titans looking like 40% of the pie but it’s only growing if you do the calculus.
It can it has to be flat to effectively 2% because of the growth that has been soaked,
now what are things that doesn’t jive with that is you have Target growing pretty fast while the omni-channel guys are going fast even some of the e-commerce platforms the report like Shopify.
They’re growing their igmp like 20 or 30%,
now they don’t report a sings Versailles so that that’s a little tricky so they’re they’re actually kind of getting new customers in there and it’s not apples to oranges but you know what’s interesting is when I talk to all these data providers and I say.

[49:04] Two things are going on here the the you know there’s someone is really losing a lot of Cher and I do think you have that going on so a lot of these stores you know we had more stores close last year than ever before.
And the dirty secret of closing stores is when you close doors and let’s say you’re you’re serious you know when they’ve closed.
. 1000 stores decorative had one Fury Commerce business and the same is true for all these other folks that have clothes stores and whatnot so that’s where a lot of the loss is coming from but it still doesn’t a hundred percent at up,
I’m so there’s there is a group of folks a lot of them work for the state of companies and what would they believe is happening is the US Commerce data.
Under reports vastly the size of e-commerce and the growth of it and then what happens is.
Comscore and Forrester correlate to that data so there’s this Theory out there at and I’m not the guy to solve this is a kind of.
Delete it because it doesn’t add up for me when I when I use the numbers I just got to watch you through it just doesn’t add up so someone would have to be losing like you know that tree down like 60% year-over-year e-commerce businesses aren’t big enough to really.
With a needle on what we’re talking about here so so that’s that’s kind of.

[50:16] The most prevailing Theory amongst people and it’s not really talk about much just kind of funny it’s like this dirty behind the scenes secret of e-commerce there when talks about that shows and things but they don’t really write about it and,
it would they believe is the US Department of Commerce data Vasily under represents the size and growth of the e-commerce market so,
there you go. That is an interesting Theory I have no way of proving or disproving it but it it’s kind of I end up Landing there because I can’t make the math work.

Jason:
[50:46] Yep and I I-10 the split that baby so I would say I do agree and strongly suspect the US Census Data under report e-commerce and like,
you know just a couple datapoint Spitzer to be aware of the methodology that you have senses uses is pretty underwhelming and just they just weren’t designed to track e-commerce into essentially they’re sending surveys to a bunch of businesses,
and asking them what their,
the revenue was and those businesses decide whether they respond to the survey in the same businesses don’t respond every time and then the US Census uses a bunch of Black Box math that they don’t disclose,
to convert you know the percentage of respondents into.
AAA National number and oh by the way the US Census doesn’t even report e-commerce they report what they called non store sales which was originally,
catalog sales which are still in this number,
but essentially it’s it’s what they call everything that’s not in a store and nobody gives the people responding to the survey any official definition so you know if Target is shipping 70% of their e-commerce orders from the store,
they may report all of those sales and their their store sales versus non store sales there’s there’s all kinds of room for,
messiness in the methodology and I will tell you that some reasonably credible Economist have looked at the US Census Data over time,
and flat-out found some glaring inconsistencies and they’ve written to the US Census asking for clarification and not got very satisfactory answers back and so these guys would say.

[52:27] That there’s just too much Black Box math it’s impossible to reverse engineer in the US Census there’s some funny stuff going on,
and so it’s it’s easy for me to believe and by the way we should have them on the show one one time to defend themselves but,
it’s easy for me to believe their numbers are perfect and SharePoint everyone wants to index to US Census Data so a lot of the other day two sources are based on US Census Data so I tend to believe e-commerce is growing,
is a little bigger Pi then then what a lot of these data sources say and I also believe that directionally your pie chart is still right,
that that Amazon has a Lion’s Share of that that growth and so you know you factor out the the three or four biggest players in the e-commerce Market,
and the rest of e-commerce is not growing particularly fast and I have this recurring conversation with all these specialty retailers they’re talking about their online and they’re you know saying how how dare you know,
trailing the industry average and how concerned they are for their jobs and I’m pointing out that they’re actually dramatically outperforming their peers.

[53:35] One last question that we may not have time for a detailed answer but I think we can probably give the high-level answer and then maybe we’ll revisit it.

Scot:
[53:44] This one is very much in your wheelhouse and I feel like this is going to take you an hour to answer so let’s see how this goes.

Jason:
[53:52] A challenge I like it.

Scot:
[53:53] Okay so this is from Ari and he says mobile payments in 2018 can I’d like to hear more about Android pay.
Google payments day. I guess Apple pay w3c payment request API and etcetera do you have any data that shows that when implemented properly these things truly reduce the mobile Gap.

Jason:
[54:13] And so it is the short answer. We’ll do it deeper dive in upcoming show on mobile payments in general there’s no,
great public data to show the conversion rate from,
true mobile wallets like Android and Google pay him now merge so we’ll just call Google pay and Apple pay,
they’re the number of people that use it as a small percentage of total transactions it does appear that that that highly loyal user base do have a much higher mobile conversion rate but there’s an argument correlation or causation,
you know one of the rare users that using Apple pay online because you had the strong Affinity with apple and you’re buying a lot of stuff from Apple probably and so is it you know,
is it higher conversion rate because you’re using Apple pay or are using Apple pay because you’re super loyal frequent purchaser,
that was Apple right so it’s at the moment those are lower friction experiences there’s some evidence that they have better conversion rate but it’s all an adult and it’s not a huge piece of the whole payment pie.
The there is absolutely some reasonably credible data out there that conversion rate is better with PayPal than without PayPal that’s the most ubiquitous.
Digital wallet in North America and you know it’s a lower friction checkout experience and so I think we have lots of evidence that every time we take the fields and steps out of checking out,
convergence better when those customers are already in the PayPal ecosystem and that’s offered as a payment option conversion goes up.

[55:51] That makes sense to me and we we see it in the date of a lot of her private clients so that makes me think all these mobile wallets have a future or they can get enough users,
and then the one thing you listed that I’m most optimistic about of all of this is there’s one thing that’s not an actual payment while it’s a payment technology and you rightly called it out as the w3c payment request API,
this is an open standard that they the HTML consorcia and essentially published that says,
let’s have some better functionality in the browser to safely enter payment information on behalf of customers when they shop and let’s let’s tokenizing letting you know not store it as.
As some sort of insecure text on the on the PC and some way but let’s make it really easy to fill out this form fields for payment.
And they’ve gotten really good adoption on that API it’s now rolled out to all the browsers and so we’re starting to see a lot more retailers adopted and.
Two good things happen when a retailer uses this API for their checkout experience,
in particularly there mobile checkout experience number one that checkout experience becomes more consistent and follows a standard convention from site to site so if all Sites use the exact same check out flow and gooey,
users get better at checking out and they’re more comfortable with it and so it it actually reduces friction it increases what we call for dents,
and and you see better conversion rate and.

[57:24] That because this this a p i can store all the information that gets entered in that field & Auto in Iraq for you it essentially dramatically reduces the time needed to check out and so once you’ve used it once,
it becomes much faster and easier to check out on any e-commerce site anyone in the web that leverages.
This API so it’s it’s one of the things I highly recommend the clients and said easy implementation and everyone should be implementing that that payment request API and their,
in their checkout experience in particular their mobile checkout experience so.
I’ll leave it at that for now but like the at the high-level there’s not a great public data source.
To show the mobile wallets work but,
you can take my word for it that I’ve seen it in my individual clients that in general at it does have a measurable effect and for sure if you’re interested in improving your mobile conversion rate you absolutely out of look at that WC3 payment request API and implement.

[58:27] And with that it is happen again we perfectly wasted an hour of our listeners time,
so now that Scott has redoubled his efforts on Facebook we highly encourage you to keep the dialogue going on Facebook again all these questions came from Facebook which was awesome so.
If we said some stuff is wildly wrong which I suspect Scott did and I didn’t be great great to discuss that on Facebook we’ll see you over on that page.
You can obviously find a spoof on Twitter were pretty active there and as always if you enjoy the show or learned anything or it’s helped help you,
you’re triggering anyway the way you can repairs for all that hard work as you can jump on the iTunes give us a 5-star review,
it’s really one of the the primary drivers of SEO and I’ll help other people discover our podcast and it makes us feel good about ourselves so.
With that I will leave it until next time.

Scot:
[59:26] Thanks everyone for joining us.

Jason:
[59:28] And until next time happy commercing.