Jason & Scot Show Episode 119 Selling on Amazon with Melissa Burdick

A weekly podcast with the latest e-commerce news and events. Episode 119 is an  interview with former Amazon merchant Melissa Burdick.

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Melissa Burdick is the president of Pacvue, and a former Amazonian who was involved in Amazon’s entry into the CPG space.  She’s one of the most popular guests on the show, so with all the changes Amazon has been going through it’s a great time to have her back.

We caught up with Melissa at the PathtoPurchase Summit, where she gave a key-note on selling on Amazon.  We covered a variety of topics including:

• Melissa’s new company Pacvue and their Amazon advertising automation tools
• Brands strategy on Amazon
• Amazon private label
• Advertising on amazon
  • Amazon SSPA – Self Service Performance Advertising
• Brick and mortar retail

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

Episode 119 of the Jason & Scot show was recorded on Monday, March 12, 2018.

New beta feature, Google Transcription:

Transcript

Jason:
[0:25] Welcome to the Jason and Scott show this is episode 119 being recorded on Monday March 12th 2018 I’m your host Jason retailgeek Goldberg and as usual I’m here with your hoes Scott Wingo.

Scot:
[0:39] Jason welcome back Jason Scott show listeners.
We are live The Sounds different to you we’re live from the bustling show floor here at the path to purchase Summit in big beautiful Schaumburg Chicago which is pretty close to downtown Chicago.

Jason:
[0:55] It is it is thanks everyone that coming for coming to my hometown I appreciate it.

Scot:
[0:59] Yeah yeah so this is one of the rare times not only our Jason I love but our guest is life as well.
This show has three days packed full of mostly cpg content around how to how consumers buy things Jason tell you the history of the show he’s he’s kind of.
But what we’re doing today is an Amazon day were talking about Amazon so we are going to bring to you some of the top speakers from that program.
And we’re excited to welcome back to the show Melissa Burdick welcome back muscle she is one of the Keynotes here today what are you speaking about at Today Show.

Melissa:
[1:35] We are doing Amazon Insider tips with that Danny Silverman from clovis and I have a long history with Danny actually.
I was his buyer to Amazon launching Johnson & Johnson and he was leading e-commerce at J&J so fast forward I don’t know how many years later 10 12 years later and here we are.

Scot:
[1:55] You’re still on speaking terms that’s pretty impressive usually usually Amazon buyers in the other side aren’t really on speaking terms. So okay back then back when you were there.

Jason:
[2:05] Cool so this is your second time on the show a lot has changed since the first time you were on the show do you what’s been going on.

Melissa:
[2:19] So a new year new company.
We have a kind of rebranded to a company named pack you and have added significant add technology expertise to accompany a kind of.
Changing with the time so we still do the same thing strategic Consulting and advisory services and advertising marketing strategy for Amazon,
but with Amazon opening up some of their apis still in beta for for some but we have access to them.
It was really necessary to bring in some significant adtech expertise to be able to build what we consider the best in class at platform for Amazon so I have a new partner is actually the CEO of our company called Joey Tang.
And he was one of the original members of Microsoft ad Center being a.
And then he went on to find a founder of a company called add Sage which is largest FTM in China.
And has brought over a lot of those supper Engineers really understand dad text and so with my Amazon expertise that we have really built the Great a platform.

Jason:
[3:23] Very cool inside this is a tool that would be used by brands or by agencies.

Melissa:
[3:28] Sweet we use it for ourselves we also license it for agencies and Brands we have several using it right now so yeah it’s gray.

Jason:
[3:36] Predominantly around placing both AMS an EMG Style.

Melissa:
[3:41] Well the goal the goal will be ultimately Angie when the apis are more readily available,
right now there aren’t many apis available within Angie so ultimately we want to get all of marketing in one place for Brands make it easy right now it’s really building out the Automation and programmatic bidding for paid search,
and making it more e-commerce sized then other so what I mean by that is.
We want to do things like when your competitor runs out of stock being able to bid on their Brandon keywords and being able to get more of their share.
We also went to integrate real-time sales into a platform so that when there’s times of Greater conversions we can been more when there’s times of less conversions we can fit less.
So we went to integrate kind of e-commerce into our platform and that’s what that’s what we’ve done.

Jason:
[4:35] Interesting in it so some of the those triggers that you just mentioned are things unlikely to come from the Amazon apis that almost sounds like you would tie the kind of insight that you mentioned clavis earlier that.
You get from a service like that with the ability to take action on it very cool.

Melissa:
[4:51] Yeah and we’re so crossing our fingers that Amazon will ultimately launch my pee is in those areas but they haven’t yet.

Scot:
[5:00] Hope so let’s start high-level what are some of the trends you’ve seen since last being on the show that you want to share with listeners.

Melissa:
[5:08] I think a lot of the trends are so last year there and there’s a big difference between kind of the traditional big manufacturers and then these Niche smaller brands are coming Alliant online and I work with all of them,
that’s really interesting to to work with all these everyone has their own different challenges but I would say for the traditional manufacturers.
The biggest differences last year it was about building the business case to think that e-commerce is becoming big and they need to Big build big games and so I think that that box has been checked and people are now starting to invest,
building teams I probably get a recruiter call each week.
Asking me if I want to be VP of you know some brand or if I know someone that wants to be in a leading e-commerce other brands I think that there’s really this heightened.
Focus on e-commerce this year,
where is last year it was kind of like building that business case Tuesday we went to start really focusing on it and then this year it’s about execution finding the right partners and starting to implement.
E-commerce and making it kind of blowing it out so I think that these shows keep getting bigger people keep learning they keep hiring more people into this area so I see this big kind of Titans.
Focus on it.

Scot:
[6:28] What’s up.
What’s causing that the kind of that when I call Mulligan or have companies just kind of work through when when brands are trying to figure this out there’s this internal battle between like the sales department and.
The offline guys and online who gets credit and all that before you kind of want to have a VPS kind of works to that is just a life cycle what was causing it.

Melissa:
[6:50] I think there’s a lot of data points I think one is here people are tired of seeing those graphs where e-commerce is growing at such a high rate and you know store sales are declining.
I think it’s just a lot of these business cases that people put together around they see their competitor starting to invest at Procter & Gamble so they point out some of the other big guys that are starting to do these things they’re starting to see that,
then losing market share in e-commerce to other Niche players because they’re not investing in it.
So I think that there’s just this combination and culmination of all these data points that have finally gotten people’s attention.
And I think that regardless everybody agrees that they need an e-commerce strategy weather there.
On Amazon or not they think that they need to have a strategy anyway because they’re on their whether they want to be or not.

Jason:
[7:44] Yeah and to me it feels like.
It’s almost a double whammy like all these companies are waking up to an important it is to do well on Amazon and The Exorcist on the changing so much.
That it’s it’s not even easy to necessarily for someone new to this pace to even know what to do or like find the Playbook that worked last year is unlikely to be very relevant this year.

Melissa:
[8:11] Exactly it’s when I when I worked at Amazon and even now the pendulum swings it’s like this year to the strategy and then the pendulum will go the opposite direction and if you’re not already kind of understanding the ecosystem and what works.
And the kind of basic principles it’s really hard to keep up with that kind of environment.

Jason:
[8:31] For sure so when you get a new client that’s sort of knew where to that promise I was trying to invest in their presents on Amazon like are there some fundamentals you recommend they start with like is there what’s the high-level advice that you give people to start thinking about.

Melissa:
[8:45] Absolutely and that’s actually part of our presentation today there’s really some fundamentals that are critical to be able to start with.
And it’s it’s these basic retail e-commerce principles of having the right assortment.
Which is actually harder than you think it is especially in the Amazon because they have so many different platforms.
Fresh pineapple Pantry Pantry just change their business model Core Business and for each of the different platforms they have different economic models in different assortments that kind of work.
And so what happens is off by manufacturers Just they put their offline assortment online and they kind of square round Peg square hole does assortments and so that’s one of the biggest challenges,
being in stock is also a bigger challenge than you think and it’s what drives people to create hybrid accounts with third-party Merchant backup offers.
Does having the right assortment being in stock.
At continent is here I’m working on a big digital strategy project with a large manufacturer and it is so much harder.
Then what you can possibly think it would be with all the legal approval so you have to get.
You know it’s always this battle between SEO optimizing titles and content and what is actually approved and it’s things that are to us maybe.
Seem like it’s an easier not very risky thing to get approved but to a legal team it’s pretty hard so.
Those are at those are really the critical building the fundamentals and having those things in place and having the technology like a pem you know just integrating all of that stuff.

[10:24] Is is difficult and that’s where actually everybody’s really focusing a lot of time and tension on right now.

Jason:
[10:29] Yeah and it is interesting if if you were to start a brand new brand today and you knew.
Your presence on Amazon the super important they’re all these sort of best practices you would build in your culture so I like when you named your skews.
You be thinking about Amazon friendly SEO in your skin names.
Most of these companies were not born yesterday in that name is probably getting made by an in an Erp system by some supply chain person whose main concern is how it how it gets to Walmart.
And so like bridging that Gap from those those are the names and all that content getting created you no way Downstream for some other purpose and sort of morphing it into something that works in these digital platform seems like one of the big.
Expensive challenges at the moment especially when the brand has a lot of skews.

Melissa:
[11:21] Yeah actually one of the examples we have is with that she’s at the Cracker and yeah you know how to spell it.

Scot:
[11:29] Cheez.

Melissa:
[11:31] Yes but the misspelled version of that the misspelled version of that actually ranks higher in search then the correct spelling,
the people misspelled it more than they spell it and so that’s an example of all the misspelled Miss spellings of the word needs to go into the hidden Search keywords in the back-end data.
I have a word of a of a detail page of an item.
And that’s just like a small little thing but it’s you know it’s just these things that are so on a shelf that you don’t even think about it.

Scot:
[12:00] Yeah the Google group is probably already figured all that out but they’re not going to be talking to the Amazon group so they Amazon groups got to go bigger all out again.

Melissa:
[12:04] Exactly.

Scot:
[12:07] Sharing the common Channel kind of things.

Jason:
[12:10] But when they when they figured out a second time that means they pay a bunch of people in the Echo System a whole second time to help them so we’re okay.

Scot:
[12:16] True I guess you.

Melissa:
[12:19] Actually funny because when I work with a lot of Brands sometimes they’re getting the same information from like three different partners same thing since your point that that is happening.

Scot:
[12:30] One of the so one of the naysayer things about a brand selling on Amazon is what you put your brand on Amazon they’re just going to mind your data and they’ll come out the private label that just effectively competes with you.
What you say so there’s a lot of data out there that shows private label is really hot on Amazon they’re creating tons of new screws all the time there in almost every category what do you say to that.
That argument then we can kind of peeled onion on private label even further if you want.

Melissa:
[12:56] I think it’s true and one of the things I did I mean private label is kind of a challenge everywhere but on Amazon it’s it’s a hyper challenge because there’s so much e-commerce happening there and then.
On top of that Amazon has some unfair treatment of private-label in terms of they have special content that the private label brands have access to them.
Access to special widgets that other brands don’t have access to and then like you said they have access to data.

Scot:
[13:23] The break between Amazon Choice I’ve noticed it.

Melissa:
[13:26] And they’re very yes exactly that too I had a client where they had a product.
Amazon came in and basically kind of pretty much a very similar products same colors in the fashion space and half the SPF.
The price and so you know all the sudden their demand when was cut in half basically and I think it just pushes manufacturers to,
keep an eye on their quality in their price and their reviews and their star ratings as much as they can.
And then you know talk to Amazon about not being so aggressive on their detail pages,
which is what they actually talk to them about because it’s hard for brand to say we’re going to pay Amazon a bunch of coop and money,
Burnett Drive traffic to our pages and then they’re going to see a cheaper you know version of our product on her page and so that is.
Big Challenge to Brands and so.

Scot:
[14:25] So should bran just avoid Amazon because that like what’s what’s your advice to brands that are not selling on Amazon and they’re worried about private label.

Melissa:
[14:32] I think that.
I mean I’m a little bit biased because of what I do but I think that Brands need to be on Amazon because that’s where the traffic in the eyeballs are but they need to focus on building the reviews and their star rating and having good pricing and having good products.
That you know maybe Amazon copies but if they’re better and they can still be there that’s what they have to do.

Scot:
[14:57] And it’s way it’s kind of existential argument right so if if your brand and you don’t believe your brand that’s enough value to stand out against private label then why are you even a brand is kind.
That’s why I can never get my head around in that argument but I understand their concern.
Does does Amazon just kind of sit there in mind how does Amazon come up with private label ideas is it.
I’ve always thought of it from a they’re so focused on the customer that they’re trying to identify these gaps and selection and price points and it ends up colliding with a lot of things.

Melissa:
[15:30] I didn’t so I obviously don’t know but my guess is one of the things that we specially in the grocery and CBD space that’s so constrained with margins and profitability.
My guess is that they look at these categories were they have a really tough time making money with the manufacturers and go private label so that they can make the margins that they want to make so I think that’s one of the the big opportunities for them.
And they just they definitely have a prioritize list that they’re kind of working through based on a bunch of different criteria of demand the category size,
the data that they have collected and then where the profitability lies.

Scot:
[16:08] Being a native satellite I think one time you told me that there’s like a really hot group with an Amazon is that still kind of a hot group to you working for the private label area or videos when Elsa.

Melissa:
[16:19] You know I think I know I think that that group has definitely grown but I think that there is also other hot groups like Alexa like the shiny new penny is definitely a kind of the AI and Alexa and Amazon go groups.
Seems like that that’s you know there’s always kind of this Rush maybe private label has continued to grow but these other groups going to be a little bit more popular.

Jason:
[16:41] The M Amazon alumni group seems a little more popular than it used to be a lot of lot of like pretty high-profile defection.

Melissa:
[16:49] Yeah yeah it has been I don’t know maybe this stock price today hit a high and people cashed out and ready to to move to a new place I don’t know.

Jason:
[16:56] I was assuming it was some big trunk show of options that finally vested or something is what I was guessing but going back to the the brand conundrum for a minute it’s it’s interesting I want to unpack a couple things like.
I almost desperately try to avoid calling it private label with clients because private label has a particular connotation that.
Brands are aware of and that they’re not overly concerned about like the private label mono was.
Retail is going to make a carbon copy of a branded product and not marketed so the marketing is you walked up to the store to buy the brand and product in you.
Stumble over the private label copy and some percentage of the audience will opt to pay less for that private label product right.
That was always erosive to some.
Some portion of the Brand’s Revenue but what Amazon is doing and frankly what all other big retailers are doing now is not private label it is not let’s make a carbon copy of the national brand and just.
Put it on the product detail page next to the the national brand its let’s create a product.
Has its own value proposition in a mini cases has competitive advantages versus the national brand and then let’s Market the hell out of it and make people want.
Answer to me it’s it’s an owned brand strategy it’s a strategy that were retailers are making brands that are explicitly trying to out brand the brand so.

[18:27] Hey I am at score I’d say the brand should be more worried than they potentially are but then the flip side of this is.
It’s not just Amazon its Walmart its Target its Costco.
And it’s Amazon and they’re all creating these Brands if you’re in a world where the only way you can survive is if no one else can peace with you.

[18:49] Then you’re just at the end of your life like that model doesn’t work anymore there used to be this explicit deal with Brands and retailers the brands.
Created the product and they traded interest at the top of the photo in the Retailer’s found the traffic and traded interest at the bottom of the funnel and they had this at the alliance.
That Alliance is now gone and so I would say two brands.
You need to be everywhere where the traffic is in the traffic is certainly on Amazon but you need to have as a strategy to win in an environment when they’re all these great competitors trying to knock you off.

Melissa:
[19:20] Yeah and they’re so what you’re saying I mean I totally agree they’re they’re really building their brand they’re using all their marketing vehicles to do it.
And so I like to study their private label so I am a student of you know Harley doing their content what are the marketing vehicles are doing how are they.
It’s a route how are they boxing their products had the you know I did a whole workshop on how Amazon does private label and actually bought all the products and show people how their packaging it is it’s the perfect way for people to learn understand the best way to do it.

Scot:
[19:48] I love the battery packaging it’s like having spent you know 8 hours stabbing myself trying to open up the the Duracell and Energizer they’re just opening up a nice cardboard box and just right there is this pretty hen.

Melissa:
[20:00] And batteries is actually isn’t the Private Label Amazon Amazon Basics like 70% market share or so.

Scot:
[20:07] According to 1010data it’s really out selling all the all the Branded products and I think we are going to show it is also baby wipes if I remember like some batteries.

Jason:
[20:16] Yeah but you’re at right there that the market leader Amazon elements batteries are the market leader right by over 10% market share over Duracell.

Melissa:
[20:26] One of you notice too and some of the widgets I was talking about they attach their amazonbasics to a lot of these other devices within consumer electronics it’s you know it an attachment that you can add to that again kind of one of those.
I’m very Replacements potentially but that’s you know it it’s interesting.

Jason:
[20:45] It’s a podcast so I know I wasn’t as can’t see it but every time someone says unfair to Department of Justice attorneys like pop up right behind her and they’re like.
Furiously scribbling notes it’s crazy I don’t know what that is I’ll leave it.

Scot:
[20:58] Did she say Monopoly.

Jason:
[20:59] Yeah I have no idea what’s going on there but that sounds interesting that we have a showing that the one thing I have noticed a lot of these brands that historically have been holdouts and maybe even public kind of public about their lack of presence on Amazon it feels like.
Like there’s any news over the last year that a lot of them are starting to have a presence in that like one that comes to mind for me is Nike any.
Is this just an edible that we’re going to start seeing all these guys on there anything interesting about the strategies your scene from those kinds of brands.

Melissa:
[21:29] Yeah I mean I think I think it goes back to the same everybody whether they’re on Amazon or not they need to have an Amazon strategy,
I think Nike you know they got a lot of news and attention and then other people are who are not on Amazon yet or kind of seeing them as the first one I think other ones will fall soon thereafter.
But it’s one of the nicest thing was really about them controlling their brand on Amazon and having a partnership because they were tired having such a lack of control.
And so I think that we’ll see more of that happening where they come in and and try to control their brand more.
And I think what Nikes doing is really interesting to outside of the Amazon where they were using more experiences with Instagram and in other mediums to bring more of the experiential part.

Jason:
[22:18] I snap I think was the big block that they want us to new shoe with a cool snap.

Melissa:
[22:23] If they had the whole Super Bowl with Justin Timberlake write that was Nike word then you could buy that product.
So I think I think Aunt people want to use Amazon for scale you know and and maybe come at some of the some of the basics but then having some experience is like that to really drive the brand to.

Scot:
[22:40] Yep there’s a lot of tacos Nike selling on Amazon really just control the third-party Marketplace at some point Amazon’s got to look at the numbers and see if what they lost from third-party is not as big as what thank you selling I don’t imagine.

Melissa:
[22:53] 08 why I guarantee you it would be way more if they didn’t have that relationship.

Scot:
[22:58] Yeah yeah so you’re a bit of an advertising Guru on Amazon what are some of the trends there we maybe give folks that there are new to it high-level overview of the offerings and then what you’re saying people take advantage of.

Melissa:
[23:13] Yeah so Amazon has basically a paid search offering which is cuter based cost-per-click you can bid on keywords similar to Google AdWords.
And then they have a CPM display advertising Network across Kindle mobile desktop and Amazon advertising platform.

Scot:
[23:31] Amazon advertising platform is for like off Amazon so some of those damn zyalix or something that will follow them kind of retargeting within starting at the Amazon ecosystem.

Melissa:
[23:40] Yes and just be a little bit more complicated actually you can leverage it ASAP Amazon advertising platform you’re basically leveraging Amazon’s audience.
And targeting and you can actually Target them off Amazon or on Amazon to Andy on Amazon is maybe less or inventory but you it’s a cheaper way to get onto desktop.

Scot:
[24:01] Got it and then so then one thing it’s always been confusing is what’s available to first-party and what’s available to third-party any news on them.

Melissa:
[24:11] Yeah so you traditionally 1p and 3p have had very different offerings but they’re really starting to come together.
Much more and have much more parody so they’re still a slight lack of parody within paid search there’s one one ad type with in paid search that they don’t have access to which is that,
practice play I’d which is right underneath the buy box on a detail page so I still don’t have access to that they recently opened up headline search ads to third party.

Scot:
[24:41] That’s that’s that long vertical strip that kind of takes over the top yet.

Melissa:
[24:46] And then display advertising has always been available to third parties,
it’s just that a little bit more expensive and maybe they they haven’t wanted to to spend money on it but it’s definitely a bigger focus with an Amazon now is reaching third parties with Angie.

Scot:
[25:03] You told me there’s a new acronym floating around what’s that new one.

Melissa:
[25:06] Overpaid search it’s so.
Paid search is called a mess for when he Amazon marketing services and then it’s been called sponsored products or 3p but now there’s actually a sponsor products I have Lancer Chad’s it’s super confusing.
So now they’re referencing it as sspa which is cell service performance advertising.

Scot:
[25:26] So sspa is the new name for EMS or just like for a sponsor.

Melissa:
[25:29] The new name for search.

Scot:
[25:32] For search and it was in there you have the banner thingy in the thing under the box and the sponsored listings sponsored Prada.

Melissa:
[25:40] The products and product display ads all of it.

Scot:
[25:42] And it’s agnostic to one p3p.

Melissa:
[25:47] The term sspa is agnostic that yep they like to call it search and display just to be super simple.

Scot:
[25:54] Got it.
And the SS supplies more cell service so I guess a lot of brands are there more using agencies do you think that.
That’s negative three agencies cuz now the brands can come and go to the cell service or are they always just do it self service and you think they’ll need help.

Melissa:
[26:13] Question so Amazon in general is a platform is more more self-service they want paid search and they really launch pit search to be a completely self service.
Capability and they.
I think Amazon’s pretty agnostic as to whether an agency runs it or whether a brand runs it although they’ve always had this feeling like they want to cut out their parties because they had that money that they’re paying a third party they they don’t they feel like that’s wasted money.

Scot:
[26:42] Your margin is mapperton.

Melissa:
[26:43] Exactly.
So you know if you cut out that third party in a brand could just run at themselves and they can have some more money and paid search that’s that’s probably an Amazon mine better but the reality is at Brann’s is that you need that person with the expertise to be able to run it.
If you lack the expertise you should Outsource it.

Scot:
[27:02] Yeah this is Ernesto Google kind of famously was anti brand for very long time and Tide Agency for a long time and then it kind of swimming around and realize I had to embrace it you think Amazon will go to that or just like not part of their culture to embrace the partnering kind of them all.

Melissa:
[27:16] I think Amazon wants to embrace partnering but they don’t know how they’re to me they’re kind of in between Google and apple and where Google super open and apple super close,
and then Amazon somewhere in the middle where they’re date they they are really trying to figure out agency Partnerships Ashley have a whole team dedicated to this Outreach.
And they’re what they’re trying to build is,
Automation and scalability with agency Partnerships so they want to create a portal where they can’t you can come and get all the content information you need and never talk to human potentially more they can do that the more they can scale.
But that’s I think that’s kind of the vision but it hasn’t hasn’t happened quite yet.

Jason:
[27:58] It seems like they want to accomplish that in every aspect of their business.

Melissa:
[28:00] Yeah automation is the way to scale.

Jason:
[28:04] Yep yep.
Changing topics just lately there’s been a lot of brick-and-mortar news lately and mostly negative potential super tragically for me it looks like Toys R Us might not even emerge from there.

[28:20] Their bankruptcy I bet that went after all then I’ll be crushed if I don’t even ever learn to the song.

Melissa:
[28:26] Do you go to Toys R Us with him.

Jason:
[28:27] So I haven’t yet I’m eager to my wife is slightly less eager but I feel like that was the first song I learned as a kid so it seems like you should I’m not super nostalgic about all this retail stuff.
But that would leave a huge hole in the toy industrial be interesting but I’m somewhat curious.
Like as as someone that like predominately plays on the digital side and then obviously like you know so much expense in Amazon what your POV is on the.
On the retail side of this just inevitable as as consumer Behavior shift to digital or what it what do you how do you think about retail Armageddon.

Melissa:
[29:03] I think I think the interesting about Toys R Us in the one that I was really sad about was Claire’s,
I’m where I got my ears pierced and my daughter got my I told my daughter his at 8 that Claire’s is probably declaring bankruptcy and her first question to me was where all the girls going to get their ears pierced she was very concerned about this.
Think that you know when they are still there right about Toys R Us that that I think one of the executive said was that kids are changing their not playing with toys anymore.
And maybe it’s true that there’s so much more digital content consumed with.
Unboxing videos on YouTube but I feel like these retailers need to bring more that experience their stores to drive more the traffic there and that it’s just about the same products you know what the price for it.

Scot:
[29:48] The same time as new brand is just really taking off like Melissa & Doug which kind of implies there’s demand for toys are just like not being found them out missing them they went through more like the booty toy stores because.
Toys R Us toys and then they prove there is a market for.

Melissa:
[30:05] And I know Melissa & Doug thought of Amazon his big strategy for them to.
So you know I think if you’re just selling toys and there’s nothing else you know that store trip is less convenient I need to provide a reason for people to keep coming back to the store.

Scot:
[30:24] Absolutely yes, surprising that they missed the event an opportunity again so why can’t you have birthday parties at Toys R Us in all kinds of different things just kind of like the Mist experiential side of.

Jason:
[30:36] Interesting late and I seen how well played. But like one of the Retailer’s he’s talking about like beating up their toys to try to fill in that Gap as you mention events is Party City.

[30:45] I’m so that that would potentially be a new audience for them I’m not sure it’s like completely synergistic but but funny that you had mentioned events.

Scot:
[30:55] Back over to Amazon what are some of the other things you see them experimenting with these days that are interesting that book should learn about.

Melissa:
[31:04] One of things I think it’s interesting and on the last show I think you guys ask me a question like what you did Amazon get into and I said I think they should offer Healthcare to Prime customers and if you remember that.

Scot:
[31:15] Yes very prescient on your.

Melissa:
[31:18] And then now they want this whole Health Care initiative they also have this ability to create a private label drugs I think to like medicine over the counter drugs yeah.

Scot:
[31:28] And if registered as a pharmacy in like 20 something States.

Jason:
[31:33] Equipment.

Scot:
[31:33] Yeah and equipment.

Melissa:
[31:35] I think that with all their experimentation with a I like they have such an opportunity the healthcare industry had is so not transparent you know when you go into surgery have no idea how much you’re spending.
I think the Amazon has such such such a big opportunity in this industry to really disrupt it.
And make it better for consumers so I’m really excited about what they’re doing there I think the Amazon Go technology is really cool have you guys been to the ghost or I know you have right.

Jason:
[31:59] I haven’t been to it since it’s legal.

Melissa:
[32:01] Okay.

Jason:
[32:02] It’s it feels I could take some of the fun out of it when there’s like no danger of you being arrested.

Melissa:
[32:07] Yeah I think that I think that go Technologies really cool actually.
And I say they’re opening a new Amazon building in South Lake Union and I think that PCC is going in there which is kind of interesting that another go is not going in to another Whole Foods or something like that is not going to another building.

Jason:
[32:26] For those that are not seattleites PCC is local co-op grocery.

Melissa:
[32:34] Yes maybe they’ll adopt maybe the License To Go technology.

Jason:
[32:38] Potential yeah that that brings up a good question there’s someone of a Honda bait amongst go followers weather.
Joe is a another technology platform that Amazon does license to third parties on Amazon web services or shipping with Amazon all those sorts of things or weather.
It is potentially something that Amazon would keep proprietary do you have a like what you would you expect to see them license go.

Melissa:
[33:06] I think so I think that they would license it cuz I think that people going to build their own technology anyway so you know then they can control people they can get the data.

Jason:
[33:17] And it seems like it follows a pattern of so many of the other technologies that they’ve done interpointe.
There there’s I can find 10 companies that have similar technology that maybe further or last so long but it’s not unique to Amazon and so.
Like why wouldn’t you it’s not like no retard will be able to do it if you don’t license it so it’s not a huge moat but there is.
There is an interesting school of thought that most of the things that Amazon license have this sort of acceleration affect other parts of their business that’s the last likely.
This was obvious go. So I was just it was going to be interested in it will be interesting to watch how that plays out but the big question the most important question everyone seems to ask about Amazon which I.
Being totally sarcastic cuz I think it’s way over played hq2 any thoughts about where.
Where the the first non Seattle headquarters is and as a Seattle and are you even allowed to talk about that or is it too depressing to talk about.

Melissa:
[34:18] I think it would be really great for Seattle because of traffic is insane and out of control so I think most people want a separate hook orders to like lessen the traffic burden.
My wishful thinking I don’t know where but my wishful thinking with the Austin because I’m a Texan and I would move their back there in a heartbeat if it where Austin Whole Foods is there.
Jeff Bezos is from Texas from Houston although I heard he bought a big huge house near Washington DC so.
I think Austin’s in the running I’m I’m rooting for them what about you where do you think it’s going to be.

Jason:
[34:52] So I think DC I think there’s a there are these cognitive biases that we all have and one of them is we all think whatever we’re from or whatever we live is the best place in the world to live.
Until the Austin thing is totally fair and.
And I think would be a good fit in a variety of ways but like Scott Galloway who like to talk about it a lot like he keeps predicting New York and I joke that like only people that live in New York think New York is the.
Best place in the world to live I just think all the all the other factors.
That there need to be closer to 4 lobbying and the very big risk that some of these some some version of.
Amazon Google Apple likely get some antitrust challenges and like need really strong government relations in the next few years I just think you had all that together and it’s like.
Washington’s most likely and if for no other reason there’s three cities in the mix there so I triple my chances of being right.

Scot:
[35:53] I saw an interesting Wall Street report this morning from an analyst and they had a firm that has a machine learning AI kind of thing and they sucked in all this data.
And it’s been out Boston and when they kind of dug into y.
It was looking at all that Amazon job openings and they have so many machine learning AI job openings which is kind of like I don’t know if they I scooted this way which makes me like freak a little bit but.

Jason:
[36:17] AI has AI biases.

Scot:
[36:18] Yeah and then what it had done is it had looked at kind of the you know the it had some demographic that she evidently Boston is very high most likely I would imagine because of a mighty in a talent in machine learning, so that does come interesting.
Unbiased review of it I thought it was was.

Melissa:
[36:36] So is that your pic what’s your pic.

Scot:
[36:38] I go Austin First DC 2nd and Austin get some clothes to Whole Foods witches they made a really big bet on and it is.

Melissa:
[36:46] And also is very similar to the Seattle culture just way way hotter.

Scot:
[36:50] Yeah the negative in Austin is at the flights in and out of really bad I don’t know what build a direct for you guys but I bet today there isn’t a Seattle Direct.

[37:01] List of places you have to go in to DFW and then hop over.

Jason:
[37:07] I will point out getting Austin is a bit of a challenge but getting a Bentonville is a huge challenge to and that doesn’t seem to have just waited the big companies in Bentonville so.

Scot:
[37:15] Yes little different recruiting perspective I don’t think you would pick them Bill if you had done what you needed machine learning calendar.

Jason:
[37:22] I’m not I wasn’t for most I wasn’t from running Bentonville although that would be the most.

Scot:
[37:27] There’s a reason. Com is not there.

Jason:
[37:30] Surprise Bentonville.

Scot:
[37:31] That would be fine.

Jason:
[37:34] We buy Tyson chicken and we’re taking over.

Scot:
[37:36] One thing you didn’t mention in one of Jason’s favorite thing is voice Commerce or conversational Commerce are you think it’s too early for Brands we think about that or or should they be thinking about building an Alexa skill or how that impacts our world at all.

Melissa:
[37:51] I think the biggest thing that they can be thinking about is improving their relevance and start drinking so that when people ask boys.
What they should buy that they’re at the top of the list but in terms of building.
Skill specific to a brand I think it’s so early because nobody’s downloading that still there asking Alexa for music.
And some of those things I talk to someone at the Alexa team who is working on.
New technology building you things and what they said was really interesting which was they wanted make Alexa so important like.
When you if you walked into his house and you took his kids cell phone away the kid was like murder you before you left the door and he wants to create experiences like that that are so important so things like.
You know any gratian’s into your car or you know like really important experiences and your day and so I think Brands he was thinking about like how can they.

Jason:
[38:57] Set a recap he wants to elicit childhood murder.
Tendencies more so than South.

Scot:
[39:03] Get weird friends is all we need is more addictive devices we’re already seeing a backlash on that.

Jason:
[39:08] That’s because that’s one of the big problems in the world is there’s not enough devices to attack children.

[39:15] Another thing that came up in the conversation I want to do it back to you real quick is you admitted to a change in the Prime Pantry program and I was wondering if you could say a little bit more about that and and like what if anybody giving two Brands to take advantage of the nuisance.

Melissa:
[39:29] So that yeah this just came out and I think it was now instead of so there was a fee per box that was shipped use it was like.
599 or something we build your box and it’s 599 to ship it to you and now I think they’ve come out with is it $5 a month subscription program and then is it I think it’s all you can you just you just subscribe to it.
And it shows that it just shows that they’re constantly playing with this business model to try to make it work and I think it’s really interesting because.
Prime Pantry has been this place where when you can’t make your assortment work on the core platform in a bigger size you can typically.
You know sell your products in smaller size quantities on the Prime Pantry platform because it’s more of an Market Basket building exercise and there’s no better margins associated with it so.
A lot of Brands actually that are not fit for the core platform can actually sell more they’re serving Prime Pantry.
But Prime Pantry is always had this problem of adoption and trying to get more people to buy their so I think that this is one of those.
Opportunities to drive more traffic to Prime Pantry and to make those Economics work better.
So I think that it’s it’s good thing for a lot of these companies who are putting this offline assortments online and trying to get more sales of that so.

Jason:
[40:58] I think you’re exactly right I think it’s like ultimately Prime Pantry is more a solution for vendors than it is for consumers.

Melissa:
[41:06] Exactly.

Jason:
[41:07] Obviously to be a good solution that has to get consumer to adopt it and the $6 per drink charge was a big burden like you had.
Super interested in building a box before you’re going to take that $6 out of your wallet it’s kind of like.
When you pay by the hour for internet people that use the internet a lot and when they switch to.
All you can use model of course it became much more addictive and so by switching to a and all you can get model on Prime Pantry maybe look at more option and it’ll be even better solution for the vendors.

Scot:
[41:40] One last question in this is a big story of Amazon’s culture and we talked about that on the last show so I.
I found the leadership principles I’ve got a copy of that that’s really good reading I really enjoy that one thing I still can’t understand is so Amazon has like six hundred thousand employees and I deal with a lot of big companies in Channel visor.
They just go so slow like there’s groups like your head and injuring group they want to go fast and then legal gets in bar called rhri rpr.
How does Amazon go so fast and avoid that that that problem were like damn his own legal team comes in and grinds at 12 like.

Melissa:
[42:16] They don’t have a legal team I’m just kidding.

Scot:
[42:18] I almost wonder like you know one example is the prime now lady has been she spoken at shop talking.
You know where they opened one and then they got green light and they open like 20 in like 6 months or something like that you could never do that in any other company because there would be the team of lawyers that would come up with all the reasons that would be a terrible thing to do how does Amazon.

Melissa:
[42:41] You know I’m.

Scot:
[42:42] Does each team just like its own little Independent Business and they don’t have to go through Amazon corporate legal or is like corporate legal is just so bought into the day one thing that they just let you do there they’ve got the risk scale slid way over tomorrow to start a pecan place.

Melissa:
[42:56] Well I think one thing is so the legal question is that mean they definitely do have layers and they definitely have to approve everything but the other thing that Amazon does is they launched things at 70% like they never wait for it to be fully baked.
I’m in which is you know kind problematic for a lot of us working on these tools because they have literally bugs in them that you know are true bugs that don’t work.
But one of the things is there speed-to-market that they’re able to accomplish through really escalated processes and so they they do have a legal team that does have to approve things but I think that they just.
Jetway faster and don’t have as many you know their risk profile maybe a little bit higher I do I don’t know.
But I mean I definitely we have there’s a lot of legal.
You know approvals and place but the other thing I think that enables them to go so fast is that they never wait until things are completely baked they don’t have to have this long.
In a business case to to have it they’re able to just move very quickly and it’s actually the number one thing that my friends have left Amazon and now are working at.
Other companies especially manufacturers they complain about is this speed.
Is so much slower it’s like they feel like they’re Turtles compared to the speed at which they’re used to being able to why do people are just getting a lot of autonomy.
And I’m Stephanie Landry who’s the you know she’s amazing.
Really has that by fraction is that big principle one of those principles were talking about.

Scot:
[44:31] Again I come to the car crosslife companies that are bigger and have despised fraction but then like some parts at work just like Yang some.
BJ’s legal almost makes me think like the legal team must have some SLA with the rest of the company that they have to respond quickly like it’s nothing illegal says no it’s just like they don’t respond and it’s like 6 months ago.

Melissa:
[44:50] I think there any they’re pretty responsive and I think the other thing too is that they try to lessen the dependencies and bottlenecks from other team,
which is why you kind of got the toll pass for when peeing 3p going different directions because they were built on toy different platforms they didn’t have to wait for each other other now that’s coming back around but that’s why.
That that happened.

Jason:
[45:12] To me it it it feels like part of this I call Amazon a very object-oriented cultural I called all these individual little parts are tried to.
Be maintained is autonomously as possible and they just Define the inputs and outputs to each little team and they don’t have these big staff meetings that we was invited to and ever.
Just feels obligated to kind of Pile in iFunny I’m curious.
I have the opposite problem I hire all these X amazonians and I’m always super excited because I feel like I’m going to get all these employees that are reading these well-thought-out 6,
grease on everything we want to do and apparently they throw away Microsoft Word as soon as they leave Amazon and they send me a bunch of really crappy PowerPoint that they haven’t used in the last five years of their career so I’m super curious,
if you guys are mainly a PowerPoint culture now that you’re not an Amazon.

Melissa:
[46:02] Sadly I think that because I’m so quiet like I work with so many clients that PowerPoint just happens to be the format that works really well.
And also actually at work a lot with most of our bed software development is in China and so it worked out with the WeChat.
That’s the first thing I had to download and get used to it as we chat but so word is is maybe a little bit less in my culture these days.

Jason:
[46:29] Cool well that’s going to be a great place to be there because it’s happening again we’ve used all of our a lot of time in the special path of purchase Summit edition of,
Jason and Scott show so if you have any questions about the stuff we discussed or any other questions for Melissa feel free to jump on her Facebook page and will continue the dialogue there,
and as always if you enjoy this episode this is a great reason to jump on the iTunes and finally give us that five star rating that you’ve been withholding its driving Scott crazy and I I’m really starting to worry for the mental health,
and told that I will see you in the next Shell.

Scot:
[47:05] Yep yep definitely does ratings and thanks for being on the show mall so we appreciate it.

Jason:
[47:09] Until next time happy commercing!