Jason & Scot Show Episode 199 – Dreamforce and Retail Earnings

A weekly podcast with the latest e-commerce news and events. Episode 199 covers the 2019 Dreamforce Conference as well as this weeks news including Walmart and Target earnings reports.

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Episode 199 covers the 2019 Dreamforce Conference as well as this weeks news including Walmart and Target earnings reports.

Dreamforce

Salesforce held their annual Dreamforce Conference in San Francisco this week.  They launched a major new functionality “Customer 360 Truth” a universal customer data platform.

Singles Day – 11.11 Day – $38.38 billion US (up 26% YoY)

Earnings Reports

Other News

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Episode 199 of the Jason & Scot show was recorded on Thursday November 21st, 2019.

Automated Transcription of the show

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this is episode 199 being recorded on Wednesday November 20th 2019 I’m your host Jason retailgeek Goldberg and as usual I’m here with your compost Scott Wingo.

Scot:
[0:39] Hey Jason and welcome back Jason Scott show listeners,
well that’s pretty exciting times here it’s November 20th we are about seven days away from Thanksgiving T minus 7 Days folks to Holiday kicks in
some would argue it done right after Halloween but I like to think of it really kind of kicking off at Thanksgiving,
Jason was kick-off I saw on Twitter Some Noise around the world’s largest Starbucks where you the first person in there.

Jason:
[1:08] Sadly I was not a side note on Thanksgiving I’ve been training all week by eating pumpkin pies.

Scot:
[1:14] Nice already.

Jason:
[1:14] Getting ready. I think it’s a rookie mistake to just go in the Thanksgiving cold without a good one.

Scot:
[1:21] If you been pumpkin spice latte into it as well.

Jason:
[1:25] I don’t I stick with my classic ice cream key around I’m weird.
I did try to get my classic iced drink at the world’s largest Starbucks which opened on Friday.
So a little less than a week ago in Chicago,
and I struck out so I was out of town Friday I went there Saturday morning at 8 when the store scheduled to open and there was already an hour line waiting to get in.
And I had families in toddler with me so I we had to abort in.
Do a plan B so I’ll have to go back and visit another time that kind of an impressive draw that it’s drawing that kind of crab for a retail store open.

Scot:
[2:06] You think the world’s largest could hold more people.

Jason:
[2:09] That was my promise I actually thought they would be popular but it would still be easy to get in because.
It was on Michigan Avenue which is like the premier shopping location on in Chicago and this was formerly The Crate & Barrel flagship store,
so it was a four-storey 40,000 square foot furniture store that they’ve converted into a Coffee Roastery.
So my assumption was it could hold an awful lot of people but apparently they’re still you were still sort of them dating how many people they let in.

Scot:
[2:40] Is this one of those doesn’t really have much mobile order it’s going to be a food concentration there’s no venti takeaway cups all that kind of strangeness.

Jason:
[2:51] Semite so that the concept of this is called The Reserve Roastery I want to say it’s the like this one.
If I have this right the first one was in Seattle there’s another one in New York this is the third one in the US there’s one in Shanghai there’s one in Italy on which is controversial,
enter this is like the premiere Starbucks concept it was a pet project of the founder of Howard Schultz the founder of Starbucks.
It does have all the regular stuff you could place a mobile order there you can get all your traditional drinks.
But it has a lot more stuff so they roast beans there and if you go to any Starbucks anywhere in the world and you buy a reserve being the beans that come in the the black and gold Packaging.

[3:37] I got roasted in one of these roasteries so they’re so it is a commercial Roastery but then they have kind of a you know it’s a it’s a beautiful.
Kind of handmade Roastery with all glass windows so you can watch them working and they have kind of a Willy Wonka set up where they have these,
translucent vacuum tubes that lead from the Roasterie to all the coffee bars in the in the building and said the beans like,
fly through the tubes over your head so you can watch the beans getting delivered for making coffee.
Any of your classic drinks with a much wider variety of beans that make a bunch of other drinks that aren’t typical they make a bunch of drinks mixed with alcohol that have ice cream that was stand-alone restaurant everything merchandising section,
this is all based on the other roasteries I visited and I’m assuming that what we’re going to see in the Rock somewhat localized so when I’m assuming we’re going to see you soon.
Cool architecture in some variation of all that in this the Chicago store will have to report on it after I physically get in one.

Scot:
[4:46] Awesome well I’m here at home in North Carolina and you are out in California at drink for so tell us what’s going on at dreamforce.

Jason:
[4:57] Dreamforce has the annual trade show for salesforce.com sales force is based in San Francisco so this is kind of on their home turf and that I saw someone refer to this is a quite Big Show it’s it’s every hotel room in the city of.
San Francisco sold out I think I saw that I was like 40,000 people are here attending it so they they call it Burning Man for people with jobs.
Which I thought was pretty funny because there is a lot of like chocolate brand building entertainment experiences in addition to the sort of.
Salesforce product experience is so that like really extravagant.
White outdoor Forest that they built in they give away free expressos the forest has like.
Like a redwood tree that you can drive through and you know all this kind of cool stuff and have a lot of celebrity speakers,
show Emilia Clarke from Game of Thrones this year Megan Rapinoe dying from USA World Cup team this year,
a Beckham the musical act is like Fleetwood Mac and then the the big headliner Tina I mean Tim Cook is speaking but the big headliner is Barack Obama speaking tomorrow so they get a lot of.
Interesting to listen to people that are you know probably not talking about the marketing cloud.

Scot:
[6:23] Yeah and then so then they that they talked a lot about a lot of social kind of stuff obviously so that the CEO of Salesforce is really into that and then I usually wear like crazy shoes.

Jason:
[6:37] Yeah he likes a mark Billy off is a very Progressive CEO and he be like there’s a lot of really good causes and so we highlight some of those,
on the stage right he’s built through hospitals in San Francisco and sponsored some public schools and things that are kind of cool but they do they have like they have content about helping people to,
be more Mindful and they they have a whole exhibit full of actual monks that are helping people to meditate you know they have a lot of bad like Arianna Huffington talking about like.
Trust and transparency and yeah I just I mean yeah she wouldn’t go into the sweet thing but.
Yesterday they have a lot of people talking about like their pet interest which are you know potentially interesting helpful lifestyle Tibbetts.
But then they also do generally make some big product announcements at Salesforce and and so like.
I’m not sure this is going to go down as the biggest year but there’s some I guess I’m reasonably sized interesting new announcements.

Scot:
[7:46] How much of the show is there like a track for e-commerce and an of the you know they’re there I guess they called the Commerce club now is that a thing or is it.

Jason:
[7:59] There is there so there’s a there’s a Commerce track Commerce is like integrated into the the Keynotes along with the other clouds but I will say.
They’re shifting a little bit more from products to rolls so,
when they were product-based like the Commerce cloud is about e-commerce in the marketing cloud is about sending emails,
and you know that they’re kind of Shifting the content to be more roll bass content so it’s a retailer or a b2c company and that that roll.
Yeah would obviously you need Commerce and marketing cloud and CRM and customer success rights are there.
I would say like they haven’t completely transition there still are definitely some products and Trick Tracks and there’s there’s a stand-alone Commerce keynote for example as well as some.
Dedicated Commerce content in the the main stage keynote but I do think I feel like it is Shifting more it won’t surprise me if a couple years from now there’s a retail track.
Not accomplished you know that’s a pretty reasonable thing to do.

Scot:
[9:07] What are the highlights of utena the show.

Jason:
[9:09] Yep so the a big one so one thing that like.
Obviously is well known to you but you know very first Cloud companies so in fact when they launched the company they launched it at Oracle world and they they did like fake picketing outside of Oracle works at World saying like.
Like free software you know and put it in the cloud and it was you know this whole like counterculture thing,
and anyways I still feel like they are a really good example of the cloud like they,
it took a lot of feedback on features from their customers and their customers can vote on the features they most want in every quarter they do a new release and you go to the home from work on Friday and you come back to work on Monday and suddenly you have all these new features,
that where that features most requested by their customers and so that doesn’t sound like rocket science but a lot of other Cloud companies I still think like.
You’re not getting the full advantage that you should from the cloud and so at the show what they tend to do is release some major new feature.
It’s free and instantly available to all the that users on the cloud so I can couple years ago they launched Einstein which was their AI module and it was,
you know a free new thing for all their customers so this year they watch them a major new platform that’s free to August and customers of customer 360 true.

[10:32] I think they’re starting to struggle with their naming conventions a little bit here.
But that this is is interesting like I feel like this is very on-trend so it’s a couple of,
can a customer data features rolled into a meta offering so the Met offerings called customer 360 truth and I think truth stands for kind of,
the single source of Truth for all customer data and the the modules inside of it is they have kind of a data manager that lets you map all your data from your various Salesforce and non Salesforce systems,
into a single Universal.

[11:10] Data platform so it’s based on customer and it has a unique ID for each customer so like normally we would call that a CDP or a customer data platform,
so it seems like Salesforce has launched one and they made it free to all their existing customers,
and said that the actual example that use on stage was a retail example they had Louis Vuitton they commented you know.
Despite the fact that Louis Vuitton uses marketing cloud in the Commerce Cloud that the you know the keynote speaker bought some cool Louis Vuitton shoes.
Last week and he got an email you know marketing on this week because the in-store POS doesn’t know you know that the the email system doesn’t know that the insert POS old shoes.
I’m inside with this new 360 data manager you can’t.
Relatively easily Plum all that data together and then the marketing Cloud knows to you know Market stuff to people that already bought their shoes instead of,
to try to sell you the shoes you already bought so,
the CDP space is pretty popular right now makes total sense that sells words would be in it kind of big news that they are not trying to sell it but they are giving it away and because they a lot of companies already have a lot of their data in Salesforce.

[12:30] That’s a pretty big competitive advantage of its kind of one click and you load all that data and all the data mapping and stuff is already done for you so that’s pretty slick.
New problem we’re all struggling with is data governance and privacy,
you know there’s a European data standard and the California did a standard goes Live January 1st and so suddenly we all need new metadata about,
who has permission what rights to us or what data and how we collected and all that sort of stuff so
part of this 360 trap trust is a privacy and data governance module which is a product a lot of people are having to buy right now to get compliant so that’s interesting,
and then they have a customer in audience is module I may have the name wrong,
this to me sounds sort of like what we would in the advertising space traditionally call a DMP or data management platform and so this is kind of,
ability that take all the state of that you now a aggregated,
and like create audiences and segments for specific campaigns and specific uses so it’s the ability to do really sophisticated slicing and dicing of all this customer data you have,
and the work with it.
Known data IE people that you actually know and also unknown data IE you know an honest users that I’ve text you but haven’t identified themselves,
so that’s kind of a pretty comprehensive interesting product that they want that’s basically available immediately we stand.

[13:59] In their sandbox so I’m sure some customers are excited about that.

Scot:
[14:03] Is the CDP thing on acquisition or something they build organically.

Jason:
[14:06] To the best of my knowledge they built that because I am not familiar of this specific acquisition there are like,
a lot of the plumbing like so a big part of this is is data mapping and transformation and they they bought a very big company in that space mulesoft.
Last year so it wouldn’t surprise me if they revered some of that capability in here but you know they also had new announcements around how you’ll stop is developing as a standalone tool so.
So don’t know I’m not specifically aware that they bought a CDP.

Scot:
[14:37] Do this is disrupted in the CDP world because if you already have a salesperson you get this for free then you’re going to.

Jason:
[14:44] I think if you’re a.

Scot:
[14:45] Buy another city.

Jason:
[14:46] Has has like you know very much data in the Salesforce Cloud it’s it’s definitely going to be a much tougher sell for anyone else and you know I would say a lot of people that have had a lot of trouble getting.
The anticipated return or value out of it right like they you know the IT department to love to move around all this data and buy all these new tools that they often don’t have buying from the business users in the office.
Don’t don’t change their marketing activities based on having these new tools and so you don’t get a very good Roi and.
Because Salesforce has a lot of the marketing tools.
Yeah I think they have a better chance to be successful and I think it’s going to mostly go head-to-head with Adobe that you know also has a very robust marketing stack and has their own CDP,
but yeah I’m sure the rest of the CDP vendors would rather a Salesforce have not gotten into this place.

Scot:
[15:41] And then if I remember from our deep dive on personalization that’s kind of the heart of personalization alive times has this CDP thing.

Jason:
[15:49] Exactly in Encino sales force has a lot of person with Asian features they have a pretty robust a eye capability the day they have Brandon Einstein and so,
kind of one of the cool things about the cloud is like you do do this mate data mapping you plug better data into it and all the recommendation tools you have and they iTunes you have.
Just start working better without really having to do any new implementations or anything else which is to me pretty cool kind of like when you get up in the morning and your test was faster.

[16:21] And then add some more.

[16:23] Some other product announcements I mention Einstein a couple of times that big Einstein announcement is that they there beta testing Einstein voice so this is a natural language processing engine for all the sales for school,
and so that they use case they damn it is you know you’re in.
In a sales meeting with a customer and you walked out of the meeting and now you kind of dictate your notes into the Salesforce app you just using natural language and you know Salesforce logs at contact in the CRA,
you don’t create the forecast if that’s appropriate their you know all those kinds of things they did a couple other use cases that are kind of cool where.
It can listen to the sales calls on the phone and listen to customer service calls on the phone and,
either do kind of post call analysis and recommend different things to the salesperson than what they actually did you know based on its artificial intelligence,
when the case of the customer service module it can be calling up like knowledge articles in and and helpful resolution to a problem just while it’s listening to the,
the customer service person talk to the customer so voice.
That seemed a little less like live in a little more kind of this is the early version.

[17:45] And then they now have some partnership well I guess those first ones not a partnership Salesforce about Tableau last year which is a big.

[17:55] Data visualization data analytics tool.
Today announced that the full integration of Tableau and Salesforce so now your Salesforce customer you get the whole Tableau capability set to use against your data for free so that’s kind of cool.
Is Salesforce a much better fate of visualization and analytics capability and then they announce Partnerships with three other companies so they announce the apartment or they,
renew to partnership with apple the announces partnership a few years ago and this mostly takes the form of they launched on the sales force apps to run on iOS and so they have a.
Pretty robust.
Interface for all their tools that runs on iOS and and that’s where they demoed Einstein voice is Kentucky into that app and stuff that was kind of cool.
They announced a partnership with Amazon and I would call this one the least interesting they.

[18:52] Have made a version of their customer service module stand alone and they’re selling it as a as an app on AWS sojourn AWS customer you can turn on this.
Customer success portal from Salesforce they announced that some of that Einstein voice stuff that we just talked about is available in beta on the Alexa devices.
I’m so you potentially could dictate yourselves notes into an Alexa instead of in your phone.
And they announce some training material that sells horse has a big warning portal and they announce the AWS training is is now available on the Michelle Sports training for so a pedestrian stuff there I would say,
and then the last announcement which was a little surprising to me was a partnership with Microsoft.
And the the biggest component of this is that they’re moving the whole marketing Cloud to Microsoft Azure so this is to my knowledge the first time Salesforce is kind of formally picked.
A public Cloud to host their Solutions on I think you’re the for like most of the apps that run on Salesforce his own cloud so interesting and I’m sure a big win for Microsoft.

Scot:
[20:03] The so I guess that won’t really be back customers just got like the back ends where it says.

Jason:
[20:10] Yeah I know it’s Maura inside baseball thing like I’m sure you know if your Google Cloud platform you’re upset and I you know I almost feel like the AWS announcements might have been to kind of soften the blow that they didn’t pick it up.

Scot:
[20:24] Brickell the other big event that has happened since our last podcast that were recovered news is singles day did you track a I had to be at a fleet conference so I was not able to track lost a very close see did you see how that one.

Jason:
[20:38] I did I kept an eye on it it’s it’s almost gone so mature that it like personally I’ll say it’s like slightly less exciting for me.
Then it was four years ago when we started this podcast for example but not shockingly they had another big year so,
total sales for the day we’re 38.38 billion dollars in US so that’s a.
Huge number that’s more than six times bigger than the biggest e-commerce stay in North America.
The scales just amazing and they’re all these ridiculous stats about how many orders they take in the first minute in the first hour and all that stuff by partly because.
Bape resell all the sales for so much that customers have chewed up a lot of purchases and they log on the first or second of the sale and click by,
to my knowledge alibaba’s never had any major infrastructure problems with this day which is like super impressive to me,
is this feels like one of the biggest stress test of it and a delivery infrastructure in the world then it seems like they nail it every year.
The one thing I would say so that that 30 billion dollars represents 26% year-over-year growth which is where the first time ever a deceleration in the rate of growth.

[21:56] So you know the day might be kind of maturing a little bit the thing I go in a single day looking for most is if there’s any evidence that there.

[22:06] Expanding their International reach so single day like definitely.
A place to a broader audience than just China but it tends to live primarily in Asia and there’s some you know Western retailers that try to piggyback on it but but Alibaba themselves you know their main pushes get Western brands,
on the platform selling to Asia for singles day not get Western consumer shopping on Singles day.
And I would say like I saw less evidence this year than I had in the past that they were even sort of leaning in that direction,
but it’s definitely true that you know Western Brands tend to be amongst the biggest Sellers and fastest runners,
on Singles day like it was a mix this year so they were like 15 brands that did over a billion one,
in sales and that was like Chinese companies like way way,
a Japanese company like Fast retailing that owns Uniqlo and then you know it’s apple and Nike so,
kind of a good mix food supplements are actually the biggest category so you know it’s a lot of people buying like like gourmet food and nutritional supplements.
Mostly imported products and then Cosmetics makeup Beauty are the second biggest category in her quite huge.

[23:30] And then you know stuff like and Mike are like diapers do well to so so good day all around.

[23:39] It felt like generally continuations of trends that we seen in the past rather than something while be different this year.

Scot:
[23:45] Used to be on Amazon would be up on that list as well have I wonder if they had a good singles day and I didn’t see anything about.

Jason:
[23:52] I didn’t see them referenced and you know singles Day falls on Veterans Day in the US and obviously you know it’s a.
Short. Of time before Thanksgiving and this year because.
You know there are fewer days between Thanksgiving and Christmas like a lot of people started their Thanksgiving promotions earlier so you know it all together.

Scot:
[24:18] Yeah Google when did Jason Scott show without some Amazon news.

Jason:
[24:22] Amazon news new your margin is there opportunity.

Scot:
[24:36] Big amazon news that we want a report on is
discovernursing so on the 13th of November not called this kind of the holiday punch in the news Nike pretty publicly announced that they are going to suspend that
pilot program where they were selling Direct on Amazon there’s a lot of this started this in 2017 there’s a lot of speculation that so John Donahoe who was CEO of eBay and then went to,
assassin company for a while and then it now has become CEO of Nike he had something to do with this obviously not a huge Amazon fan
so that was pretty interesting Jason what it what did you make of that one.

Jason:
[25:20] Well there’s a lot of speculation I Channelview the speculation that like when Nike started this pilot in there in 2017 I think it was,
did it wasn’t necessarily an effort to sell a ton of product on Amazon and Nike sort of felt like they had to be on Amazon for their customers the speculation was,
did they wanted more leverage over Amazon to help and get Amazon to cooperate with sort of anti counterfeit anti gray marketing.
And so you know a lot of us think that they they put
a limited assortment of Nike products and certainly not the like poppy are new releases on Amazon in order to have a more formal business relationship with Amazon to achieve some of these softer goals
and you don’t now the inference is that didn’t work very well or Donahue felt like it wasn’t worth it or or you know whatever the case is but it,
doesn’t it never seemed like it was a full court press to create an amazing Amazon Nike brand experience on Amazon.
I still like I think it’s interesting I think it definitely gives cover to a lot of other brands that are on the fence about whether they should be on Amazon or not like I definitely think when Amazon Nike moved on there.
It made it harder for other brands to say like we don’t think that’s right for our brands,
and now like I think it did they’re not on there I think it makes it easier for other brands that make that say move what it what do you think about that.

Scot:
[26:48] Yeah Yeah lyrics and see what how other brands react
part of I think what Nike was thinking when they did this was they could control part of this was simultaneously Amazon put the clamps on people selling Nike products and if so
I haven’t heard anything but I’ll be interesting to see if those,
yo come off as well and then so will happen is this product will still be on on Amazon but just did the third-party Marketplace and argue,
Amazon Prime makes more money that way anyway so I think Amazon will be okay I wouldn’t I wouldn’t cry for an hour don’t stay up all night worrying about Amazon Chase.

Jason:
[27:28] I was not going to but you actually reminded me of another day point I actually heard some rumors that in the run-up to this that Nike may have been.
Actively soliciting some of their authorized dealers to be comforted party sellers so like Nike may have even decided to help make sure that the.
The product stayed on the platform when they pulled off the one piece sales.
And I would just add one another thing that’s a little more about Nike than Amazon but the to me.
Nike being on Amazon was kind of counterintuitive because the same time they announced this pilot they announce this big initiative to cut way back on the number of wholesalers that they had,
in the premise was we only want to work with retailers that have a really differentiated customer experience otherwise we would just rather sell the rest.

[28:19] And so they literally had like 30,000 businesses that were selling Nike shoes and allegedly they tried to cut that down to 40 in these forty all had to kind of commit to have an enhanced Nike experience so think of like,
Nordstrom with a Nike shop and shop for things like that,
so to be kind of a commodity on Amazon at the same time you making that other shift kind of fell in kangaroo it is and they really had a lot of success with that initiative so,
in 2013 so while ago 19% of their sales were direct-to-consumer today 30% of their cells are directions to consumer in it it’s a that’s a big number and Nikes case so that’s pretty successful.

[29:02] They’re like 35% of their their their online sales are growing at 35% same-store sales growth like 6% so like most of the growth is coming from,
their online direct to Consumer which is super interesting and I talked a lot about Nike being really good at digital in-store and doing a lot of really smart things,
in their house of Innovations and their Nike towns and the one bit of news I didn’t get to cover when it happened but that I think is super interesting is,
Nike has this really good app that lets you kind of specify shoes you want to try on and in a Nike store of the shoes get delivered to a locker and you can try them on and buy them without ever having to talk to a Nike salesperson there now.
Piloting that capability in Foot Locker stores so you walk into a Foot Locker in the upper east side of Manhattan and you can.
Use the Nike Plus app to try to win merchandise and Foot Locker store you can order merchandise and it gets delivered to a Nike Locker inside the Foot Locker store it’s a,
it’s super smart and interesting for Nike it was shocking to me for Foot Locker because it essentially means that Footlocker is encouraging.
Customers to use the Nike app in Footlocker and you know like that doesn’t help their Adidas sales very much so it was it that was it.
An interesting thing that I’ve never seen before where a brand had a successfully done a takeover of the in-store digital experience of a retailer.

Scot:
[30:32] Yeah yeah must be complicated to manage all these different brand experiences at some point.

Jason:
[30:36] And then one other like so I started with an irony of and I’ll finish with an irony this announcement that they’re pulling off of Amazon happened two days after single day and of course Nike is one of the biggest presences and is all in on,
I’m single day so that you know they one of those 40 retailers definitely is Ali Baba.

Scot:
[30:56] One of the R9 listeners were one of the kind of previous holiday punches in the nose that Amazon received was from Toys R Us so we’ll see how this goes for Nike.
Never a good idea to kind of flip your nose in Amazon so maybe we’ll see some amazonbasics shoes with swoosh like things on them.

Jason:
[31:18] Yep. Be interesting.

Scot:
[31:19] Another quick Amazon one they did announce that they are going to start a week of Black Friday deals on the 22nd so they’re they’re going to have a week of
Black Friday deals so it’ll be interesting to see the kind of settled on on this deal format with a good kind of a combo of
it got the gold box it got some Lightning Deals at the other day and then they wrote a bunch of that stuff in the past experiment was video and whatnot.
I’ll be watching on the 22nd just going to get a flavor for is there some new kind of platform at the deals as a kickoff Black Friday deals.

Jason:
[31:57] Yeah yeah I’m watching it in a we talked a little bit about this but the you know they also publish their physical toy catalog and one of the things they did a really good job this year and the toy catalog is.
Digital integration in the paper catalog in it and sort of quick to buy capability and so.
I thought that was really smart and then I noticed that the Walmart toy catalog holiday catalog just came out and is the first time Walmart has implemented that capability as well so that seems like the new the new standard and catalogs as you finally have to.
You don’t make your catalog digital friendly.

Scot:
[32:33] The any other Amazon news before we go on to Walmart earnings.

Jason:
[32:40] Just too quick to bits on grocery so we’ve talked about the fact that Walmart or Amazon has some real estate in Los Angeles and that and that they intend to open in grocery stores in Los Angeles.
They they responded to some press inquiries last week,
and in one of the one of the questions was are these stores going to be Jay Watts stores just walk out store so will they will they use Amazon go in this La Market in these much bigger grocery stores and Amazon said no so,
that was kind of a definitive answer that you have these grocery stores aren’t going to be bigger go stores and of course all the speculation is that they’re going to be.
Lower price of grocery stores like Target in a broader audience.

[33:26] So we’re all going to be eager to see when in January these doors open and I’ll sure make a truck out to LA.
Take it out of the winter and do some shopping in the new Amazon grocery concept but then there was an article that came out this week that although they’re not using,
Amazon go in this La Market concept that they’re opening,
Amazon did admit that they have a dark store at private store that they don’t you know what let test customers and employees into in Seattle this a 20,000 square foot grocery store,
that is using the Amazon Go technology so they apparently are pressure testing and stress testing,
the the Amazon Go technology for a bigger form factor store which is interesting and in that same article they also acknowledge that they’re actively talking to several retailers,
about attentively licensing the technology and one of the ideas was apparently Amazon has productized kind of a small kiosk version of The Go technology.
That you might use it like an airport or a hotel lobby and that a sibo which is a sort of a gourmet food and convenience store concept it’s in a lot of airports.
Was apparently named as a potential licensee for that so give me interesting stuff to watch.

Scot:
[34:50] Record then we have a couple earnings to report on super stuff is Walmart.

Jason:
[34:56] And not shocking but they they had a good earnings call so Revenue was up 3.3% same-store sales in the US were up 6.6% so
the US is doing better than International for them econ was up 41% so that’s right in the range that they’ve been.

[35:16] Announcing a recorder they’ve been kind of bouncing around between 39 and 45 per cent they promised that for the year that be up 40% so 41%,
feels good and Doug mcmillon acknowledged that the bulk of that gross in e-commerce is Grocery and specifically grocery pick-up and and he did kind of,
talk about the the elephant in the room on that that that growth is not particularly profitable and you know one of the goals for Walmart is that they need to do a much better job of.
Selling more stuff to those those grocery customers to make the sales more profitable and so what’s interesting about that is the aov,
on grocery pick-up is already higher like twice as high as the it’ll be in the store but what isn’t happening in grocery is you’re not adding any general merchandise to that order,
and though that’s you know one of the big challenges that that Doug mcmillon talked about is they got to turn online grocery customers into overall Walmart customers.
And you know we were at the moment there’s a separate app that you use to buy groceries then there is to buy general merchandise and so you know.

[36:29] They call that the gold and blue app and don’t be surprised if you see,
the feature set of those two apps kind of merge in order to affect the School of the Dead was talking about but it is interesting to me either.
1400 their stores now do grocery delivery $3,000 stores now do grocery pickup,
again they have about 4,000 stores in the US so they can expand for another quarter and a thousand more stores and keep having this kind of growth,
you know is very likely that growth is going to slow down once they get to 4000 stores that are all doing grocery pick-up and delivery and then it’s going to be really critical that they,
change the customer Behavior or their other cops are going to be really challenging and then kind of related to the
earnings announcement they did introduce their new CEO for the us so that used to be a CEO named Greg foran he left to become the president of New Zealand airlines he’s a native New Zealander so,
best way to drag and they promoted John firmer who was the former CEO of Sam’s Club to be the president of the u.s.
So he’s a longtime Walmart guy but he’s a really young guy so.

[37:42] Congrats and it’s going to be interesting to see how he does it Walmart and then they back filled his job with Katherine Maclay who used to run Neighborhood Market so that’s.
The stand-alone Walmart grocery concept and so she steps up to become the CEO of Sam’s Club so some some internal matriculation happening it at,
at Walmart.

Scot:
[38:05] Sunmark Lori reports right to McMillan right so would does he is eCommerce, cross-section so the u.s. guide actually just run stores in the Commerce a separate how does that.

Jason:
[38:19] Yeah yeah so there’s two presidents of the US there’s there’s the president of stores which it was dragging now John and there’s the president of digital which is Mark they both report to the CEO.
At Walmart which is Doug mcmillon and the like there’s a chief customer officer,
that’s kind of above marketing and she reports to both of them so she coming to you don’t have to report that to the digital and the stores.
And you know I think some of the old articles from last year about Walmart we’re about like some sort of friction between the store guy in the digital guy in the fact that you know.
A lot of the digital growth was actually being delivered by the stores with this online grocery pick-up and that you know Mark was kind of getting credit for it but it was probably,
the store guide doing most of the work so it’ll be interesting.
John’s a little younger than Greg you know I think it’s a fair assumption that he’s a little more.
Digitally native then dragged was and so it’ll be interesting to see if he has a different relationship with Mark and Greg.

Scot:
[39:25] Selena on the heels of that we had Target earnings and this is what in the world of all straight we effectively call a beat and raised so this is really well-received by Wall Street,
so the beat part expectations was EPS of a dollar 19 came in well north of that at a dollar 36 and then they bumped up
the guidance at Wall Street was expecting 592 620 on the revenue side and they came in at 6:45 to 6:45 so they kind of move the range of guidance up above all she was acting self
shares were up pretty sharply I saw,
thanks to this so that was good and then there was a e-commerce was up 31%.
Gets me back to this question we should we talk about Pride like every 10 shows or so if everyone’s e-commerce is growing north of 30%,
these are big companies so Amazon’s at like 25 Walmart we have at 41 Target here at 31 how on Earth,
even like Shopify is growing forget their number but it’s it’s like 30% I think last time I saw GMB wise.

[40:40] Then we have e-commerce growing at 15% I I.
I don’t know how that works something something has to be like a negative growth even eBay is like just flat so it’s not going to really be a negative trim there so I can look inclusion e-commerce is either going faster than we think it is or,
or there’s some peace some dark matter in there that we don’t have any visibility on that
I’d like to me but I digress did you see anything interesting in the Target earnings date they
the talk a lot about ship-from-store some sure you if you were interested in that.

Jason:
[41:13] Yep yeah that was super interesting that we talked about it before but my answer to your conundrum below is that e-commerce is growing faster than we think,
and the problem is like all of these these,
companies that come out and say e-commerce is growing at 15% of index there their forecast of the US Department of Commerce data in the US Department of Commerce data is flawed for,
Ecommerce particularly for omni-channel e-commerce and so when Walmart says they grow 41% and that’s mostly people going to pick up groceries at the curb the US Department of Commerce counts that is best for sale so that’s part of your bra.
But in any case yeah the target announcement was super interesting to me for some of the granular data they shared about their curbside pickup so first of all they said hey we grew 31%,
80% of that gross was pickup in-store orders.
So so that the that you know they bought this company ship they they really enhance their curbside pickup capabilities they do deliveries from store and they do they actually
built with all male rooms in the back of all their stores and they do ship from store and so.

[42:27] That store inventory is being used for 80% of their digital growth which is huge and then most interesting is that they said that when a customer comes to the store to pick up an order so we don’t have to ship it to the customer.
That takes 80% out of our cost or 90% rather out of our costs 08,
curbside pickup order Casas 10% of what a ship to home order cost us and when we get a ship the homeowner and we can ship it from a store.
That cost that’s 40% cheaper than ship from a fulfillment center and so,
the you know a debate has always been like Ashley stores aren’t going to be as efficient at picking and shipping as a fulfillment center so you know the unit economics could arguably be worse the pic and chip,
and then the counter argument is but your shipping in a way shorter distance because the inventory is already a lot closer to the customer and so the shipping cost should be well or and you know people debated about whether that netted a positive or negative for the retailer and what Target is saying as.
Man we can ship something from the store that I get there faster to the customer and it says it’s a bunch of money and we can get the customer to come to us and pick it up it saves us,
a boatload of money and that’s what most of our customers are doing so.

[43:46] To me that’s super encouraging for Target and it’s fascinating and it really high like me.
The difference between the Walmart and Target strategy.

[43:59] So one problem with all the ship from store and pick up in store stuff is you can only sell the inventory you have in the store right,
is a target’s got 65,000 skews in the store and soda Target digital strategy is to sell those 65,000 skus,
either Walmart you had like 200,000 skews in the store
but you’re trying to compete with Amazon for the total wallet share and you’re trying to sell tens of millions or hundreds of millions of skews and throat you know Walmart is totally leaned into building more fulfillment centers in developing a Marketplace,
and that that kind of thing to sort of get there their catalog up to be you know competitive with Amazon and they’re making progress and doing that,
but it really makes the unit economics challenging for Walmart whereas Target is selling a much more constrained,
catalog but they’re actually able to do that profitably you know it’s kind of not sure once Reggie’s right or wrong but it feels like,
Walmart is trying to hit a homerun and compete with Amazon and Target is trying to head a sort of a single or a double and you know being more successful at doing.

Scot:
[45:09] The one thing that doesn’t add up for me so the store has 65,000 items Target’s website has I would imagine orders of magnitude more than that right.

Jason:
[45:21] Maybe a order of magnitude more they have more but it’s not their target does not have millions of products.

Scot:
[45:27] That’s what’s to say it’s a hundred.

Jason:
[45:30] Yeah could be two hundred thousand.

Scot:
[45:32] Yeah but what’s a 200000 the chances are.
Yeah that the thing you order online is not going to be in the store so do they know are they pushing people to order things in the store and some way like the top of search results.
How are they or just happens to be the head of the distribution curve and that’s kind of the 80/20 rule.

Jason:
[45:54] So I do I think it’s partly that that 80/20 rule but I do think target is more actively merchandising the in-store assortment in are you know,
then there are some other retailers and you know it is I think it’s two because they have a.
Metronidazole a lot of items but and I don’t know this for a fact but I would bet you anything did the percentage of customers on target,
Define products through the guided navigation is much higher,
then the percentage of people that find products through the guided navigation on Amazon or Walmart like the Walmart and Amazon assortments are so big
The Galley navigation is use very little and almost everybody has to find things through search but Target is so much more known for curation,
a lot more with target cells are their own Brands brands that are exclusively available through Target.
And like I do think they have like a more chill rated taxonomy that’s more friendly to shopping and so,
you know part part of this is a self-fulfilling prophecy is that you know more people are clicking through the menus they’re saying the first page of that menu result they’re buying stuff that’s all stuff that’s in the store.
I think that’s literally the target strategy and it’s kind of opposite of the Amazon Walmart strategy.

Scot:
[47:14] And then a couple Acquisitions to talk about the first one that I think shocked both of us PayPal acquired honey-honey is a
well, browser extension so it sits there you install it into your Chrome or your Safari or your Internet Explorer,
messenger name that always forget and you know what kind of watch is your shopping behavior and if it sees you throw something in your cart somewhere it will go and try to find a lower price so essentially just like.

[47:43] Scot Anderson there’s tons of these out there none of them have got no attraction but for some reason honey is done a really good job with marketing and and seems to have a pretty good user base
the thing that shocking about this one is a couple things first of all the price tag of four billion dollars this is asbestos,
we’ve seen reported this 200 billion dollar Revenue company just got a 20 x multiple so that’s just me there was some kind of a bidding war hear the other thing I wonder how PayPal navigated is
I would imagine so if you think of
Amazon having 50% of e-commerce it’s probably 50% of the honey I’m activity or more is on Amazon.

[48:28] My understanding is there some kind of an affiliate relationship they’re so so Amazon hasn’t black honey but now that it has a new owner I’m Amazon
you know do I really want it your PayPal owning this there’s going to be some,
preference PayPal payments Amazon doesn’t take PayPal,
yell at my say something happens and they are in Amazon turns off honey which which is very viable yeah you can look at the IP in and just shut the
crawlers down that they have you know that thing has huge exposure from getting an award Amazon so I hope PayPal is thoughts through that and,
got some somewhere around that challenged his communication to see what happens to that one.

Jason:
[49:13] Yeah and I can try to shut them down they can make it way harder for honey but like there are companies that successfully still.
Do stuff with Amazon even though Amazon doesn’t want them to I’m not saying that’s the position you want to be in but I’m not sure it would completely exclude on that would just make it much harder if Amazon. Active it at preventing it,
but I think they might have a broader version of that problem you know Visa V PayPal in that like I I don’t know that much about honey but I imagine that the retailers have a love-hate relationship with him if,
you’re not a honey partner and people are shopping on your site and honey is trying to divert those customers to a site that is a honey partner,
you don’t like honey very much right so if your target you’re not paying honey and when you you know try to buy stuff on On Target it’s saying like hey there’s this other retailer that has a lower price,
or you know honey you says like hey they have a promo code over here these kinds of things.
You have the potential to to alienate a bunch of retailers and those are the same retailers that PayPal is trying to get to a doctor platform,
so it is possible that they’re going to have some customer conflict here don’t don’t know enough to know that for sure yet but but it’s going to be interesting to see how it all plays out and improve your point.
I sure hope PayPal thought through that when they paid for billion dollars for me.

Scot:
[50:43] Yeah we should probably rename this segment Scott and Jason are super jealous or why didn’t we think of that so it so number one congrats.
Short forgetting this exit and then the other one that was kind of mind-blowing was Kylie Jenner she started a makeup company and you know obviously she’s she in her hole
Kardashian Clan there are a really big influencers this has blown up
2 / 200 million in Revenue very quickly and she sold half the business to
the large conglomerate in the beauty category called Cody for 600 million which is effectively gives that a 1.2 billion dollar valuation in the real mind-blower
is the company has six employees.

Jason:
[51:29] Yeah that Revenue per employee works out to be pretty good huh.

Scot:
[51:32] Yeah I have a feeling Kylie may take a disproportionate amount of that but we don’t.

Jason:
[51:40] Yeah I know it’s that super anything in that I mean it’s a nuanced but I think Cody actually bought 51% so that’s that a controlling interest.
Which is somewhat interesting like I wonder if that will in any way put off Kylie Jenner fans but I mean mad props to her like I think she’s actually totally changed the way influencers think about monetizing,
their popularity comes before this they all would take money to,
sell other people’s stuff and this model has been so successful that you now see a lot of other popular influencer saying hey.
I’m not going to promote someone else’s product. No launch my own products and so there there’s a lot of lot of folks trying to follow in her footsteps but this is a.
You know what that huge home run and congrats Shopify by the way cuz that’s this probably the biggest biggest retailer on the shop.

Scot:
[52:33] Yep
and it’s also important to point out that this is also a DMV be kind kind of a strategy here so imagine
fairly large percentage of her sales are from her website and then she does I think she does sell thru I always get
it could use which one but she’s in either Sephora or Ulta.

Jason:
[52:55] Yep and I think she started out online only and then only in the last year has she added the the wholesale distribution but so yeah for sure.

Scot:
[53:06] So Jason and I have a big announcement we are starting the Jason and Scott beauty company and we’re going to come out with a palette for Holiday 2020 so stay to.

Jason:
[53:16] Yep yeah we’re not to upgrade the servers for the mass influx of traffic we get for that but
looking forward to it and it will include a browser plug-in which will help you buy a product instead of anyone else’s product on the web so we’re kind of think of it is,
honey + Kylie Jenner.

Scot:
[53:35] Yep we’ll just call it Scott and Jason honey or something like that we’re still working on the brand.

Jason:
[53:40] Exactly send your suggestions to Scott,
and sadly that’s going to be we’re going to have to leave it cuz we have used up all our a lot of time as always if you have any questions or comments you have to hit us up on Twitter or Facebook page
and I please please please this is a great time for holidays to give us that special gift and go to iTunes and give us that five star review the the reviews key
keep coming but we we want and need more and we really appreciate it.

Scot:
[54:10] Thanks everyone we’re probably stay tuned for episode 200 you’re going to love it.

Jason:
[54:18] Yeah absolutely that’s going to be fun next week and until then Happy commercing.

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