A weekly podcast with the latest e-commerce news and events. Episode 216 is an interview with Juozas Kaziukenas (aka Joe), the Founder and CEO of Marketplace Pulse. We talk about the state of Marketplaces in North America and how Covid-19 is impacting them.
In this interview, we discuss the state of North American marketplaces, their trajectories, and current impacts of Covid-19.
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Episode 216 of the Jason & Scot show was recorded live on Thursday, April 17th, 2020.
[0:24] Welcome to the Jason and Scott show this is episode 216 being recorded on Thursday April 16th 2020 I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-host Scot Wingo.
[0:39] Hey Jason and welcome back Jason Scott show listeners
Jason we’ve had on our list of folks who want to have on the show for a while our guests today,
but because we have a weird recording schedule because you and I have day jobs we usually record late at night and that’s inconvenient for most guests we were excited one of the Silver Linings of the pandemic is we can now
record during the day so we are really excited to have Joe Kazuki – also known as Joe Joe is the CEO and founder of marketplace pulse
welcome to the show Joe.
[1:14] Hey Jason and Scott thanks for having me.
[1:17] It’s awesome to finally have you on the show Joe and as Scott pointed out I’m having trouble adapting to this giant Yellow orb that’s facing me while I record a podcast that feels very unusual for me.
So Jo I know you’ve listened the show before before we jump into it
what we always like to get a little bit of background about our guests so can you tell us a little bit about what you you did prior to Marketplace pulse and what led you to start.
[1:49] So I think all the way back in 2008 me and a bunch of friends started the books e-commerce company.
Kind of Amazon 0.1 and then 10 years forward from that I’ve been much more focused on marketplaces stand of understanding the markets both here in the US and.
And what right.
[2:13] That’s awesome and so then like what gave you the actual inspiration to launch launch the like sort of editorial side versus being a practitioner.
[2:26] It’s funny because I was reading about biggest stars and YouTube.
And it kind of meat it’s kind of made me think like who would be the biggest retailers and the biggest merchants on marketplaces specifically being Amazon so Marketplace post ended up starting off as literally a list of top Amazon sellers.
Thank you used to be called Doubles in size that’s calm and since the launch I started noticing that a lot of Sellers and other brands in this space,
kept coming to the site to check the rankings to see how everyone’s doing and since we were kind of collecting so much data and through that data getting so much Insight that overtime kind of blood more and more towards the story of content as you can.
The trends we’re seeing the changes we’re seeing that the data we are seeing that all about that content and.
I think I spent the next three no it and it sort of content and kind of sharing articles on our side became a pretty big Focus.
[3:28] Very cool so tell us where does the data come from so so I think I have an idea but I kind of want to hear it from you and you maybe include what marketplaces does your technology look at and then what types of things do you look at across those marketplaces.
[3:45] So we try to look at all the major Market places both in the US and Europe and elsewhere so like Amazon eBay Walmart cool shopping target market place which at Sea and I’m sure and others as well.
And the data you collect is kind of center around probably two main areas.
First one being open merchants and sailors on marketplaces and the second one being Brands and products.
And so to understand that and kind of get the data we just run a pretty.
Pretty large set of data ingestion operation which relies on scraping and apis and all the partners and other sources of data.
We collect as much as we can we can of clean it we store it we are private obviously over the years,
and value whatever use case becomes the we are able to look back at the data and provide that because I actually as a business we work primarily with other companies for building marketplaces themselves,
so we help them that that by providing data on the kind of a leading Market places.
But also since we look at this data all the time and we talked to people like yourselves on the time being we also kind of get questions asked and we try to answer these questions from our data and going to publish them on our site.
[5:05] So if Jason and I opened up a Marketplace for our podcast that featured travel coffee and Star Wars stuff we could come to you and say hey what are the top selling.
Star Wars items across these categories and what’s big and coffee and you can you can look into that data set and then make recommendations based on what you see across marketplaces is that a,
instead of good use case.
[5:31] Are we going to help you figure out the categories that Brands you should be selling where would you be sourcing these Brands so it which sellers can provide you that assortment,
as well as getting into more specific details like hey which Partners you should be working to help you with the onboarding of sellers or like what’s a partner ecosystem even looking for you so it’s kind of a multi-dimensional,
problem for a Marketplace because it’s it’s really not just a product you can on board but also the core we sponsor coming from who is fulfilling them who are Partners in the software space etc etc.
[6:04] Even without your data I’m pretty sure travel is not a good category during the pandemic.
[6:08] It’s definitely not it’s definitely not.
[6:10] Making a long-term I’m thinking long-term.
[6:13] I like it and so like do you have full-time developers that are constantly like having to sort of tweak your your data acquisition tools as the marketplace has sort of changed,
[6:30] So we are a tiny company but luckily we rely on a lot of automation to kind of validate the data they’re ingesting as well as to notice any sort of changes in the kind of ingestion pipeline so,
that’s usually not a big problem for us any sort of changes these marketplaces make and getting Hands-On pretty pretty quickly.
[6:51] You ever just sell the data so I know from my experience at Channel advisor there’s about a bazillion Wall Street people that want to build hedge funds off data like this and do all kinds of crazy things is is that part of your business model or it’s really more
kind of advisory Services based on the data.
[7:07] So we do some data but primarily to marketplaces and kind of software and services companies in the space of e-commerce we had had many conversations with Wall Street companies as well but.
I guess so far we found that there are much better sources in this kind of alternative data space for the Wall Street Market.
Primarily being like most of them utilize kind of credit card and email processing data.
Robbery been potatoes about the marketplace itself so it’s like if you if your what if you’re involved with anyone understand Amazon you’re much better off acquiring credit card data than what we can provide for you because they’re sort of things they’re looking for are much more.
Going to particular to the noise and I guess our data would just have too much noise for them but we had kind of.
Be honest we had to leave the try to come and help them understand what this even the Amazon Marketplace because of all the kind of award e-commerce players in the space that you still find that it’s going to the most misunderstood player in this space,
given how large it is.
[8:11] Yeah isn’t that interesting just to follow up on the data so I think of you like,
your methods you’re going to get much better visibility to the digital shelf like what products are offered like the velocity that stuff is moving on and off shelves,
Like in any of the attributes about the products that are on the shelf that that like credit card data set you mentioned is going to see a lot more about the consumer Behavior so it almost seems like.
They’re there to sort of different data points that like together tell an interesting story am I thinking about that right or.
[8:48] Yeah that’s true that’s true so we try not to spend too much effort in trying to estimate sales velocity for anything because that’s really.
Well done from credit card data and of emails and all the other alternative data sources I guess we spend much more effort collecting data on the covid building blocks
it’s like a products themselves and Brands themselves with all the merchants and sellers and categories and how all that’s kind of space looks like on a kind of very granular level.
[9:14] Yeah now I’m curious you started out as an e-commerce entrepreneur and now you your super deep and knowledgeable about.
The the sort of opportunities that you know emerge in marketplaces like where there’s a gap between,
demand and offers and you know where there’s a good source of product all these things I it has to be tempting sometimes to want to act on that data yourself versus.
Showing that insight to others.
[9:48] True true but at least for now the focus has been much more in the data side of things as well as like the market self understanding the market,
and I think having been in in this kind of in a position of selling things before I both miss it and don’t miss it at the same time.
Especially especially in times like these where kind of sales are compressed for everyone in marketing budgets or cough I’m I guess I’m someone happy not to be selling any products I think given moment.
[10:18] Yeah fair enough and then I did one other granular question about the data so like of the people that are,
like watching marketplaces and sort of extrapolating data from marketplaces it seems like you you do extrapolate data about the products but what,
you’re also getting a lot of data about the sellers of the product and so I actually think of there’s some other companies out there that also.
Monitor the digital shelf and they focus mostly on product data and they sell that actually back to Brands so I think of like.
Edge essential or profiteer or companies like that the kind of monitor the digital Shelf,
to tell Procter & Gamble how you know how their product is being presented versus someone else’s but the data source that I see like you ever go out that I’m not familiar with anyone else that provides is,
information on the actual sellers like how many sellers they are you know are they domestic sellers are Chinese sellers like what categories is the seller based growing things like that am I.
Am I accurate or am I misinformed there.
[11:29] Absolutely Services business has been kind of the core dataset we’ve been building since we started,
specifically being all the sellers and Merchants on these marketplaces and we try to,
beside you basically collect data on every single Merchant on all these marketplaces to have.
Like a full understanding of what’s working for these Merchants what are we selling who are the top Merchants where do they come from like how to be fulfill things etc etc because again on marketplaces.
Differently from an online retailer on the marketplace it’s not just about the products it’s also about the kind of a supply side of things and where does that Supply inside of things comes from.
For example a question B we tried to answer before was like.
If you shop on Amazon you notice that there’s a lot of items which look like me came from AliExpress or Alibaba.
And yet it wasn’t clear that I’m weak how many of these items are actually sold directly from China as opposed to US based sellers importing them so,
we spend some effort trying to figure out okay covid mountains on Amazon or of all merchants on eBay how many Alexei come outside of the US and others like a surprisingly large number,
large number especially coming from China.
[12:50] Very cool and just as I thought on that one I mean that was one of the trends I feel like you uncovered is there’s this perception that it was a lot of domestic importers and and you’ve really been able to track the growth of,
of Chinese sellers on them on the platforms.
[13:07] Yeah I think most people have this impression of Amazon Marketplace as being largely like a platform for,
people who drive around to Walmart stores and buy Closeouts and then sell them on Amazon Marketplace.
That’s that’s very clearly completely not true and not only is there are many many different types of businesses here in the US we also have an incredibly large.
Portion of a marketplace coming from I thought our countries as far away as China when kind of helped by the Amazon Fulfillment services.
[13:43] Yeah and then the last question we’ve been just talking a lot about Amazon but your data isn’t exclusive to Amazon right like what marketplaces are you guys tracking right now.
[13:53] Amazon eBay Walmart Etsy Google shopping which target market place and a few few Smiles as well.
[14:03] Scot and then mostly the North American iteration of those marketplaces or are you trying to look globally as well.
[14:11] We try to look globally.
For example for Amazon of course we look at all the countries animals and is running the marketplace and should be leaders not 15 15 countries obviously eBay is a global platform at least a global platform which is a global platform,
we don’t spend too much effort yet on looking at.
The properties of Alibaba like Timo and taobao but that’s much more so because we just don’t have a big business case for bath and,
I think most most us Brands don’t really care about them too much yet that’s why we focus much more on like what’s relevant in Europe and the menu in the US.
[14:48] Gotta okay well let’s jump into it so obviously all our listeners are pretty familiar with the
the big Marketplace is right so in the u.s. I think mostly of eBay and Amazon like what what is the high-level story with sort of the tier 2 marketplaces like the Walmarts and wishes and targets are they.
Growing are they getting traction are they like losing share to the Amazon like what’s what’s kind of the,
the macro view of Market places in North America.
[15:21] To me I think tier 2 only has a single company and that’s Walmart.
They’ve launched their Marketplace all way back in 2009 but kind of really got into it.
In 2016 and probably over the last couple of years made it an actual important part of Walmart itself.
Just from an announcements you saw about the company as well as the seller acquisition we’ve done I think just very sweetly finally surpassed 40 thousand merchants.
Which we acquire my very very differently than Amazon so that number is actually pretty,
pretty large because they acquire an approval to join Roman marketplace so woman is on a very good job at integrating the marketplace into the.
Kind of overall Walmart selling experience and buying experience you can return items from the marketplace into Walmart stores as well as all that other stuff and then you have,
to me I think like a baseless third-tier,
of marketplaces the likes of wish and go shopping and target market places which are basically either trying to do similar things like Walmart or or Amazon is done,
for our very strong in their in their own niches like for example XE is obviously not trying to compete with Amazon but at Sea on their own right is an incredibly strong Marketplace in the handmade and vintage Goods.
[16:40] And and to me it’s probably the most exciting kind of development in the spaces it’s probably all the niche market places marketplaces which focused on the particular category of products for a particular use case,
obviously at seize the most known now,
but you see many more and clothing and sneakers in streetwear in any sort of imaginable category,
and they tend to view the content around the marketplace much better so they’re not only being debate Supply they also kind of build content and tutorial content around it which tends to work really well.
And and then you probably have even more so kind of.
Kind of traditional retailers still trying to launch their own marketplaces but to me that’s.
Probably an old strategy kind of companies trying to be much more like Amazon but they’re probably not kind of strong players at the moment.
[17:38] Gotcha so just to kind of put some rough orders of magnitude to this like like how many sellers are on Amazon right now.
[17:46] What Amazon has over eight million sellers worldwide so three million just on amazon.com in the US.
[17:55] And then in do you have an estimate for the number of skus that are offered or a.
[18:02] It’s funny because we get asked about this on specific on Amazon school calendar all the time and as of probably the last two years we have stopped tracking that number because it became completely meaningless,
I think the last number we had from years back was 550 so 560 million skus.
And since then it became even larger and yet.
It doesn’t it kind of it no longer represents any sort of meaningful metric to track because Amazon adding a hundred million more skews no longer represents in any sort of measurable sales growth because these skills get kind of.
We stayed in there in the vast Universe of battle sounds good.
[18:43] Yeah and I assume there’s a tremendous amount of churn in there too so I they added a hundred million skus about a hundred million skus died and no one’s ever going to see them again.
[18:52] Yeah I was going to Amazon’s assortment this is the most chaotic assortment in retail probably ever invented,
because it not only are we having thousands of new sellers everyday all these sellers are bringing probably tens or hundreds of thousands of often new products new private label products.
My place every day so like a sort of changes in the SKU count are pretty much meaningless.
[19:14] Yeah but it’s still helpful to me in this one context this sort of order of magnitude context so so Amazon’s got three million sellers in the US and hundreds of millions of skus,
and then you kind of cat characterized Walmart as a,
growing tier 2 Marketplace so put that in perspective for us you said that was forty thousand Merchants verses.
[19:36] Walmart has 40 thousand merchants and they have much less an Amazon because they’re kind of an invite-only approval Marketplace so you can’t just join Walmart they would have,
ten times more Merchants if it was open and Walmart has 15 million skills at the moment.
[19:54] Yeah and and if I’m not wrong 50 million actually represents tremendous recent growth from them because before they really leaned in in the marketplace they probably had under a million skus.
[20:05] Yeah so one of the numbers we always tracked about Walmart is how much of a catalog comes from Walmart itself and how much of that comes from the marketplace and.
Pretty much since 2016,
all the girls that’s something the marketplace like Walmart itself still only sells I believe three million excuse and all the other skills have come to the marketplace.
And so then like what is your sense is there and so you kind of you gave us this nice framework Tier 1 Amazon eBay tier to Walmart and then tier 3,
General Merchants wish Google Target and then Niche niche market places.
Is there more opportunities for General Merchants marketplaces like could you see a Google or Target catching up to Walmart and being a tier 2 player,
could Walmart like ever catch up to eBay and you know be a alternative to your one player or do you feel like.
I assume you’re going to say there’s plenty of opportunity left for niche market places but like for the general merchants.
Like is a his that played out in your mind or do you think there’s still a lot of opportunity for people to capture share.
[21:24] Three other ways going to stores in this first it’s very clearly that.
What kind of establish large retailers like Target and best bikes should be able to fairly easily to grow Marketplace similar like Walmart.
And achieve the same sort of kind of merchants Grove as well as well as you growth I guess for companies like Target the question is do they actually want that.
Because if you look at their latest quarters they’ve been saying that most of our sales growth is coming from store delivery.
You can’t really integrate the marketplace into store delivery as easily.
And no actually no one has done that to me you are still so technically you could do that on target but in reality they probably won’t covid at least not going to try it because the stores are working so well for them.
[22:12] And then on a second-tier I think like to me Google’s attempt it’s probably the most exciting because they are also at a company like Amazon and they also have,
theoretically unlimited amount of capital to go after Amazon so if Google really push the pedal.
To the floor and actually tried to go after I was on the thing they could do a pretty good job given the sort of assets we have the given the sort of the user traffic may already have,
but I think for all these companies the question is like do they actually want that because you can become,
like I’m not a couple of billion dollar a year Marketplace launched by Google somewhat easily,
but like Google wants to build a hundred billion dollar business has not been done and our businesses so,
competing with Amazon or launching another meaning for business for all of these companies means having to wait many many years before it becomes meaningful and it’s unclear yet of like is anyone willing to actually wait.
[23:15] Yeah interesting and it is it’s funny like,
you could imagine an alternative reason Google would want to grow it besides just the revenue like they have this super important you know hundreds of billions of dollar Revenue stream called advertising,
that they need to protect right and and if,
if the marketplaces are stealing the eyeballs on the advertising from Google like when one reason Google might want you no more a stronger Market Place would be to keep the eyeballs in their echo system and not have weakened.
To an Amazon or someone else.
[23:51] I think you’re completely right like a lot of shopping already happens at Google,
just Google itself doesn’t really monetize it as much as it wants to nor it can control it as well as it probably wants to,
they always have Google shopping and they have some rich content that Google as a company has done many many things from like they’re all kind of in parts and none of them are connected to an actual shopping entity people can go to,
and the Outlook over the last couple years again Google shopping and still the marketplace they’re adding Merchants all the time they’re going to school calendar trying different things but there.
They’re not a sort of all out it hands as you probably would expect from a company as kind of as big as Google.
[24:33] Yeah and I will see how it all plays out but one thing that get that makes me want to watch him even a little closer as you know like four months ago they did hire Bill ready from,
PayPal and created a new role they didn’t have a Google prior so he’s president of Commerce a Google and so you know you sort of bring in a credible,
e-commerce Weider create this new title like there’s these endemic reasons they might want to do better at Commerce so like that that at least.
Gives me reason to believe that they’re going to lean more heavily into this base.
[25:07] To me though I think there’s one kind of important caveat is how can Google do this and not upset and I trust Watchers.
Because for Google like then adding shopping usually means adding shopping elements in to search for all the other properties we already own they were already find for similar terms in Europe a couple years back,
anything more meaningful with probably risk some of these finds again so for goo is the kind of a balancing act of like how do you actually do that without upsetting the kind of an ecosystem of people who now rely on Google search traffic for the shopping.
[25:46] I know for sure I feel like that’s the one of the new normals right is is sort of balancing your business growth aspiration with your antitrust risks.
[25:53] I would argue that kind of did this with travel to so so they did this in travel where you can actually book right in Google and they got away with it so I don’t I don’t know.
[26:01] For example like if Walmart join school shopping Marketplace and people can just buy through Google from Walmart.
Like does Walmart want that or do they want people to go to actual Walmart and then buy from there it’s kind of.
All these has the advantages and disadvantages But ultimately the larger the retailer is the less they want to be aggregated behind an aggregator on Google so,
I just I could never foresee Google being able to aggregate large retailers like Target or Walmart they will always refuse to be a part of this.
[26:38] Yeah I guess the one Edge case where it seems like there might be some leverage for them to aggregate the big retailers is.
Literally just as a foil to Amazon right so,
you know if Amazon you know if Alexa gets the most traction and Alexa gets built into all these appliances and everyone’s you know now everyone’s appliances as reordering Pantry items,
exclusively from Amazon if your,
Walmart or Target you’re unlikely to build your own smart speaker echo system to compete with Alexa and so you know you may look at Google as the less competitive more friendly partner,
that you might try to enable to be a more complete competitor against Amazon.
[27:24] That’s some people from Google Cloud which is the competitor of AWS and their business Stitch to retailers is basically.
We hate the Amazon you hate Amazon how about you just move all your Cloud infrastructure to go about and this works really well so yes I completely agree like.
Kristen kind of players in this space who will driver who we do anything else but work with Amazon that’s an opportunity.
[27:50] Yeah I think that’s actually the official sales pitch for Google Cloud platform and for Microsoft Azure so.
[27:56] Aggressive very easy fish I’ll take it.
[27:57] Yeah yeah so one other topic we want to talk about in general in the marketplace is is what if any role you CD to see companies playing in this whole Market Place Evolution like,
intuitively like if I took a real literal definition.
It doesn’t seem like d to C in Marketplace like are super compatible but it seems like in practice a lot of D disease think they’re directed consumer play is via marketplaces is that.
Do I have that right or how do you think about it.
[28:31] I think it depends on the kind of the purity of a brand is trying to be I had I am seeing a lot of.
Small niche market places in the DTC space to focus on a particular category so for example sorry I was talking to these guys maybe last month who build a Marketplace specifically for Street Wear.
And all the brands inside of it are already PC Brands because the marketplace can bring them,
obviously Shoppers as well as data they couldn’t get on a traditional marketplaces like Amazon and yet but if you see Brandon has a more manageable kind of acquisition path than just trying to do it themselves.
[29:10] Because to me the reason why kind of DPC doesn’t work on Amazon or any other of these major marketplaces is the fact how how these marketplaces handle data exchange as well as kind of user interactions.
It doesn’t have to be like that so the kind of the more modern Marketplace has built for the DPC space do share a lot more data than Amazon does and douche and do give the way for Brands to talk to their consumers through but Marketplace.
And I’m sending in all this becomes possible so think like is Amazon a great home for DDC brands,
it was fun enough nowadays because we live in a pandemic and some of these Brands will inevitably have to kind of rely on Amazon to get some sales out of it but,
once we have passed that I said I do see that like a lot more Market I just Google built so informative to see space because all these markets can do is basically aggregate,
demand and then the brands can benefit from that much more easily than themselves trying to acquire this in users.
[30:08] It’s like marketplaces are the new virtual retailer you just don’t have the store element.
[30:13] Yeah so I think it’s always been the case that like if you’re Nike you can build a store in the middle of a desert and people will probably come to you,
like most brands are not Nike most brands who built stores in the desert will never see anyone come to them they can’t force people to come to them if they just spend a lot of money on marketing,
but that’s obviously has limited time Horizon so as Brands try to acquire users at much more favorable costs,
like Michael please do play a pretty important role and I think they also allow Brands to kind of acquire the same user.
If I would have to compete with other brands also trying to acquire the same user like a lot of Brands and travel.
Like Barrel raising advertising costs because they’re all trying to acquire the same user even though but same users probably buying from all these branches anyway.
[31:02] The one exception is if that desert is in Las Vegas or Dubai people actually will come to it.
[31:09] I forbid we should wish Italian brand I think it was proud of the builders store in the desert in maybe outside of Texas.
[31:15] Yeah you’re exactly right it’s a fake store but it’s a very funny photograph yeah.
[31:20] But I think to me like my lesson from areas like yes those great yes product you did,
no you’re not a product like most brands are not product most breaths if they tried it will just lose my clique,
to me like that’s kind of the marketplaces versus writing your eCommerce site and tribe you do your own acquisition is shopping mall versus Your Own Story the desert.
Like yes either ghosts can work but I guess basically decide which one will work better for your kind of capital constraints I guess.
[31:49] Be cool so that gives us a good overview of the landscape and it wouldn’t be a Jason and Scot show if we didn’t talk a little bit about Amazon here when we’re recording Amazon’s flirting with new kind of all time highs around,
2400 and change definitely flirting at well over the trillion dollar club and kind of nipping at the heels of apple and Microsoft,
which during a pandemic is kind of an unusual thing so
seems like they’re seeing a pretty big surge they had to turn off FBA Sellers and a bunch of those kinds of things do you have any data that indicates how they’re doing through,
[32:30] What’s most interesting about Amazon is event over all their sales are up and yet any individual brand or seller is either very negatively impacted by this for very positively impacted by this so you have this incredible.
Kind of spread of people and companies were very happy about their sales and very upset about their sales but like Amazon overall is their cells.
And there are enough that some people like sometimes I talk to sadly it’s basically they’re having a friend day every day.
And I mean it’s I think it’s still hard to judge just how much sales increase on Amazon because given how large they already are but they clearly have increased.
[33:10] Yeah the give us an idea of the winners and losers is it is it kind of category based on dimension.
[33:19] Yeah I mean it’s kind of obvious the thing that keeps you look at Travel,
nobody’s buying that if you look at swimwear no one’s buying that if you look at sunglasses no he’s buying that and yet everyone is buying the things you would need for your house the things you would need to work from home the things you will need to get entertained while you’re at home as well as work out the home,
been of essential items like all the health items as well so I think this spread of categories is probably the same across all the different retailers.
[33:49] So you did a blog post where bandanas were hot.
[33:52] Amazing amazing I haven’t bought one yet but I just think about it because I tried I tried buying face masks now for a while and they’re obviously sold out everywhere and if they’re not,
they’re like they’re shipping from China it’s going to take a month to get to you so I think I think I’m going to get some bananas and try to make a,
try to make a face mask for me because one of the other items we’ve been looking at is weekly look at search traffic on Amazon and see how they train Trends have changed,
and like for example one of the trends I saw maybe now three weeks ago was in fact that like I stole it paper sold out,
many many people are started by the days which wasn’t even like a popular category before and Amazon and all of a sudden became hugely popular.
And then maybe in early February the biggest explosion I saw,
friends of mine manage kind of Amazon in sizing for a few different brands and one of the Brand’s we manage out of energy for so kind of survival food kits and that brand went from selling,
is this a couple million dollars a year to selling a couple million dollars a day on Amazon.
And that’s that’s when I knew I’m like this is this is this is serious crisis as well as people are really scared about that so to me of him nothing like looking at that,
kind of different changing consumer than an Amazon kind of has been killing an interesting insight into what people think they need to kind of push through the days.
[35:17] Yeah you had another blog post we talked about some of the negatives of this surge walk us through some of the data on that.
[35:25] Yeah so one of the things we always look at is how many negative reviews are these merchants and animals and receiving and,
usually that number overall that number tends to spike as Christmas approaches,
because people have placed the orders but order is not getting to them before Christmas and then they realize it’s never going to get to them in time so they leave a negative review and they usually cancel the order.
But then as of last couple weeks ago I started looking at that number again I started noticing that it’s it’s spiked even more and then it usually does.
And what about spiking in negative feedback on Amazon is coming from sellers who bought face masks hand sanitizers toilet paper and all the other essentials from Merchants who often don’t have those products.
And are using fake tracking numbers to kind of basically hide the fact that they have never been to ship a product or being shipped the wrong products like cheaper alternative is of the face mask,
for when it all the toilet paper which triplet completely different item all together so as much as I was in is increasing in demand.
[36:32] A lot of that kind of issues within policing of the marketplace as have resurfaced as kind of merchants are trying to insert themselves into this massive wave fourth increase the man,
and since I mean if you go to Amazon today you will find that there’s no face masks or hand sanitizer some toilet paper in stock.
But yet as a merchant if you claim that you have it in stock you can try to kind of weasel your way into that search results page,
and because that serves our page is receiving so much traffic you will get a few sales in before Amazon realizes we need to come need to kind of block you so Amazon has been in this.
[37:09] Kind of.
Crazy position of having to deal with actual issues of like fulfillment operations as well as employees and now also having to deal with this sort of marketplace chaos which is doing with all the smaller Merchants trying to kind of
benefits from the marketplace not necessarily saying something but also sometimes by selling something they don’t actually have.
[37:32] Yeah it’s I mean the level of difficulty was already complex now it’s almost unimaginable like,
pivoting slightly I’m sort of curious how you think the pandemic is influencing how Brands think about Amazon is it,
is it potentially driving Brands to Amazon or off of Amazon or what do you think.
[37:55] I think that like don’t really I think all of us would probably agree that now you’re starting to see Brands go back to Amazon go back to selling on Amazon Branson previous every excuse that obviously we’ve all seen that announcement from Birkenstocks,
we seem to be going back to Amazon I think we’re at that point in time now where the sort of ideological refusal of selling my Amazon in a past.
Is probably being questioned by Executives now because as we see their own sales in their own channel is decreasing their trying to find other channels too,
do something items through and if they’re not selling on Amazon it’s an obvious choice and it’s an obvious channel to have immediate sales,
so it’s very clear that,
it’s not yet mr. of acceleration Brands jumping back onto Amazon is definitely going to accelerate even for Brands who have previously.
Refuse the blatantly bit like they will have to change their view because it’s
it’s wild for the last decade they could have made this kind of strategic choice of not to be on Amazon,
bad choice and things just kind of been taken away from them now because of just the sort of crazy conditions we are living now where so much of shopping is kind of centralized on to Amazon
as and limited budgets they have to spend on marketing means that.
Like I wasn’t all of a sudden became probably one of the better choices they have to have any sort of lemony.
[39:22] Yeah there’s almost this odd Paradox at the moment I think you’re you’re exactly right like if you had decided you were staying away from Amazon,
some of your resolve is probably eroded and there’s there’s there’s more arguments in favor of you being there and I certainly think Amazon is going to emerge from the pandemic with greater share than they had going in and so,
Same reason people rob banks that’s where the money is like if you want to sell you probably need an Amazon presence but the one Paradox is,
there is a cohort of brands that maybe weren’t very digital Savvy and they almost looked at Amazon as a hundred percent of their digital strategy,
and if you’re an apparel brand and you thought the mean way you’re going to sell digitally is on Amazon and you suddenly became,
a an essential product that couldn’t get you know your FB a product replenished you probably were getting being,
exclusively dependent on Amazon so it on the one hand I see a lot of brands that had been resistant moving towards Amazon and on the other hand I see,
number of brands that were kind of single Source on Amazon you know trying to diversify their portfolio little bit are you seeing that as well.
[40:38] I think I’m seeing the same thing like this sort of increase in demand for 3pl their Housing Services has definitely skyrocketed,
as brands are even trying to find other ways to,
selling on Amazon or going to average over their houses they can use to sell on Amazon and I mean for many many of these Brands we can’t really do that on fulfillment as effectively,
as they kind of new to now because often they don’t even have this sort of that house capacity,
or staff for it so yes absolutely I think many Brands who have either relied on that wasn’t before,
for having sold on Amazon before but now can’t even ship out instead be a are all flocking to 3pl logistic companies to do it for them.
[41:25] How about private label Brands you’ve done some interesting reporting there what are you any updates on what you’re seeing there from the pandemic or any other thoughts on the the plethora of Amazon private label brands.
[41:38] It’s that one of the guess one of the most infamous reports you’ve done was last year about that the Amazon private label brands,
the kind of the cord Discovery from that was the fact that like they are attempts are obviously very wide but most of the brands that launching and haven’t been as successful as most people the still they are,
and to be honest like since then Amazon itself as a company has really been as aggressive and launching new brands,
they are so launching amazonbasics products all the time but in terms of Brands they would be launching especially clothing brands which kind of comprise most folio brands that trend is definitely die down,
but in the same space a lot of the private label Brands and Amazon are launched by the smaller smaller merchants and,
as much as that it’s still happening that obviously has been hit very hard by the pending first by.
Not being able to Source items from China as effectively as before that is mostly recovered but there’s still some issues with the logistics from from the point of view of costs and state but also a thing,
many many many companies in the space who previously relied on data to figure out what we should make.
I think are finding that they can’t use data as effectively anymore because the trends are changing so so fast that by the time they’re able to Source it say.
[43:02] If you see that the bananas are becoming high demand from the time you’re going to be able to Source them and get them onto Amazon it’s going to be June and the man has gone so I think the sort of the the stability of demand.
Has previously allowed private labels to be built and I think now that the stability is gone I think it’s much harder job for me small images good and also,
access to Capital now is much more constrained Amazon lending itself as killed their program and are not issuing a new loan so when we smaller companies to get Capital to launch new brands it’s a much harder job.
[43:39] Well let’s let’s pivot over to eBay they just sent out some new CEO and I’m kind of excited about that it’s a guy I think I’ve met him a couple times when he was there and kind of Circa
V 208 I believe.
Jamie iannone so you know they’ve been kind of rudderless for a while but do you know
to their CEO departed about six months ago they’ve sold StubHub they’re about to sell their classifieds are talking about it and what not they’ve been distracted by a lot going on do you think Dave benefited in the same way that Amazon has during this pandemic.
[44:16] I don’t think so and I don’t think so for two reasons first.
Yeah I was looking at that traffic across all the different retailers as well as eBay eBay doesn’t seem to have any sort of measurable lift from this which I think is pretty disappointing for them and I think second of all.
I don’t think many people think of eBay as a great place for Essentials.
And that’s why it’s so much of shopping is happening on Amazon as well as other kind of traditional retailers.
EBay is much stronger and other categories but many of these categories are not that important anymore so I’m sure we’re going to have are having some increase in demand in some categories but overall,
I would be pretty shocked if they having an actual and measure measurable major increase in sales because of the sort of,
this sort of weird positioning they have as a company visually I think only became more apparent than any more visible during this visit the spend the night.
[45:12] Any other interesting Trends on eBay that to speak of are they losing sellers in this kind of sideways area that they’ve been for a while.
[45:21] I think eBay has not in like Amazon has has been trying to Police Products on there on the catalog as well
but since its eBay to me is also the most the most fun Marketplace because you can buy a single toilet paper Square on Amazon concert on eBay pretty pretty easily,
which always doesn’t sell in a remarkably so if you if you search for toilet paper on eBay it’s a much more eclectic mix of products than other retailers would have,
and in terms of like seller seller leaving you may tend to have a pretty unique set of sellers a lot of them are selling collectible girls a lot of them ascott sorry memorabilia following selling car parts so like none of these sellers,
have clear path to other marketplaces so I don’t based on measurable kind of,
leaving of Sellers from eBay or onto a onto eBay I think that’s that’s been mostly stable.
[46:18] Interesting today they’ve sort of got those they have an advantage with some of those incumbent categories but they seem to be struggling in the categories where they overlap a lot of other marketplaces is that their summary.
[46:32] I think they dig has the biggest jobs or when you see CEO.
Is figuring out just exactly what is the direction and what’s the core focus of eBay.
I think you bae hasn’t been able to answer that question for the last decade as it kind of try to became closer to Amazon.
But like after all the years of efforts is now just a worse version of Amazon,
without any sort of benefits of Amazon you you would have just literally by shopping on Amazon so eBay is basically figure out like where where does it want to be,
because it’s still want to be in the same competition as the sort of the real real or the stock X or Etsy or just want to be more like Amazon your more do more general merchandise because now it’s tries to do,
all those things at the same time and doesn’t do a great job at any one of them.
[47:28] Yeah yeah it’s going to be any I mean that’s a fundamental challenge for a lot of companies but yeah you definitely have to be able to have a clearly articulated,
reason for existing and so that’s going to be a challenge for Jamie when he he gets to eBay you know he is coming from Walmart Sam’s Club he had a lot of success sort of running.
E-commerce for Sam’s Club and then got promoted to be I think I think it’s official title might have been like.
Co overall of walmart.com so it will be.
[47:57] EBay eBay has to disrupt itself but I don’t know anyone who has an idea of what that would look like I personally don’t have any idea as well.
It’s unclear what do they actually do to kind of to find New Growth but it’s very clear what they’ve been doing for the last decade doesn’t actually work,
and you can look at their sales growth is non-existent and we sort of incremental changes are not going to get them to the growth they want to see so they can keep extracting more and more revenue from the salesman having,
and that will continue to increase their stock price as a public company but like in terms of growing Marketplace and growing place people go to shop at.
It’s not going to happen unless they have like a major change and covid around the platform.
[48:42] For sure it’s no it’s no fun being the one losing share in a rapidly growing Market the what about some of the other players I think of wish for example is kind of being an interesting situation like it,
it seems like it’s not the most awesome time to be right between the US and China in terms of trade which you know it’s probably a negative but then on the flip side.
They’re very value focused and you know we’re probably gonna have a bunch of consumers in in the u.s. in a pretty deep recession you know and maybe those like sort of affordable indulgences are going to.
Going to be more popular than they have been in the past.
[49:21] I’m a big fan of wish because the thing is very Unapologetic Marketplace we’re not hiding that most of the things it’s are coming from China we’re not hiding that most of these things are low quality and affordable girls we’re not hiding that it’s going to take awhile to get those items,
well I come from getting bad but like as of to probably two months ago,
which is obviously completely collapsed because they rely so much on demand deliveries from China.
[49:48] That that which were first impacted by the all the men back exposing down and are still negatively impacted by the kind of increase in cost as well as decrease in availability of all the deliveries from China so.
I’m not going to put a number on it but their sales are down and it’s unclear yet of when they’re going to be able to do recover because,
like I uniquely some of these other companies which mostly operated by running around their houses here domestically wish,
while having some of the assortment here in the US most of it comes directly from China so,
like they’re having issues with the demand side of things by maybe some poison works on buying or much anymore as well as Supply things as a supply side of things which is,
deliveries and the assortment size from China so they’re in them very tricky position but at the same time I think,
like wish knew they could be trouble one last year we were all discussing import duties from China like wishes exposed to that very much anything now they’re very clearly exposed to all that kind of.
[50:55] International delivery as well as supply chain constraints.
[51:00] Yeah a potential long-term risk there is like so they obviously rely a lot on the US Post Office for the last mile delivery in the US and they’ve always benefited from these super favorable rates from,
a very old Global postal treaty that were a part of and at the moment like seems like the US Post Office is like on the verge of economic collapse.
I’m hopeful that there’s some some sort of last-minute save but it’s it’s very possible that that last-minute save involves like renegotiating or getting out of some of those.
Those International treaty so it may not be as favorable terms for wish.
However the US Post Office emerges from all of this.
[51:48] I agree I don’t think they’re in a good position at the moment they like me it was a beautiful business and obviously I’ve been able to grow it fairly,
well I think it’s doing at least 10 billion dollars in jail B which is obviously,
very major number that’s larger than most marketplaces would be doing but it’s also built on infrastructure made can’t like reliably rely on.
Part of that is obviously shipping from China but also part of it is like not having any infrastructure themselves relying on USB as well as all the domestic shipping Partners in all that every country’s very end so it’s yeah it’s not a great place to be in at the moment.
[52:27] Very cool it really appreciate you taking time during a busy pandemic time to come on the show any other any other trends
you know we had before the show we talked about you have some good hacks for making sure your Amazon order gets in and I’d also love to hear your thoughts on where our marketplaces in three to five years.
[52:46] So first of all if you’re relying on online groceries you have to figure out a browser extension to help you with that this is something I did maybe the last week and I’ve since then I never had a problem placing an order,
on Amazon Prime now so it’s a huge lifesaver.
[53:06] Just like a honey or you wrote your own.
[53:08] No it’s basically a Chrome extension which refresh is a checkout page on Amazon,
to try to spot a slot opening once my slot opens it sounds like a desktop notification to me so you just have to leave it in the running in the background and next thing you know you have the place your order.
Sebastian has been great and then in terms of marketplaces the thing,
they are having especially now obviously incredible time because most consumer shopping happens through marketplaces,
like marketplaces in the u.s. already are combined,
the largest online retailer in the US that’s means like the most interesting status that they all the marketplaces combined,
or in the kind of a slice of the market place of from Amazon is larger than Amazon is larger than any other retailer so Marketplace already play a huge part but the thing with the directions we are going into is.
Miche marketplaces which done which focused on particular categories and do content as well as coming user Community much better than Amazon eBay could ever do.
Second business to business Market places that’s a huge area of growth.
Obviously have Amazon business is falling all over my place watching this space I’ll do the business buying is now being done through marketplaces and even on Amazon site that’s the part of Amazon which most people completely forget or,
don’t even realize even exist and that’s already a very huge part of the sales and then I think I think third there’s a lot of focus on managed marketplaces,
somehow he managed micro-business are remarkably says which help you not only by providing you a wide selection of Supply but also they pick the thing,
you are you want so whoever is a managed Marketplace because you don’t think the driver over its upsides driver is best for you,
so we will see this continuously going that direction is even,
as even marketplaces like Amazon and eBay will be much more kind of pressure to be in a position of trying to help consumers to pick the item that you want,
rather than providing them to just endless list of items available millions of items account of what in relying on the consumer somehow picking the thing they want so.
[55:21] Kind of super this deposit all in perspective like Matt like marketers is going to be continuously growing bigger and bigger but they’re also going to kind of change in shape,
to move away from these generalized marketplaces like Amazon to focus on their own strengths because I think
it’s your e-commerce business right now only trying to build up my confidence right now it’s probably a bad idea trying to go directly against Amazon’s business
or trying to go to the marketplace this follows the same model it’s a much better idea to do something differently or have a different model and examples like Etsy and exams like wish,
like they’re all doing really well on their own like truck by not trying to be like Amazon and eBay who did try to be like Amazon are obviously not doing as well.
[56:08] Joe you know usually people that are pro Marketplace on the show are really just pandering the Scott but it’s very obvious that you have True Religion about Market.
[56:20] They are great.
[56:21] Yeah no and clearly like globally they are winning like it seems like the the dominant most successful form of.
[56:29] Do me do me a favor like to kind of put it all like in the final perspective like to me a Marketplace is just,
it’s a reinvention of a shopping mall for the internet which means the aggregate consumers in a single place,
boss allowed single shops or single Brands to talk to these consumers much more cheaper than having to do their own,
kind of customer acquisition and inverse a Marketplace will always make sense and sure you will always have Brands and retailers who can run their own stores and current that on that position but ultimately a Marketplace could always do it much more efficiently the question becomes
like how do you do that and still retain some kind of brand value and not give up all the to do something like Amazon.
[57:12] Yeah well well said and that seems like a great place to leave it because we have used up all our allotted time as always if you had a burning question or comment feel free to hit us up on Twitter or Facebook
if this show is valuable to you we sure would love it if you jump onto iTunes and give us that five star review,
Joe real pleasure talking with you thanks very much for taking the time.
[57:34] Hey guys thanks for having me.
[57:36] Joe Fox want to follow some of the awesome content that you guys put out there what’s the best place.
[57:42] Marketplace post.com or if you want to find me luckily I have the one of the most unique names you can think of so if you just if you just Google my name and you’ll be able to find in two seconds.
[57:55] That is terrific we will put those links in the show notes and until next time happy commercing.