A weekly podcast with the latest e-commerce news and events. Episode 227 is recap of the latest industry news including Amazon’s announcement of the Dash Cart.
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Jason recent events:
- Publicis LinkedIn Livestream: Trends & Insights Live “The New Reality of Retail”
- RetailTouchpoints: Retail Strategy 2.0: Separating Urgent From Important
- Brick and Mortar Reborn
- Rob Gonzalez, Peter Crosby, and the Digital Shelf Institute/Salsify “Creative Commerce in the time of covid”
Jason Upcoming Events
- NRF NXT Tuesday, July 21 11:45am–12:30pm EDT “Future of Platforms”
- CommerceNext July 29th 4:10 pm EE “Lesson Learned and Thoughts for the Future”
The Great Debate
Are we in a long-lasting, deep recession, or is at an artificial recession will quickly bounce back from? What should retailers and brands be planning for. Jason and Scot has it out. Who will be right?
Amazon News
- Amazon Dash Cart
- Echo Frames are frames are shipping
- Q4 restrictions on 3pl warehouses
- Prime day in October
- Employee Health Clinics
- Amazon becomes worlds largest advertiser spending $11B a year
- Earning results next week
Other News
- US Census Bureau Data for June is out.
US Real Retail sales were up 5.8% in June, (down from 17.7% in May) but representing a 2nd month of retail recovery. Total retail sales back above Feb levels. (Numbers adj for inflation and including auto). E-commerce up 23% YoY. - Nike leaves Google Shopping
- Google shopping fast shipping tags
- Nike RISE new store concept in Guangzhou, China
- Walmart and Amazon healthcare battle
- Walmart+ coming soon?
- Is digital grocery profitable?
Don’t forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.
Episode 227 of the Jason & Scot show was recorded live on Friday, July 17th, 2020.
Transcript
Jason:
[0:24] Welcome to the Jason and Scott show this is episode 227 being recorded on Thursday July 16th 2020 I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-host Scot Wingo.
Scot:
[0:39] Hey Jason and welcome back Jason Scott show listeners,
Jason as you know the last three episodes we’ve had a what I would call a blue-chip roster of guests on the show and we want to take a little breather and catch up listeners on all the retail news going on
first of all Jason I think we have to address this super awkward elephant in the room a lot of listeners have pointed out to me and I’ve seen it on Twitter
that you have been presentation and pot cheating on me so go ahead and tell listeners all these other things you have going on.
Jason:
[1:13] I do plead guilty I feel like I’m vast as per usual in vastly Overexposed I’m gonna.
Preempt your question with two other quick points I just wanted to throw out number one.
I’m thrilled to be here alone with you we’ve we’ve had these like three great shows in a row with great guest that I super enjoyed but the bumper of that is I don’t get to just
make fun of your wrong positions and things because it wasn’t just the two of us so.
Scot:
[1:43] Yeah we’re going to definitely carve out some time for that on the show so it’ll be fun.
Jason:
[1:46] Yeah so I’m thrilled to have some alone time with you Scott and I it’s come to my attention that there’s a few listeners that don’t listen to every episode,
all the way to the end of the episode and so for those of you that don’t and I don’t forgive you for that.
At the end of every episode there’s two very important things we make a plea for you to go onto iTunes,
and leave us a 5-star review so for those of you that get so much value from the front half that you don’t listen to the back half I’m throwing it in now,
after tonight’s episode you need to get yourself onto iTunes and leave us that five star review you owe it to us by this point I feel like we’ve earned it.
And number two I have a witty catch phrase that I could include every episode with and I’m not going to tell you what it is so you.
You’ll know what you’re missing.
Scot:
[2:39] I don’t know if I’ve ever heard of either I’m usually you usually put me to sleep by the time I get there it is an hour later I’m sorry.
Jason:
[2:44] Yeah yeah yeah it’s okay yeah no I’m grateful that you’ve never listened to a show after we published it because you wouldn’t realize how much of you is edit out of the show.
Scot:
[2:53] That’s totally true I hate listening to myself so then I could actually listen in now.
Jason:
[3:00] Oh my God yeah that could be a whole another show but I have all these horrible verbal crutches and it’s it’s crushing to hear me saying over and over again on the show and you don’t do that for the record.
Scot:
[3:12] Well sometimes I miss us going to trade shows together and so I play our podcast at half speed and I get to have drunk Jason it’s like being at a trade show.
Jason:
[3:19] Nice some.
Scot:
[3:21] Play Jason if I play Jason after three Starbucks I put you on 3x.
Jason:
[3:25] I like it I like.
But so yes you have correctly busted me I’ve been I’ve done a bunch of stuff including cheating on you on some podcasts.
So last week my company publish a pretty cool livestream on LinkedIn they called Trends and insights alive.
And there’s sort of a beta tester of of live casting on LinkedIn.
So they’ve done Eight Episodes this season that eighth is the final episode in the season and so you know that’s when they wanted to roll out the really big guns so the 8th episode was all about retail so we call the new reality of retail and,
two of my colleagues and I got to chat about some of the big.
Big evolutions and Retail that we’re seeing so you can watch a video of that on LinkedIn and I’ll put a link in the show notes.
Scot:
[4:20] Since nobody knows LinkedIn has this I’m sure there is a huge audience.
Jason:
[4:23] Yeah well it shows up in your activity feed so it’s like you you’ve.
It’s a pretty big beta so not just anyone can stream yet although you’ll be glad to know that the Jason and Scot show has been pre-approved.
For streaming on LinkedIn so if you want to do a show we could do it yeah we have clout with LinkedIn.
Scot:
[4:46] Influencers.
Jason:
[4:47] There’s also a retail publication out there that a lot of our listeners are probably familiar with called retail touchpoints and they do sort of video podcast Series so I sat down with them and did a,
interview that they entitle the separating urgent from important because I think that was one of my topics that we talked about in the show so I’ll put a,
LinkedIn to put a link to that in the show notes there is a podcast,
specifically focused on the evolution of brick and mortar retail which I know you would you would have some strong thoughts about called brick-and-mortar reborn so I got to do an interview on that podcast.
Scot:
[5:28] Or alternatively the path to chapter 11.
Jason:
[5:31] Exactly maybe not but okay and then there’s a SAS Pim product out there called salsify in the the content team and the and one of the founders of salsify started a cool.
Podcast about the digital shelf that’s in fact called the digital Shelf.
And so I sat down with Rob Gonzalez who’s the one of the founders of salsify and Peter Crosby who’s the chief Storyteller there and we had a good.
Good conversation for an hour so in the extraordinarily unlikely event that people don’t get enough of me on this podcast there’s like four more hours of me from the last two weeks you can get and.
That’s not all if you want the freshest stuff I have like three things coming up next week too so.
[6:22] Yeah so on start Monday Tuesday and Wednesday of next week is in RF next which is sort of the,
the spiritual successor to to the shop dot-org trade show so normally this would have been a,
in-person event in Las Vegas this year it’s going to be a virtual event it’s two days a bunch of great speakers and I’m doing a presentation on Tuesday the 21st,
right around lunchtime 11:45 Eastern Time called the future platforms and I’ll be talking about sort of the evolution of e-commerce platforms and.
What people should be looking for and what what pitfalls that they might make in choosing choosing a platform so that’s a topic I used to talk about all the time and I haven’t talked about in a while so I had to do a pretty.
Pretty significant update of my appeal for that.
Scot:
[7:12] I would avoid going all in on Elliot just BTW.
Jason:
[7:15] Yeah yeah I debated whether to bring it up at all.
And for westerners that are following closely Elliot’s that eCommerce platform whose one of their Founders was on this show and they imploded this month and I’m not clear whether.
They just like weren’t able to ship and bring it over the finish line and kind of folded or whether it was.
More significantly vaporware and was never close to the finish line but I don’t know if we’ll ever know.
Scot:
[7:44] There was an article that I tweeted that made it feel more of a prairie.
Jason:
[7:49] That seems entirely viable to me unfortunately and so then the week after that another former guest of the show Scott Silverman who was one of the founders of shop dot-org has his own.
Event series that is also going virtual this year called Commerce next and so I’ll be giving a the the closing keynote on July 29th at 4:10 p.m.
Eastern Time called Lessons Learned and thoughts from the future.
So that will be cool and then in the event that you’re interested in my opinions but you can’t stand my voice well
which you would not be alone I do have a column in Forbes and I have a new article I just put the finishing touches on and I think I’m gonna,
publish that on Forbes over the weekend and that is called that retails great.
From traffic to to revenue per customer kind of talking about how all retailers are having to make this big shift from.
Trying to get as many people as possible in the store to having fewer people in the store and having to make more money on each one.
Scot:
[8:55] Nice Thanksgiving us all exclusive preview of that.
Jason:
[8:59] Exactly so I appreciate it if folks folks to take the time to read that and give me your feedback so that’s all my stuff I’m exhausted already is the show over.
Scot:
[9:09] So I guess if people listen to this save it for next week you could have a week of Jason essentially if I’m doing the math right you could read the article on that off day yeah got a week of Jason coming up.
Jason:
[9:20] Yeah yeah or you could just binge all 227 shows of the Jason and Scot show.
Scot:
[9:29] You do the math in a presentation what is it like 3 weeks or something if you didn’t go back to him.
Jason:
[9:36] It’s longer than any yeah I think that like if there was a remake of Abu ghraib we might feature prominently.
Scot:
[9:42] When you do that in audience ever looks at each other like to see really think we’re going to do that it’s hilarious in a office kind of a.
[9:52] Cool my kids would say cringy,
all right so before we jump into the news another piece of listener feedback that we’ve gotten is folks have really enjoyed hearing kind of our opposite views of the economy so in our covid show you and I had a little friendly
Spar I guess I would say about you know what we think is going to go on so we’ve gotten a lot of there’s kind of a team Jason team Scott thing forming they’re obviously the team,
Scot crew is huge than team Jason is a couple lonely Souls
but in my experience when you have these kind of different opinions one of the best ways to kind of settle it is to make some predictions you and I do that on our annual prediction show which is kind of more about you know e-commerce Trends and things of that nature
but I thought at the top of the show would be good for here for us to kind of like
update our positions and then make a little bit of a prediction one of the one of the key differentiators where everyone’s disagreeing right now and I think you and I fall into different camps here too so
this is probably a good framework is the shape of the recovery so so the options are V which would be you know we’ve kind of come down and we’ll come right back up as quickly as we went down so that V shape you which would be like a delayed recovery so
you know call it Q3 kind of middle to late next year we do come back but it’s.
[11:14] Takes over a year to get there then there’s the L some people call it a swish
that’s kind of a super slow recovery so more like 20 22 before the economy’s kind of cooking and then there’s the dreaded W which is the we have a V and then we get into the fall,
the virus surges and then we have to go back into the bottom of the V again which then you know and then you come back out so that forms that w
and then you have seen some other shapes out there but those are the main ones so so.
A do you agree with that Framing and then be why don’t you go first and give us our view if you agree.
Jason:
[11:53] Sure yeah so I feel like there’s some room for variance in in some of those descriptions but yeah those like those are certainly all all,
versions of a recovery that have been hypothesized and and,
my own opinion is that it is going to be a check mark shaped recovery which would be the Swoosh
but maybe not quite as slow as you described so I think we are still going to be significantly impacted economically and likely health-wise by covid for all of 20 21 and so.
You know I think holiday 2021 will be better than holiday 2020 which I’m not expecting to be very good but I don’t think we’re going to get back to true pre-pandemic
well levels until 2022 so,
so maybe it doesn’t take all the way till Q4 of 2022 I think January of 2022 might be on parity with January of 2019 so we may lose two years here.
That is kind of my stick and I’m I like to call that the realistic position and then I think you we’ve given the the delusional position to so why don’t you tell us what that is.
Scot:
[13:14] This is why predictions matter so will some one of us will be right and it will at least be able to they’ll they’ll have they’ll be goalposts Elise
so I I’m increasingly so I’ve fought for a while and I’m increasingly seeing that we’re in a v-shaped recovery
so so first of all unemployment is interesting I think unemployment’s.
Misleading because so so you made a point earlier about you know this is the worst economic.
Depression since World War II which if you use the correct definition of depressant you’re right.
But there’s you know those were not caused by a pandemic so those were caused by other you know.
Economic impacts the government essentially cause this one is a reaction to the pandemic so,
so it’s very unusual from anything else you can’t use those past things,
this is my theory and prediction you can’t use those past like 2008-2009 which did have these very slow recoveries
as a comp so I think it’s a v-shaped recovery the data I look at is first of all my favorite data point is consumer confidence.
[14:29] And consumer confidence is actually right around a hundred which is pretty good
you know I think people would say it’s kind of neutral it’s not super negative not super positive when it goes way over a hundred people are like super positive and then when it goes under a hundred if you look at 2008 at the bottom of the Great Recession it was like
20 I think it touched like 25 or somewhere in there and that was like one of the lowest ones I’ve recorded so so you have this anomaly where,
GDP is low
unemployment’s High yet people feel pretty good and what’s causing that is the fed and the government just pumping tons of money into the economy the unemployment thing is actually
huge problem because in I’m sure you’ve heard this from retailers it’s actually impossible to hire anyone right now because they’re making so much on unemployment so once that
once that goes away in July or is diminished we have to kind of see where the government lands on that but I think they’ll be something there
I think you’re going to see employment come roaring back because essentially people will have an incentive to go back to work so so that’s going to,
that’s going to solve a lot of things there and then the other data that’s really interesting and someone had kind of tweeted This Is Us retail sales is a perfect V we’re like literally already back to the pre covid levels now you could say well.
[15:49] Yeah we don’t know if it’s going to be W or not that’s where time will tell
that’s another one there’s also these really weird data points coming out where consumer savings are at one of the highest rates they’ve ever been so people are saving a ton of money that’s because they’re not traveling as much their they did they delayed their vacations and these kinds of things
you know it’s not all that being said I do think,
macro we’re gonna have the V shape but there are going to be some segments to get left behind I think the ones are going to be hit the hardest are Airlines you know so,
people are not really traveling by are nearly as much as they used to it’s come back some so if you look at the TSA data we’re at about 750,000 Travelers a day,
a year ago it was two,
eight million so we’ve lost two million Travelers a day so the airline industry is going to have a huge challenge oddly enough it looks like the cruise industry is going to come back before their line I don’t understand that personally but,
there you go.
And then you know the other thing is I work with a lot of startups and there’s a fairly large percentage of companies that are not going to go back into office space for a long time and.
[16:52] That part is going to be delayed so those Industries will be hurt but I think we’re going to see other
parts of the economy pick that up and we’ll still have that V I also am bullish and I know you strongly disagree with us that there’s going to be a vaccine so I think we got
two good candidates in moderna and Oxford and I get all my medical news from CNBC so don’t take any advice for me but this is
this is my again I’m making predictions to try to,
see where we land on this and I do think this project Manhattan thing is interesting and you know there’s all these arguments that say well we’re going to need three billion vaccines I don’t think that’s right I think if you go and vaccinate there’s a clear,
there’s a clear set of people that have a much higher
impact from this virus so if you start at the 85 and older the people that are immunocompromised and have existing conditions that’s a significantly smaller number
you’ve protected a really big part of the population that buys you time to go do the other ones you also have herd immunity kind of meeting in the middle so I think there’s probably,
and the US are 20 million thing over three or four months that get you there
so so I’m very bullish and all that and so my prediction just kind of summarize all that is it’s going to be a V shape and you know definitely by q1 of 20,
one we will be at the kind of back where we were and I think it may be as fast as Q4 so.
Jason:
[18:18] Wow Q4 of 2020.
Scot:
[18:19] Yeah.
Jason:
[18:20] Okay I write so let the record show I hope to God that I’m wildly wrong in your wild rewrite like I’m certainly rooting for you.
Like a couple of things that caused me to have some concern like first of all you have a hypothesis which is perfectly reasonable but I don’t agree with that it’s a government caused recession so I for sure,
we took actions that that.
Substantially contributed to a recession and potentially triggered the recession in the US but there’s but worldwide there’s a bunch of countries that didn’t take any of those actions and they’re still in a recession right so sweet and in shutdown
people aren’t spending in Sweden in a bunch of people are unemployed Taiwan didn’t shut down people aren’t spending their right so,
there’s some evidence that even if there had been like you could debate whether the government action was helpful or not helpful and,
and if there could have been better government action almost certainly there could have been but if there were no action.
[19:25] The my hypothesis based on all the international evidence is we would still be in a recession.
It could be worse could be better the truth is we’ll never know.
I would also say I actually think there’s a very good chance we’ll have a vaccine I mostly agree with you it’s it’s possible we won’t like as much as we all want to be optimistic and we’re we’re.
Making the most prompt medical progress in the history of humankind to potentially create this vaccine it was described to me once that like making a vaccine is very hard it’s like.
Scoring a goal in hockey from half half ice but the good news is we have more Wayne Gretzky’s on the ice taking shots right now than ever before right so.
I think it’s totally possible we make a vaccine most vaccines have.
[20:20] Problems with limited efficacy.
Aren’t effective in everyone that takes it vulnerable populations often are the ones that are least likely to be able to take it it does,
it is difficult to distribute a vaccine there’s a bunch of people in the US that just don’t believe in vaccines and aren’t going to take it,
even if we do have one and so for all of those reasons even if the science goes perfectly and we have a decent vaccine in q1.
I just don’t think you have enough immunity to turn the economy around and toll Q4 and that means you won’t start seeing the economic results of that turn around and talk q1 2022 which is where my.
My estimate sort of comes from and again I desperately want to be wrong I hope you’re right but that’s my my concern.
Scot:
[21:14] Well we’ve got our stakes in the ground on there’s a good year in there too.
Jason:
[21:18] Other depressing news on this point from this week just to throw out there is all the banks had their earnings call this this week and the common theme from all of them is they’re all reserving tens of billions of dollars because they.
Massive default on all of their.
Their loans and mortgage properties right like that the you you hit the hammer the nail on the head it’s the weirdest recession ever because there’s this.
Very high unemployment and very high savings rate like because per your point like all this stimulus money and stuff caught and and bolstering unemployment benefits,
caused everyone to like the average American had a huge cash influx.
At the same time they weren’t working so that’s a weird weird dichotomy but all those benefits are scheduled to end in.
Couple of weeks there was a more people than ever that miss their rent payment this month there’s a even higher cohort of people that say they don’t know how they’re going to pay next month’s rent and then all these benefits are going to,
expire so there’s a chance for.
All sorts of cascading negative Financial events to happen and it feels like all these earnings calls from the banks are kind of a foreshadowing that they think it’s going to happen for whatever it’s worth.
Scot:
[22:39] Yeah it’s really weird because I heard someone say that it’s like having two different movies playing on one screen because then like car sales are up.
Jason:
[22:47] Yeah so you know it’s funny about that like you mentioned like oh retail sales are kind of back like the V is there.
That’s a hundred percent true if you include Auto Sales like are are,
what month did we get the reporting came out for June today so so the June retail numbers with Auto in there,
the June total sales number is higher than the February total sales number so complete recovery but if you take Auto out of that like we’re still definitely trending in the right direction but we are still below are like February level.
So it’s weird like cars are disproportionately affecting that I’ve heard one hypothesis is because.
Air travel is so curtailed a lot more people are taking,
are using their cars more I’ve heard Harley-Davidson as having a huge Resurgence people are buying motorcycles and going on on,
driving vacations instead of flying vacations,
you would know more about this than me but I have heard that as all the rental car companies declare bankruptcy and and sell off their their fleets that that’s going to put a damper on the auto sales as there’s going to be a,
full out of inventory.
Scot:
[24:01] The other kind of treating them internally so we’ll see I don’t know how much of this so-so.
I would say real car usage is.
Going crazy right now which is odd because it’s usually tied to air travel but they become disconnected because people are saying I don’t want to travel on airplanes
therefore I will drive from Chicago to Detroit and I you would normally fly that so and then they kind of say well I don’t want to put those what does that 3,000 miles on my car I’ll bring the car and do it that way,
yeah so it It’s tricky to read and that’s what makes the prediction that much more fun we’ll see.
Jason:
[24:39] And before we jump into other e-commerce news several listeners have asked over the last week there’s been a lot of get spiffy news and I’m wondering if you can just share a quick update on on some of that for our listeners.
Scot:
[24:52] Yeah yeah I guess the biggest new so we are
we’re experiencing this V which is what I think probably influences think so we definitely had a huge dip in demand largely from fleets and then obviously office Parks have been hit that hasn’t come back but the fleet stuffs come back
pretty dramatically consumers have come back so it’s actually been pretty tough hiring so we’re hiring technicians at a pretty good pace and then one of the biggest
inbound requests we get is for people that want a franchise so we’ve kind of carved out the 50 what I would call Amazon Prime cities as you know and.
[25:28] Love Amazon and there in about 50 cities with Prime and those tend to be the cities we want to Target as well I figure Amazon has a pretty good idea where those Prime households are so
but then we get tons of requests from smaller cities like Wilmington North Carolina
a will see Memphis Tennessee that are will probably not be able to get to you for years because we’re in 17 of these 50 that we’re focused on so we’ve decided to open up those kind of
next to your market so three hundred thousand eight hundred thousand people in the Metro areas to franchising so we were able to announce that,
feels like last week yeah last week and
that has had a really good response so that’s been fun you know at Channel visor one of the things I loved every day was I got to work with thousands of entrepreneurs some of them were intrapreneurs they were like you know
early digital people in the side of Nike like we’re leading the charge but then at the same time you would deal with these entrepreneurs like
rock-bottom Golf and these crazy brothers that were selling golf stuff and so there’s a lot of fun so I’m looking forward to look at working with a bunch of other entrepreneurs in that capacity.
Jason:
[26:38] Yeah that’s awesome I just take it as a good sign because I’m thinking about
all of the those that cumulative carwash and capacity and I’m doing the math on how much crystal meth you must be selling to need to launder that much money so that.
Seems really encouraging.
Scot:
[26:55] Yeah I get this a lot as a car wash guy the reference it for those who don’t know is the TV Show Breaking Bad the guy by his car washes to essentially you know clean his cash so.
Jason:
[27:09] Literally and figuratively yeah.
Scot:
[27:10] Yeah we do not for fully of total transparency we do not do that.
Jason:
[27:18] Or so you say okay.
Scot:
[27:19] Cool well it would not be a Jason Scott show with Al.
Jason:
[27:26] Amazon news new your margin is their opportunity.
Scot:
[27:39] Yes this was a weird one and I want to check your memory because I feel like I’ve lived seven years in the last four months so I got this notification that said
congratulations Scott you are in the day one program for
Amazon Echo frames so I ordered those and they’re coming this weekend and,
I forget if we knew about this or not and if we talked about it on the show so is this new or has an I just like him.
Jason:
[28:08] No it’s super it’s super annoying so,
it was announced over a year ago when they launched the echo buds they actually announced a variety of new Alexa enabled devices so they,
they had,
the earbuds they also showed a a ring that you wear on your finger and they announce these frames that you get prescription lenses in,
and for the the ring and the.
The frames you had to apply and you and I I know for a fact both applied on the first day that you could apply,
and so the reason I’m super annoyed is not even that you got in and I didn’t and that you don’t remember,
registering the reason I’m annoyed is because after I found out you got in,
I went into my Gmail spam and found out I got in in March and my invitation is already expired.
Scot:
[29:04] Well next time you see me I’ll be having a conversation with my eyeglasses and you’ll be you’ll be.
Jason:
[29:11] This is another reason why I see Jeff Bezos point that I should whitelist him but I’m still not going to do it.
Scot:
[29:18] I think Jeff loves me best.
Jason:
[29:20] He probably does your more lovable to me frankly you’re more of a wide-eyed Optimist the the he has definitely experienced a v-shaped recovery.
Scot:
[29:28] Yes he he’s well on the he’s on a V with a rocket ship on the tail,
which is actually interesting because they are going to announce results next week they haven’t announced the day I’m thinking July 23rd If you kind of look at last year so we’ll do a whole show dedicated that because I do think you know,
as Amazon goes it’s really a good indicator of what’s going on in online I’m going to,
predict it’s going to be a blowout quarter based on everything I’ve seen but another thing that was really interesting kind of in your world of grocery and there was a very robust discussion on Twitter
was this idea of the Amazon – cart and you and I were aligned on this one oddly enough so let you know so this is a cart that.
[30:21] It’s really weird because everyone had one image of this thing so you can tell it was like from a press release it’s going to be in the store that is not a ghost or a not a Whole Foods I don’t know what this evening to be called
I don’t know if you know the name of it and it’s gonna be this cart that you can put some items in,
it’s really hard to tell from the pressure release if it uses image recognition when you look at the card it clearly has some cameras mounted on it and then it has a digital display most of these cards use RFID in my experience so it’s not clear if it’s going to have some kind of
belt and suspenders where there’s an image recognition and an RFID or not.
[30:55] W my guess but it’s really interesting cart and then online we had this really interesting discussion where someone said and I think it was the target guy so he met,
be a it may be you know on a different team here but he was kind of like this is the stupidest thing why would you have Amazon go and do this dumb cart you’re wasting time in Cycles what’s going on this is or you know
I think the conclusion he came up with this is this is an admission that Amazon goes not going to work,
and then you and I and other people pointed out hey you know,
Amazon’s a 1.6 trillion dollar company I don’t think because they’re trying three or four things you can kind of say this is a signal that they have failed at,
thing number one in fact Amazon has enough experiments they could run 50 grocery experiments
and to me it actually the opposite is essentially saying Amazon is really serious about groceries so they’re running a lot of experiments these are the ones we know about there’s quite another 50 coming that we don’t know about
so that was a really interesting discussion what did you think about that car.
Jason:
[32:01] Yeah so well I was first and foremost excited so I’m excited about this whole deal.
Amazon has had home delivery of groceries for a long time in Amazon Fresh and dirty secret Amazon Fresh hasn’t been very successful are caught on very well in fact.
Walmart basically is kicking Amazon fresh as but.
Um so then Amazon bought Whole Foods and they started delivering and doing curbside pickup from 80 of the Whole Foods and that’s been a pretty successful service and so,
pandemic kids people want way more digital grocery in and in typical Amazon fashion they dramatically scaled their delivery of Whole Foods from 80 stores 260 stores and,
and all kinds of amazing things to expand their capacity so so Amazon’s main success in grocery is Whole Foods and so what I’ve been excited about for a long time is.
Whole Foods is super expensive groceries that only cater to affluent markets in Big City centers.
So it doesn’t you know solve the grocery problem for the bulk of Americans so a while ago it became clear that Amazon was going to open a new physical grocery store.
The first of which would be in Woodland Hills California which is a suburb of La that is not a Whole Foods brand a grocery store so this is not something they acquired this is a grocery store that Amazon is inventing and.
[33:26] You know my experience Amazon does a lots of cool inventions if they’re going to reinvent grocery I want to see what they think is going to work,
so we’ve all been excited I visited the construction site before covid where this thing was scheduled to open it was supposed to open this summer.
[33:42] It did not open instead the rumor has it that they’ve been using that location as a dark store for deliveries,
and the reason they’re probably doing that is one of the things we figured out over time about this grocery store is it has a big micro fulfillment center in the back of it so it has a robot,
there holds a bunch of the groceries and automatically fills a bag with a customer’s order so it’s much more efficient at,
feeling bags of groceries for curbside pickup or delivery then humans are and that is clearly part of this new grocery concept that Amazon has,
um I’m super interested to shop a store see how that all works they have now discovered another one of these grocery stores under construction that’s promise to open sometime in 2020,
in a suburb of Chicago so I’ll get to visit one whether we’re flying or not so I’m excited about that so the new news this week is yes that,
one of the other things they’re going to have in this grocery store are these smart carts and my guess is a little different than you,
I think it’s a little simpler I’ll be shocked at the store has RFID I don’t think they’re going to put RFID tags on all the products for sale and in fact,
I think they might have a lot less products that you put in the cart yourself because I won’t be surprised.
[34:57] If you use the micro fulfillment center even when you shop in the store so you order your,
peanut butter and mayonnaise and cereal and the robot picks them and puts him in the bag won’t surprise me if you’re only pushing the cart around in the Meat and Deli area and picking your own produce and your own meat.
[35:14] We’ll see how that works but to me the smart cart looks like it’s primary feature is,
scan and go self checkout so lots of retards let you use your phone in the camera on your phone at products and kind of check out as you go Sam’s Club has a store that that’s the only way to check out call them,
Sam’s Club now you can do scan and go in all the other Sam’s Club,
Apple was one of the very first people to have this experience and they still use it broadly a problem with that is the the,
the camera in the phone isn’t perfectly situated not everyone has the right apps on their phone there’s a lot of user are it’s not the fastest experience in the world so my theory is
there’s Amazon grocery stores going to let you do skin and grow on your phone of you want but it’s also going to let you push around in one of their carts that has a.
Special-purpose camera dedicated to the task of doing scan and go in the cart so I think the.
[36:14] That cart is going to be a way to do scan and go but the cart also has a screen in it and I think they’re going to use that for media so I think they’re going to sell ads,
two vendors as part of the Walmart Amazon Media Group,
and they’re going to pop up ads in that grocery store when you’re in the appropriate section of the store so I think that’s another way to monetize it and I think there’s going to be a bunch of secret cameras and sensors on that cart,
that are carefully keeping track of everything you do while you’re in the store and they’re going to use that for analytics and data for for you know future experiments and Improvement so.
I think that’s going to be the main use case of the card I don’t think you’re going to have to use a card to shop in there I just I just think it’s going to be an option and I like per your point I totally agreed with Chris that like.
It’s just walk out or nothing like I do agree with Chris.
Doing just walk out technology in a 50,000 square foot grocery store is actually.
[37:13] More than linearly more difficult than doing it in a 2000 square-foot convenience store so I think there are reasons to think.
Amazon Go technology might work in a bunch of categories but grocery wouldn’t be the most obvious one where works so it doesn’t surprise me the Amazons trying to invent something else that fits better for these bigger stores and I also think if the smart cart thing.
Wear to work well and become popular it would be much easier to retrofit that into all the Whole Food stores they already own whereas.
Um you know go would be easiest to deploy if you’re building a store from the ground.
Scot:
[37:47] I can’t get over the mental image of you in a construction site wearing a hard hat where you’ve taken an Amazon sticker and put it on there and.
You’re just like walking through like you know what’s going on in your like using a tape measure to be like oh this is where the robots going to go and.
Jason:
[38:02] You just described a way smarter cooler version of what I actually did now.
Scot:
[38:07] You’ve got a laser measuring device.
Jason:
[38:09] Coach I should have gotten some coaching from you I probably would have gone inside but yeah.
Scot:
[38:13] And then you do like a mission impossible repel and they like you’re hovering two inches off the ground and you’re like then a bead of sweat drops that how it.
Jason:
[38:20] That’s basically how I roll that’s that’s what I like to call Tuesday.
Scot:
[38:24] Oh man that kills me.
Jason:
[38:30] Yeah so it’s exciting I think Amazon’s inventing new stuff I don’t know whether this like,
smart cards have been tried before and didn’t work it’s not going to shock me of Amazon Does It Better Than People have done it before there are some smart cards that are better than this that do cooler stuff in China that apparently people do like so there
there are you I think you commented man that smart cart looks like it has a huge bed or if it’s just running the
the electronics that’s kind of weird I wonder if it’s self-powered and there are smart cards in China JD.com has a store with smart cards that actually,
like follow an RFID tag in your on your wrist around you in the store so you don’t even have to push the cart there the car just follows you around.
Scot:
[39:10] Yeah almost wondered if there’s a little Kiva robot hiding in there and it looked just like pop out and just start moving products room W fun mmm,
so couple of their Amazon items in Q4 they announced they’re going to be restrictions on third party stuff and warehouses this has been kind of an ongoing thing where they’re just kind of
totally tightening the screws of the one area of Amazon where they raise prices which is access to the Fulfillment
by Amazon side of things and then Prime day didn’t they so they had moved it they were going to have like,
Prime Vibes and then nothing really happened there and then they moved Prime day to September and now haven’t they just totally punted on it.
Jason:
[39:52] Yeah so the latest rumors are that it’s going to be October I somehow got some inside information and for the life of me I don’t know how but I somehow knew it was going to be in October for several months so everyone’s like oh my gosh we just heard it was in October and I’ve been like wait
it’s been there for a month so somehow someone did me a favor and I didn’t,
I didn’t realize it and I will say super quick on that on the on the 3p Warehouse I agree with you they’re gonna have a good earnings this quarter and there’s lots of reasons to think they are.
It does seem like fulfillment capacity is likely to constrain them like if anything slows them down it’s going to be,
capacity and the thing that jumped out at me in this announcement was not that they’re constraining,
capacity it’s that they’re like by the way we’re bringing 60 fulfillment centers online this year to increase capacity and.
We’re still going to have to constrain it and you and like I don’t know if people are falling at home but like the next biggest e-commerce site in the United States of America has 8 fulfillment centers total.
Scot:
[40:55] Yeah it’s just its fulfillment centers matter and I think they do it is so far game over it’s not even funny there’s no way anyone could you have to spend like.
Foreigner billion dollars or something to catch up with where they are where they’ve been you know they just been like knocking in these things out over so long the asset they have built there is massive,
it’s a Death Star.
Jason:
[41:17] Another thing I’m watching kind of closely is Amazon has made some some minor health.
News lately they have announced that they’re opening health clinics in a couple cities in these clinics are adjacent to fulfillment centers because these are not health clinics at the moment,
that we believe are to treat their public there to provide Health Services for Amazon employees and so it definitely seems like.
As we’ve talked about for a while Amazon has some significant Healthcare aspirations and it feels like they’re dogfooding a lot of those aspirations by,
using by testing,
new health care approaches internally so you know for a while like Amazon’s had some interesting telemed services for employees they bought some some.
Digital diagnostic tools companies and they made those available to employers and now they’re going to open some dedicated health clinic so.
What’s interesting to me is that it’s probably a precursor to them having some big big consumer offering in healthcare space and so we’re watching that closely.
Um
Scot:
[42:26] Yeah you’ve kind of predicted Walmart would get into this and hasn’t.
Jason:
[42:29] Yeah and they have yeah I thought we were going to maybe talk about this later but the Walmart has opened.
Clinics that are pretty substantial in Atlanta and now they’ve announced a bunch of other states including Chicago where they’re going to open these clinics,
and they’re pretty impressive stand-alone clinics that provide a bunch of services at.
You know Walmart level prices shockingly low prices even without insurance and that has kind of been Walmart’s ammo like they did a big thing with Pharmacy where they sell almost all generic prescriptions for four dollars so you know a bunch of people.
Even with insurance had some deductible they could never achieve and so they like literally couldn’t take the The Chronic prescribed medicines that their physician prescribed.
And you know now through Walmart they can afford them and in much the same way lots of families can afford to get an annual physical and have their kids get an eye exam and dental cleanings and things like that even with no insurance through these Walmart clinic so it’s kind of a.
Interesting approach to cost reduce Health enough to make it accessible to all the,
the Americans that that are pretty vulnerable with regards to Health Care at the moment so,
this is another initiative I hope to God Walmart and Amazon beat each other’s brains out with awesome new inventions and healthcare because we we need it.
Scot:
[43:48] Yes so bad that there’s like so much room for.
Jason:
[43:50] Yeah it’s a huge industry and it’s you know ripe for disruption and you know Walmart and Amazon are probably the two company like unless maybe Apple also wants to get into that.
You know those are two pretty good private companies to be solving it’s a shame that we’re having to depend on private companies to solve our health care problems but,
venturing into politics and we don’t want to go there my funnest fact of the week.
[44:16] Is add a age and they’re probably mad at me because it’s 50/50 whether I’m thinking a De Jour adweek in there too competitive Publications but one of them published a report that Amazon is now the largest Advertiser in the world.
So they’re spending 11 billion dollars a year on ads they have this novelty stat that means they’re spending twenty one thousand dollars a minute on ads but to me what’s cute about that is.
We keep talking about their ad Network and how they’re becoming a meaningful seller of ads and they’re kind of the Third.
Biggest digital platform behind Google and Facebook and you know the forecast were that they were going to sell like around there on a run rate to sell about 10 billion dollars in ads,
in a calendar year which is still a distant third from Google and Facebook but it’s it’s bigger than,
Twitter and a lot of other Pinterest in a lot of other digital Network so it’s pretty impressive,
but what where their unique is they’re the only company in the world that’s buying 11 billion dollars of ads and then selling ten billion dollars of ads so they’re they’re buying eyeballs and then selling them back to Brands which is kind of funny.
Scot:
[45:26] Yeah I would not have expected him to be the largest Advertiser because you you know when you think about what you watch on TV you don’t see a ton of Amazon ads on TV.
Jason:
[45:36] Then they do they have ads in Market all the time they are like a big Super Bowl Advertiser which is a big big chunk but the bulk of their spend is not TV it’s digital it’s like they’re there Google’s biggest customer.
Scot:
[45:50] Yeah living the dream it’s funny because for the longest time they said we’re going to we’re not going to spend money on Advertising we’re going to put it all into free shipping and stuff like that and I guess they finally got to the point where.
They just had so much money they had to spend some one-on-one marketing.
Jason:
[46:05] Well another thing where they’re a complete anomaly is I guarantee you they are the only top 10 an Advertiser in the world where nobody can name their CMO.
[46:20] Yeah I mean I yeah but the like they do not have like a big public-facing.
Marketing department right like you think of the mark Pritchards of the world that are like you know constantly out there for PNG which has historically been one of the biggest advertisers and it’s a it just Amazon is a very different approach so it’s going to be interesting.
Scot:
[46:40] Cool stats that was a lot of Amazon news what other news is on your radar.
Jason:
[46:45] Well today I alluded to this earlier but the middle of the months it’s been super fun for me because there,
the US Census Bureau publishes the retail data for last month about 18 days into the month so,
this morning they published the June retail sales data and.
I don’t know if we want to get into all the technicalities of it like there’s a bunch of different ways to slice the data so everyone reports the data and the numbers always look different and it’s because it’s this.
This Rich data set you can report retail sales without,
food or restaurants you can report it with restaurants you can report it without gas and Automobiles or with gas and Automobiles you can report it with adjusted for inflation and you can report it seasonally adjusted so.
If you’re reading I say all that to just tell you if you’re reading any of these statutes.
[47:42] If the person cited and did a good job they told you all those details but that’s why you’ll see a lot of variance in the data but so in general the.
The adjusted for inflation month-over-month retail sales were up.
Five point eight percent in June over May which is a,
um by historical standards of very large jump it was a smaller jump than last month which was the hugest jump of all times and that obviously followed a couple months that were the hugest,
drop of all times but it it per your point on the economy it is trending in the right direction and it’s trending in the right direction pretty fast.
Um
The so that’s two months in a row of retail sales growing know basically you know forget the number and no matter how you slice it it’s above above average growth.
Um and basically as we discussed you we’ve kind of caught back up to our February sales levels which were the kind of pre covid-19,
numbers especially if you if you keep car in there,
a weird one this data is really bad I hate it for reporting e-commerce sales but they try they have a thing called non-store sales which used to be catalog sales and now it’s,
it still has catalogs in it but it’s mostly calm and their number there is weird it’s down 2.4% so you go.
[49:10] Since when is e-commerce been down and why would it be calm down now when everyone’s adopting digital as a result of covid and a couple of reasons.
Month over month growth like is not a awesome metric you have to really.
What you’re thinking of yeah I mean seasonality is a problem but also it just it’s so dependent on what anomaly happened the month before right like it’s much better to compare.
June of 2019 with June of 2018 and spoiler alert.
June of I’m sorry June of 2020 is 23 percent better than June of 2019 so so the real Trend here is e-commerce as way up.
E-commerce was so way up in the beginning of the pandemic that now.
As it normalizes a little bit e-commerce books down also the e-commerce number in the Department of Commerce isn’t huge and so the number of days in a month can actually impact it so there was one less day,
this month and so that you know if you take that out you know month-over-month it was actually up two percent so.
So yeah I wouldn’t I wouldn’t agonize over that number they have slightly better e-commerce data that they report quarterly and the next reporting of that quarterly data is,
August 18th so August 18th is going to be a big date because we’ll get the quarterly e-commerce and we’ll get the July retail numbers to see if we can make it three months of recovery in a row.
Scot:
[50:34] Yeah I think Amazon’s cleaner data than all the stuff.
Jason:
[50:38] Yeah,
most of the people that like even like the adobe’s that you know have a lot of clients and aggregate their data like most of the the comscore panels and stuff they’re all going to tell you e-commerce is up so when the the,
Census Bureau reports is down its kind of goofy.
Scot:
[50:56] A couple quick ones on Google shopping so they rolled out this is kind of
the consulate testing thing so it’s hard to know if this is a test or a permanent feature but
you know a one of our guests saw that they have this fast shipping tag and then another one of our guests Faisal said hey it’s only been 15 years and they finally realized
people that shop online want to know when they’re getting the products boom I want to report a murder and then another astute online person know.
Jason:
[51:28] It’s a side note on that comment faysal actually works for Google.
Scot:
[51:33] That’s it no it.
Jason:
[51:35] Yeah yeah he works like in in the like especially like he’s in the autonomous vehicle division of Google.
Scot:
[51:43] Okay that’s alphabet it’s different he’s in he’s in a whole nother part.
Jason:
[51:47] Yeah those those crappy sales.
Scot:
[51:49] He’s a w and that’s all day.
Jason:
[51:51] Are still paying his salary I guarantee you.
Scot:
[51:53] Yeah he’s over in W crap it over on G so it’s alright it’s he’s like in the whole back end of the alphabet all right and then Nike someone noticed pulled all their listings from Google shopping which is interesting because you know I think we just reported.
Like a week ago that Nike CEO said they’re going to move to 50% direct cells so they must have thought they weren’t getting the brand,
whatever Roi and they wanted from Google shopping.
Jason:
[52:22] Yeah and Nagy does have this philosophy which is pretty bold that they’re really only going to sell their product through retail experiences that offer a differentiated experience and so mostly you know people took that to me,
retail and so what that means is.
If you’re a boring store that puts the Nikes right next to the Reeboks and doesn’t give them a Nike a chance to tell their unique Brand Story in any way
that they’re going to fire you as a customer and they have fired them bulk of their retailers and even the ones they haven’t fired.
Are increasingly not getting the good hot new Nike products and so to me this Google move feels a little bit like that right like the Google shopping still isn’t a very good experience it still has a bunch of flaws as Joe pointed out
like it’s a complete cluster with regard to win am I going to get it shipping times and so to me it feels kind of on brand for Nike to say
I’m not just going to put my shoes in a catalog tile in a mediocre selling experience.
Scot:
[53:21] He had this this data points like three to five years old but I just have a hard time believing night not the Google solved it but a lot of Brands not just in the shoe category but we’ll use that as ample
they get they get really frustrated with how Google presents their products right so so there’s all these crawlers this algorithm spits out and says but here’s here’s
here’s the best Nike running shoe or something like that and then Nikes like well that’s like six years old and you pulled it off eBay and it’s used that that’s that’s not if you’d asked us that’s like not even in the zip code of like one of our top shoes and you know where the heck did you get that as a top shoe.
Jason:
[53:57] It’s weird because everyone tells me that AI is perfect it’s weird.
Scot:
[54:00] I don’t yeah it’s maybe Nikes wrong.
Jason:
[54:03] Yeah the the fun side note on my favorite Google shopping story is someone
a couple of Reed here’s got together and they’re like hey I’m seeing something really weird in my analytics the you know we always have a lot of cart abandonment and carbonates Hoover High and we’re always trying to you know figure out what it is and we do cord cohort analysis and stuff to try to figure out you know who’s who’s abandoning carts
and we notice there’s one user that has huge cart abandonment,
across all of our sites and his name is John Smith like someone’s typing John Smith in in a bunch of cards and abandoning their carts and they’re like.
You know who is this what is it and you know they did some some digital Sue thing and found out that it’s a Google bot for Google shopping.
Scot:
[54:49] Driving a cart abandonment stats everywhere.
Jason:
[54:54] Yeah speaking of Nike the the the more interesting Nike news to me.
Is that Nike has announced yet another new,
Nike owned retail concept so in Nike store that they’re calling Nike rise this first one is opening in China in the,
ganju District just opened a week ago.
And you know I’ve been kind of impressed with Nikes digital in-store efforts so Nike has a store concept called Nike live which is very personalized order that leverages,
data from local Shoppers to a sort the store and it has some cool omni-channel amenities then they open this huge flagship store concept called House of Innovations there’s now several of those and
they’re to me the best example of letting customers,
use their phone in the store to legitimately enrich the shopping experience and now they have this other concept which I actually obviously haven’t been to yet,
but that also its primary emphasis is around digital shopping in a physical store and using your mobile phone in the store so,
I feel like there the market leader in doing that and I’ll be interested to see how Nike rise is different than the house of innovation.
Scot:
[56:14] Yeah when it opens I want to have a suture Rita on the show because her tweet was your like oh my God I’m getting about Nike rise I can’t wait to just like can someone explain this to me in English I don’t understand what this is supposed to be
this store is supposed to reflect quote the pulse of sports and a member City and quote this is like the retail equivalent of abstract art.
So I’m picturing going in and it’s like a Picasso painting where like the shoes are all in cubes and melty and stuff.
Jason:
[56:43] So my interpretation like so a every retailer when they open a new store concept they issue this like you know fluffy press release with all the cool experiences in it and the reality is.
[56:54] One or two of those experiences are super valuable to customers and customers like them and resonate with and other ones are ones that some executive thought was cool but that no customers ever going to care about right so
maybe I’m just more cynical than suit Cerrito I’ve never had a press release for a new retail store that didn’t have some silly fluff in it and I suspect she’s right,
some of the features that Nikes touting of this door probably will end up being super silly fluff and I think the one she’s pointing to the way I interpreted them is they have some kind of.
Um augmented reality experiences where you can use your phone to kind of have a,
a virtual Sports tour of the activities in the city where the store is so you’re a tourist and you know maybe you get the experience if you’re if there were a Nike rise in New York you might get the experience of
being at the finish line of the New York Marathon or you know being in jet Stadium or something like that so,
I don’t know if I’m interpreting that right but I would kind of agree with her like that’s like a kind of tangential shopping experience.
Other experiences on that list I’m much more excited about for example there instead of using those Oldham rulers to measure your feet they’re using,
image recognition to to measure your feet and prescribed shoe sizes to you and I think.
[58:20] It’s shocking that it’s taken this long to improve on that that shoot of ice that’s now a hundred years old.
Scot:
[58:26] Do you step on it or like it you walk in the store and a camera sees.
Jason:
[58:27] It’s just a camera that like it when there’s a home in the US there’s a home version that you can use in the Nike app but I’m guessing this is going to be a slightly more optimized version that the so the sales associate uses in the Nike rise store.
Scot:
[58:42] We’re up against time and we have 60 more topic let me so the one I really want to hear about what we reward folks are making it this long is there’s been a lot of chatter about Walmart’s new kind of quote-unquote prime killer
I thought I thought it’s kind of funny because,
I think people are missed it it’s really grocery Focus so I was kind of because you’re the grocery Guru I was curious about your take on that.
Jason:
[59:08] Yeah I’m of two minds so like to summarize it
Walmart is launching a subscription program you you get a membership I think the speculation is that it’s like a hundred bucks and you get some shopping benefits for that that.
That bent that subscription.
Walmart has announced any of this and in fact Jenny Whiteside the chief customer officer who was on our show a few months ago just did an interview on LinkedIn yesterday and they asked her and she said I have nothing to announce right now.
But but stay tuned because it’s it is going to be out in like a month so we don’t know what’s really in it,
and here’s my two minds if it’s pay $100 to get free one-day shipping for your general merchandise,
I think that’s going to be stupid because like it’s going to be trying to compete with Amazon Prime with a way Lamer offering right like.
[1:00:09] Amazon has way more assortment than Walmart and and whatever assortment Walmart can ship in one day is a small subset of Walmart’s assortment so–
it’s not just a matter of like some products can get there in one day like way more Amazon products are going to get there in one day than Walmart products I’m pretty confident in that so if that’s all it is,
it’s not going to be very interesting but I will be surprised and disappointed if that’s all it is I’ll bet you they’re going to bundle some sir some Walmart benefits in there that are different than things Amazon can bundle right so,
um therefore there has to be a grocery component in there like you could imagine that there’s free fast home delivery of grocery included in that,
I wouldn’t be surprised if there’s a healthcare offering in that that they’re offering some premium Healthcare stuff so I’m going to reserve judgment until I see whether offering I hope it’s not an Amazon me-too product,
if they can come up with a compelling list of values super smart and important.
[1:01:15] That they build us a recurring Revenue model for Walmart like you know as retailers are getting more and more strained on margins recurring revenues where it’s at like the the most successful in the retailer in the US by many standards is Costco,
and it’s because of that membership fee like you know when you look at Amazon success it’s all around Prime,
so I think Walmart smart to figure out what its recurring revenue is going to be eager just like everyone else to see.
[1:01:44] If this first offering next month is unique and differentiated and it can attract people or if it’s a silly shadow of Amazon Prime.
Scot:
[1:01:54] Yeah I think that’s compelling it’s like hey pass $99 will give you two flu shots and a bag of groceries let’s see how that sells.
Jason:
[1:02:06] Yeah well but I mean you can omit like there’s a bunch of healthcare services that people have to pay for like you could imagine them taking a hundred hours a hundred dollars out of the cost of that and then you getting all these other benefits right and that’s.
That sounds wacky but like you know when Amazon first rode up the the memo and said we’re going to give free shipping and free movie rentals,
in Prime that sounded wacky to now everyone’s like well of course you get those.
Scot:
[1:02:32] Two billion dollar behemoths battling each other is good for consumers so I’m all for it.
Jason:
[1:02:37] I and I think more retailers need to invent this there was I know we’re crushing time there was a bane report that came out that got widely distributed where they sort of did the math on the profitability of grocery and,
this is a these numbers unfortunately are painfully familiar to me but like a normal profitable growth Grocer in store makes two to four percent gross.
[1:03:01] So it’s a pretty pretty thin margin business and so anytime you then pick the groceries for the customer and drive them to the customer’s house.
Um you’re going to lose money right so all of this digital grocery stuff is not profitable there’s been a lot of Articles written about and Walmart.
Digital grocery not being profitable the easiest way you’d make it profitable as you charge more fees for that right and in general consumers haven’t been willing to pay those fees and so.
The the hypothesis is like that a recurring membership program may be the best way to collect fees to make grocery profitable,
and so you can kind of think about Walmart plus being Walmart’s answer to the profitability conundrum of digital grocery.
I will tell you we talked about the micro fulfillment centers and doing automated picking for groceries,
and that’s actually the real way to make groceries profitable if you use a robot to fill the bag and you have the customer pick it up in the parking lot instead of driving it to them,
you can basically make digital grocery higher capex than a regular grocery store but hit the same operating margins so then.
You don’t have to charge any fees if you can get any fees for it suddenly becomes more profitable than regular grocery.
Scot:
[1:04:22] But how’s the robot going to know I like my avocados firm ish but also soft.
Jason:
[1:04:29] Um so no you joke but.
Scot:
[1:04:31] This is the hard thing about grocery people have really weird.
Jason:
[1:04:34] Grocers like and Walmart and Amazon are both bad digital Grocers like almost every big one is,
if you live in New York and you order from Fresh Direct which is a digitally native digital grocer,
when you order the avocados it’s going to ask what day you want to eat it because,
they’re going to forecast the ripeness and give you a avocado that becomes ripe on the day you want to consume it and so customers would traditionally say I,
a day to avocado and a day for avocado and overtime on a good platform like that you also build your all your preferences for substitutions if you don’t have the 2% milk I.
Substitute the to give me the 2% milk and a different size or are you willing to accept 1% milk instead of 2% milk or do you not want milk if I don’t have exactly what you want right and so
on these really digitally mature platforms you build these robust preferences that enable it to be really smart about filling your bag you know it
Walmart Amazon and Kroger if they don’t have the milk you want you’re likely going to get glue sticks or something.
Scot:
[1:05:42] So you could say the conclusion of the show is there a ion avocados is better than Google shopping say.
Jason:
[1:05:50] For sure I although I doubt they have any AI it’s probably simple like that they have they have dudes that come in a.
Scot:
[1:05:56] Come on that was like such a.
An interesting contrast dang it well one of the things we wanted to talk about was the Bigcommerce S1 we’re going to kick that to the next show so that’s a teaser to keep you coming back to episode 2 28 or 229.
Jason:
[1:06:13] Yeah yeah so that is a great Cliffhanger and we will leave it there because it’s happen again we’ve used up our allotted time as always
if anything piqued your interest here we’d love to hear from you on Facebook or Twitter as I mentioned the beginning in the show please please please jump on iTunes and give us that five star review and appreciate everyone sticking it out with us for an hour.
Scot:
[1:06:39] Yeah I would love to see your thoughts on the V shape to versus the we’ll never recover position of Jason so look forward to seeing that on social media.
Jason:
[1:06:49] Yeah until next time happy commercing.
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