A weekly podcast with the latest e-commerce news and events. Episode 229 is recap of the latest industry news including Google Commerce, Big Commerce S-1 filing, and the NRF NXT tradeshow.
Jason recent events:
- NRF NXT Tuesday, July 21 11:45am–12:30pm EDT “Future of Platforms”
- Forbes Article “Retail’s Great Pivot: How The Pandemic Has Changed Stores’ Criteria For Success From Traffic To Efficiency“
Jason Upcoming Events
- CommerceNext July 29th 4:10 pm EE “Lesson Learned and Thoughts for the Future”
- NRF NXT was this week, a digital commerce show from the National Retail Federation (the successor to the Shop.org tradeshow). You can still register for free, and watch all the sessions on demand.
- Google has eliminated commissions for it’s “Buy on Google” feature on google shopping, as well as offering PayPal and Shopify payments.
- Goldman Sachs equity research published: “Global Internet eCommerce’s steepening curve: Raising global forecasts & identifying new winners” July 20,2020. Scot breaks it down.
- eMarketer publishes “US ECOMMERCE BY CATEGORY 2020” July 22, 2020. Jason breaks it down.
- Big Commerce files it’s S-1. (Keep an eye on RetailRoadshow for their roadshow video).
Don’t forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.
Episode 229 of the Jason & Scot show was recorded live on Thursday, July 24th, 2020.
[0:24] Welcome to the Jason and Scott show this is Episode 229 being recorded on Thursday July 23rd 2020.
That’s a lot of two’s I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-host Scott Wingo.
[0:40] Hey Jason and welcome back Jason Scott show listeners well it starts in this episode we are going to focus on some news because last week we just couldn’t jam it all in and then more news has happened since then so we have a lot to talk about Jason before we jump into that you’ve had a busy week educating the world on some very various topics tell us how that went I think you spoke it in RF next.
[1:05] That’s that’s right so for people that might not be familiar
there’s been a longtime digital show about e-commerce arguably the first
treat you about e-commerce called Shop dot-org you and I were both board members when it was independent organization it got bought by NRF,
and overtime shop dot org has morphed into this digital conference called NRF next which of course was canceled this year because of covid so Monday Tuesday and Wednesday of this week,
they hosted the virtual version of NRF next.
I got to give a presentation about the future of platforms.
[1:46] The future of platforms we don’t tell us much about it because these are the kind of things we love to turn into deep Dives but give us a teaser so what’s something that’s going to blow people’s minds but without telling us what it is.
[2:00] Monoliths are dead.
[2:04] Mmm the end of the model.
[2:07] Just say no to monoliths and if you either listen to a waiter deep dive will do or you watch the segment the the digital version is free so you can still go register and all this stuff is available on demand so if you’re interested you can still go watch it,
and I Unleashed a new web architecture for future e-commerce sites on the world and it’s called Jason secret web architecture hashtag,
Jay SWA and it got a lot of play on Twitter after my presentation so just saying,
you could you could be on the ground floor of Jess wha if you view either catch our Deep dive or watch the the segment.
[2:46] What do things better just swallow or J-1.
[2:49] Jay Watts way better.
[2:51] Okay got it I saw some Jo Lighting in a when some protesters broke into an Amazon store.
[2:58] Yeah that’s called the woo.
[2:59] Joe what the heck oh okay that’s Mia well they did just walk out someone was like the Amazon apps going to charge their phone as like yeah I think it works that way.
[3:11] Yeah I mean was it Amazon ghost or looted I didn’t see that that would have been like ironic I guess.
[3:17] I don’t know if they get in but it was pretty clear they were working at it so the one I like Street I think there’s one on Pike Street I saw there was video of them smashing in a window and jumping in so.
[3:26] I saw a lot of anti Bezos graffiti on some Amazon go stores in Seattle as well.
[3:32] Controversial I’m sure Jeff’s up late at night worrying about it.
[3:37] Yeah I’m sure his security detail is all over that,
so slightly off traffic so in honor of next was three days it was really well attended there was a
pretty good diversity of topics and sessions and yeah so if you have some spare time and you you didn’t watch it live you should totally go register and watch some of the content and especially watch
the future of platforms and make sure.
That you you stay till the end and give it a five star review because former ghost guest and friend of both of ours Rob Smoltz did another presentation and we’re having a friendly competition about who gets better ratings.
[4:17] Yeah can I just skip to the reviews if I can I like that okay.
[4:20] In fact I’d appreciate you should both do that and hit pause right now in the podcast and go give the podcast of five star review on iTunes while we’re talking about reviews.
[4:29] Asking for a friend you think Dave that they would stop a little script from going and doing that a million times.
[4:35] Yeah I think you can only you have to like log in and then you can only vote once.
[4:39] Gosh that’s no fun.
[4:42] Yeah I don’t I so I historically have done well in those ratings.
I think the bar must be really low but I.
[4:53] Let’s Rob Schmaltz.
[4:55] I hold the all-time record for an RF event ratings because I did a,
a session about mobile usability and my last example I did an evaluation of the mobile rating system for the NRF,
so I finished the presentation by having everyone go to their phones and go through the process of giving me five stars I thought,
smart yeah yeah I felt very proud of myself.
[5:24] And then you just Savaged it after that you’re like was that the worst experience ever.
[5:27] Exactly yeah but yeah so I tricked enough people in the voting for me that I got a good score.
[5:33] Nice did you get to see Rob session.
[5:35] I did watch Rob session I didn’t get full disclosure I did not watch it live because it was,
right before mine and they’d like you to be on in their dream room and and all that sort of stuff so I didn’t get to watch his session live but I watched it later and it was good even though I’m not
I’m kind of cynical on the topic so he was talking about Ai and
you know he had some interesting use cases and stuff but I’d feel like AI is just so overused that I my
guards go up as soon as people start pitching me on AI solution for anything.
[6:13] Yeah I was this is a kind of a wacky sidebar but I’m sure you’ve seen this GPT 3 stuff that’s come out,
which is this natural language platform from this open to AI initiative but it’s got kind of a you know
but significant like a factor of 30 more words that it’s been fed and that its knowledge so people are feeding it all these past things they’ve done and then
it spits out stuff and I was I was gonna talk about this offline but we might as well do it on the podcast here I was thinking we have what
29 now episodes that we could feed this thing and then maybe it could just do the podcast going forward so little little side project for you look at.
[6:54] Yeah it could be vastly better.
I’m in a much more narrow scope Adobe has this cool really scary app where you feed it audio samples and then you can get it to say anything you want in that person’s voice and.
[7:07] Yes I think we can marry those together and we can have a Jason bot an ascot bot and then you and I could just go to the beach and retire from this whole thing.
[7:13] Yeah well obviously there’s.
[7:14] They’ll be our Mastermind project for.
[7:17] Way more audio from either of us than you need to train this engine but like think about all the guests we have to Ike we have this beautiful repository we could have a lot of fun in this industry.
[7:25] Yeah all right sounds good what other what other talks did you catch that were interesting.
[7:31] Yeah I tried to catch a bunch of them in and if they were pretty diverse.
You know depending on your area of interest you could lean different ways but there.
Was one of the original VCS behind Salesforce talking about like investing in the cloud and how.
Difficult that was at the time and they were rolling The Rock uphill and obviously that investment worked out pretty well for them so I found that interesting there’s a variety of.
Sessions about you know how to deal with the crisis and leadership in the crisis and some of those things.
On my day on Tuesday there there was an interesting session about the death of the cookie so several of the browsers have already.
Block third-party cookies so Safari and Firefox don’t allow third-party cookies,
Chrome is the most popular browser in at least the u.s. right now and they still allow third-party cookies but they’ve announced that they’re going to phase them out over the next two years so.
Fundamentally changes a lot of advertising tools that you can use on the internet if third-party cookies don’t exist and so there was an interesting conversation about.
What would change and what what and What alternative means people might use and just you know sort of thinking how you prepare for a world in which there’s no third party cookies.
[8:59] Yeah yeah that’s worthy of a deep dive right there.
[9:02] Yeah I mean there’s that’s that’s like the livelihoods of a lot of people so I get that yeah so.
[9:11] But you want basic stuff to work right you want as a user I hate logging in all the time so.
[9:17] Yeah and so part of it is.
[9:18] It’s going to drive me to apps because that’s why I like apps they look keep me logged in and websites now are less frequently keep me logged in.
[9:24] So that’s a again we won’t Deep dive in the platforms but part of my conversation of platforms was,
you know what are the priorities right now in picking a platform and one of them is obviously mobile and I talked about the apps versus
Naval native mobile web thing quite a bit so there’s there’s interesting.
Topic they’re the there was a good session from Dollar Shave Club talking about how,
they’re they’re heavy users of split path testing a/b testing and how they do a lot of them
behavioral experimentation on the site and so they shared some of their learnings and winnings from that and then I think Spotify was the last session on Wednesday and sort of talking about how voice is the future and podcast like the Jason and Scott show will rule the world.
[10:15] I like that did you talk to them about selling for a hundred million getting some Rogan Rogan money.
[10:21] I’m trying to play hard-to-get so we could surpass Rogan money.
[10:25] Sounds like a good strategy.
[10:26] So I did that by not not approaching them at all I thought that was pretty clever of me.
[10:29] Well it’s better when they when they come to you so will I will keep waiting.
[10:34] Yeah so that was interrupt next that was maybe more time than we allocated for that top.
Um but let’s jump into the week’s news.
[10:42] Yes so this week you know I love to say it wouldn’t be a Jason’s got show without some Amazon news but today this time we’re probably going to skip him as on news because we’re really holding it for next week so a week from today when we’re recording this Thursday of next week they are going to have Q2 earnings and
everyone’s watching that with with bated breath because there’s a lot of interesting data we’ll talk about the rest of the show that’s got people there’s a camp that feels like you know
expectations of Ronald Billet ahead there’s another camp that says no they’re just going to just destroy the numbers that are out there so it’s going to be really there’s really a pretty big split on where the not only Wall Street but other pundits feel like Amazon’s going to come out
so we’re not going to cover that this week but there was some pretty interesting news today from Google shopping and,
Jason why don’t you walk us through some of the highlights of that.
[11:33] Yeah so before I talk about today’s news I’m going to go back in the Hot Tub Time Machine 2 April and they.
We have the highest quality sound effects on the Jason and Scot show.
[11:46] That’s the hot tub fair enough.
[11:48] Exactly I like it I.
[11:50] Oh I could do this too.
[11:55] That was substantially better that some some legitimate fully work right there.
[11:58] Okay okay que me up again go.
[12:03] Let’s jump into the hot tub time machine and go back to April.
[12:10] Awesome so back in April Google made an announcement about Google shopping that they would essentially let anyone that wanted to provide a feed have free ads.
On the Google shopping platform and so at the time it was there was this it was really unclear whether they that.
You would show up in Google shopping for free but that you would still be obligated to share at a crate with.
Google if someone acted on that ad and there was a lot of conversation about that and Google was a little vague about their answer so then fast forward to July and today Google made an announcement,
that they are discontinuing,
taking a commission or a take rate on all of Google shopping so if you have an ad on Google shopping and someone checks out,
directly on that that platform you pay no commission to Google so presumably the only way they’re going to monetize Google shopping is with embedded ads that they sell in the Google shopping experience.
[13:15] Yeah it’s it’s interesting because there’s a new
so not only do they have a new leader for Google shopping but there’s this one change where.
The shopping count of Commerce team in the ads team have been separate and that’s you know allegedly when.
Apparently that’s made it hard for the Google Commerce team to gaining traction because you know it’s very easy to look at any Google result I’m sure and say well if you put this thing out there you’re going to lose this many dollars from
from the ad platform because ad platforms are robust right so so another change they had made I think earlier this year is there’s one executive that that owns both,
and then they made it a
yeah priority for him to really accelerate the Commerce said so one reading of this is finally Google there’s all this data we’ve talked about it by a thousand times on the show that shows that that more and more consumers are not going to Google to start their shopping journey and learn about products are going to Amazon
you may have some updated stats but for you know for the longest time you know Google was ahead and then Amazon surpassed and and
yeah I’m sure that’s still the case I think the last data I saw showed like 65% of people started an Amazon 35% of Google do you have any new data on that Jason.
[14:36] Kind of so I have to debunk the whole thing we the real answer is we don’t know most of that data is published from
surveys and originally most of it came from this Bloom reach survey and all these surveys are of 2,000 people.
So they asked 2,000 people when you go shopping what website do you go to First and 65% of the 2,000 people said I go to Amazon and so spoiler alert,
people are never right when they tell you what they do why give I go look at the data from their browser that’s not what they do and so even if we try to use panel data there’s some big panels out there of millions of users
it’s impossible this is to Define what a.
[15:19] A a shopping mission is versus some other search mission right so you you you have to come up with some huge definition of what searches constitute a
Commerce search versus an informational search and nobody’s just done that satisfactorily so so the real answer is we don’t know what the percentage is
if you wanted to have a conversation about a particular product category you could probably do that but.
But it’s really hard to know but directionally it’s for sure true that traffic,
is going up on Amazon search engine and presumably that is at the expense of Google and we certainly have seen Google do a lot of things that seem like defensive moves against Amazon.
[16:06] Yeah perhaps more importantly the dollars are moving right so to you probably know more about this than I do but you know Channel visor we’ve seen people kind of go through this life cycle of testing a little bit on Amazon ads and then kind of like
really ramping it up and then taking a lot out of the the other obviously offline budget spend also you know I think the Google budgets get starved out from that too.
[16:29] Yeah no for sure and and you know Amazon’s collected 10 billion dollars in advertising fees and and presumably that wasn’t all incremental like a bunch of that even very likely came from from Google and Amazon it is ironic we
talked about this a little bit offline but.
Well Amazon collects 10 billion dollars in advertising fees for the Amazon pep platform they actually pay for 11 billion dollars of Google ads they’re Google’s largest Advertiser
and so there is this funny thing they’re like buying eyeballs from Google and then they’re monetizing them on their site and it’s it’s actually a clever Arbitrage because
even if they break even if they buy an ad and sell an atom break even that
causes all that those eyeballs to fly by all these Amazon products on the Amazon platform that they get to sell to for free basically.
[17:19] Yeah and sign up for Prime and all that good stuff yeah so.
[17:23] I was just gonna one last point on that that’s kind of humorous you you talked about like the old days at Google where the ad team was at odds with some of the product teams,
there are all these new products Google has launched that are white clearly you know intended to be direct competitors with Amazon and it has to be awkward that Amazon is their largest customer that they’re trying to compete with.
[17:44] Yeah there’s a lot of interesting stories about the early days where
you know Amazon’s pulled products in and out of Google shopping a lot because they there’s this argument of having their products in their actually makes it better
to this day they’re pretty limited on what they put in there I haven’t done it a forensic check but they have some Kindle stuff Zappos the Quincy guys we’re still in their last I looked but the whole Amazon catalog is not in Google shopping
um yeah and even then early on there was a famous Bezos story where he told you know and it was actually an angel investor in Google I think to so but he told the Amazon team to share No data with them at all and so they would go buy ads but they would never.
Like install the pixel or give Google Google analytics or any insight into where it what was going on behind the firewall which I think.
[18:31] Yeah I think there’s a Jeff Bezos quote that they’re in the information collection business not the information dissemination business.
[18:38] So then the big picture is you know so I felt for very long time google has this existential crisis kind of facing with Amazon,
you know it’s not gonna be the end of Google but by all accounts.
Kind of Commerce related terms is a really big chunk of their revenue some estimates say 30 percent 40 percent 20 percent whatever it’s not immaterial and Amazon has been siphoning that off pretty relentlessly so it is interesting to see them make some news and moves here the other one that you didn’t mention is so
the buy on Google program where you actually check out on Google which I think is a better experience for mobile,
previously you could only do Google pay so then it ended up being super restricted because you said you know well we’re only going to really show the ads on
Android and you have to do Google pay or Android pay or whatever that’s called these days
and this that and the other and then suddenly you know and then Merchant has to go through this complicated thing what now in addition to making it free they have opened it up to PayPal and then Shopify as payment platform,
well so you know some of these moves kind of make me think Mmm they’re definitely someone at Google has woken up and said we need to do something about this it definitely does feel like you know too little too late and then where I kind of end up.
[19:58] Getting to is to really fight Amazon someone’s gonna have to step up and build a lot of fulfillment centers because you know if you really started the customer experience that you have to match Amazon’s customer experience there’s no way around that.
And this is a huge challenge with
all these these other experiences right Collins Sebastian who’s a Wall Street analyst who’s been on our show he was talking about in a
either a note or a tweet he ordered something from instacart Instagram for the first time and you know the shipping was like it gave this window of,
two weeks from now or six weeks from now was kind of like the window is like a three-week window two weeks away it felt like.
1999 kind of shipping levels so so it’s good to see Google chip away at this but I think the got to get like
yeah someone needs to go out and start spending in 10 billion dollar chunks if they really want to counteract the Amazon customer experience.
[20:56] Yeah no I agree and it does so you alluded to this but
Google hired this guy Bill ready to be the president of Commerce at Google and he was formally like the CEO at PayPal so an experience Commerce guy he
the the memo that it was now free to list your products on Google shopping in April came from Bill ready and then the memo that we there were no longer charging a commission to be on Google shopping,
today was from Bill ready so he obviously has his fingerprints on on these moves and you look at them together and you say oh man.
[21:34] Google is doing everything they can to get people to list their products in Google shopping they’re making it easier to list their making it less costly to last because per your point,
they’re trying to make that that platform attractive enough and useful enough to Consumers to compete with Amazon.
The in addition to those two big moves they’ve done some other interesting things so one very subtle thing they did is,
you can now send your Amazon feed in the Amazon merchant center format to Google for listing on Google shopping so they’ve,
reduce the friction to list your products if your listing on Amazon you already have a fee that you could choose to send to Google so at the very least I feel like,
they’ve made Channel advisor job easier which I know we always want want that to be the case.
You mentioned they’re accepting PayPal and Shopify they also will let you Syndicate your product straight from Shopify on to Google shopping so there’s this interesting thing,
and let’s keep talking about o Shopify is the potential competitor to Amazon,
and I hate that narrative I don’t think that’s true I think Amazon Shopify are super complimentary and don’t really compete with each other and you know part of the reason is because.
[22:53] Shopify doesn’t have in his likely never going to have a multi-vendor Marketplace experience but almost by default.
Google could potentially become the multi-vendor version of Shopify right like that if it’s.
Completely frictionless to Syndicate your products if Shopify encourages it because Shopify will actually make money on everyone that buys from Google shopping because,
they’ll use that that Shopify payment system and Shopify you know a lot of their revenue comes from having their own own payment processor now so.
[23:28] Roll that up and it’s it’s kind of interesting to watch I totally agree with you the Achilles heel of all these plans is.
That shipping experience that there’s some new features and Instagram that came out this week as well they’re not that interesting so we weren’t going to cover them but but.
In a nutshell.
Instagram has elevated shopping to a button on the homepage now so there now is a shopping tab on the homepage of Instagram that’s rolling out as we speak and some some journalists were asking me if I thought that was going to make a big difference and and I had the same thing,
experience is Colin I pointed out
Target with like 3,000 products on Instagram shopping that you can buy and so I looked at a candle on target side and that same candle on Shopify site and it’s the same price.
I said shop if I meant on Instagram site it’s the same price but if you buy the candle from Target it comes with free one-day shipping and if you buy it from Instagram it will ship sometime in the next two weeks.
[24:26] Yeah yes we are click on our stand like it’s going to be injecting in the same system so I don’t know.
[24:32] I just don’t I don’t think they have a live OMS so I think they just have this like you I suspect if I ordered that candle from Instagram I’d get it in two days from Target but I think they just don’t have a way to give real time shipping information.
[24:45] Or goes to someone they print it out it passes through six people’s hands.
[24:51] Fax it to the store.
[24:52] Data they fax it to a store someone data entered is it a trained pigeon uses the keyboard to data enter it and then your two weeks are up and now you get your package in a day.
[25:02] You could be a product designer for publicist that was pretty good.
[25:04] The things we’ve seen in this world of e-commerce Jason those are actually not that crazy,
so we’ll be watching that really closely one thing you know to shopify’s crack I know you hate this
this analogy so I’m just going to use it a lot they are compete with Amazon because they are the only people that have kind of the guts to go build a fulfillment center right so they’ve got this what they call it a dick fulfill by Shopify.
Yeah and it’s best I know they’ve actually built a fulfillment center so and you know since they’re Canadian.
Tape I have to imagine that one in candidate and one here I don’t know do you know.
[25:44] I don’t I thought there was speculation that it was more than one like I think they are it’s complicated because I the speculation I’ve seen is that it’s Blended like that they
have some 3pl partners that they’re relying on help fulfill but they own more than one of their own facilities and they did by a robotic picking company so
like they have some of their own technology.
[26:07] Another thing that was interesting that got a lot of noise on Twitter was a Goldman had any report
and this was interesting because a lot of these Wall Street analyst they’ll have a retail analyst and Amazon analyst a online offline us and then just kind of thing and this is for the first time Goldman really comprehensively got all their teams together globally
and the the.
Impetus for this was to understand the covid-19 impact on everything and it was pretty interesting so so lets you know
let’s cover the us first so the way they formatted this was they said here’s kind of like the old kind of thinking and here’s our updated,
post pandemic kind of so pre-pandemic post
so let’s look at 2020 so in the u.s. pre-pandemic they were thinking e-commerce and then I know we’d like to be really specific this excludes
travel and others so but it would include tickets and events of those kinds of things but no autos and no
travel so so they had the u.s. growing at 14 percent year-over-year of from 19 to 24 13 point 6.
[27:23] Ecommerce growing at fourteen point six.
[27:26] Ecommerce and then 20-22 2021 kind of flat 14.4 and then 20
twenty one to twenty twenty two fourteen percent so they’re now saying covid has effectively doubled the growth rate so they’re expecting,
29% from 2019 to 2020,
then you know what’s really interesting is there’s this big debate amongst folks in the e-commerce landscape imagine if you had been physically at a in RF event this would have been the the kind of the
the back alley,
the hallway talk you know everyone’s in the online world is excited we’ve gotten the surge of activity the big question is how much is going to stick well they kind of took a shot at this which is kind of interesting so they’re saying we’ve got the Surge from
unexpected 15.6 to 29 percent and then I should also say they,
they go out they grab all the data we talked about on the show so they take the Commerce data the comscore data the emarketer data.
[28:24] I think they have like Forrester data in the mix and then they also have access to a lot of data
um you know from these credit card receipts and all these things and all that they say in the note was kind of inputted into this this model which is interesting so it’s this amalgam of all these things that they look at
but then what they’re saying is it actually is going to stay pretty elevated not at this 29 percent growth rate but
you know next year for example instead of the 14.4 they were thinking pre-pandemic they’re going to they’re saying it will grow 17 percent your year,
that’s really impressive coming off of a 29% year a lot of people were like wow I thought it would be more,
the kind of unit is going down your ear but no it’s actually to do Seventeen percent on top of
29 is pretty impressive most times if you had this blip you would actually go negative the next year because you know you would you would effectively.
[29:17] Be comping against this really really big previous year number so that was interesting and I thought yeah it was pretty.
I hadn’t seen anyone really take a shot at it so I,
I thought I was cut thought provoking the think through how much of this is going to stick and be sustained and build new habit sources kind of receding to previous habits.
What insights did you gather.
[29:40] Yeah I mean well so it’s super interesting in my biggest takeaway is,
we don’t know and smart people disagree you’re right because I consume this as soon as it came out and then two days later emarketer published what they call there
20/20 us category level forecast so they had they had previously published an updated covid forecast for the top line numbers.
And and this week they published this much deeper dive that like they forecast what they think is going to happen in e-commerce in the u.s. category by category.
it’s a very similar methodology like they say in the front of the report we have a hundred and seventy-nine data sources which include all the same ones you mentioned and so we consume over 10,000 individual metrics
we synthesize all those to build this like complicated forecast model and in some ways directionally similar but in some ways,
meaningfully different so the the top line from emarketer is.
And and what what makes this hard to be perfect apples-to-apples is of course emarketer and golden and don’t have the same definition of retailgeek.
[30:58] Um so by the strictest definition of retailing comscore which excludes food restaurant tickets Auto and gas.
Um they’re they’re saying that e-commerce will grow 18 percent this year versus last year which was I want to say their previous forecast was like 12 or 13 percent so,
um a meaningful uptick they unlike Goldman they also forecast retail and they actually forecast brick-and-mortar retail would be down 14% which is.
Historic drop and so that all Nets out to us retail online and offline will be down a little over ten percent for the year so that’s the Debbie.
Debbie Downer top-line what’s interesting to me is.
[31:47] The shape of their forecast is also different than the golden one so they’re basically saying.
They give three forecast they give the strict definition of retail that excludes food and gas and they can see that that’s,
when you’re talking about e-commerce that’s not really fair because.
You know people are buying a meaningful amount of food online now right gasps their argument is no one buys gas online and so that’s why you would exclude that but they say like if you want to take cars and and gas out,
we’ll give you this this bigger number and if you want to take car’s gas food and beverage out will give you an even bigger number so the one that’s most similar to Goldman is the excluding cars and gas so that’s going to be,
twenty percent growth in 2020 and then they’re predicting 20.7 percent growth in 20 21 and 22 percent growth in 2022 so they’re actually.
[32:46] Intuitively the Goldwyn Moon one makes more sense right that you’d see a big spike this year when the brick-and-mortar stores are closed for a long time,
presuming that’s not going to be the case next year you would expect some of that to come back but the the E marketer forecast has them growing every year which is.
Interesting and and they do have a pretty granular forecast that makes it more credible so they do show like food having that same shape that Goldman’s predicting where it went way up and then it goes down,
but they show other things like apparel,
is way down this year online and in-store and it starts to creep back up online in the next year’s and intuitively.
That kind of makes sense so they aggregate all those categories together and they get this this different snapshot what’s interesting to me is,
just looking at those sales as a percentage of total retail since they’re estimating brick and mortar you can you can see how big a chunk e-commerce is and again by the strictest definition of retail 20/20.
14% of all 14.5 percent of all sales are online to put that in perspective,
20:19 was 11% by that definition so that’s a big jump.
If you pull the car and gas out twenty percent of all sales are online and just for fun if you pull grocery cars and gas out 29 percent of all retail sales are online this year so that’s.
[34:15] Say a u.s. number or that’s Global Jessica.
[34:20] Because Goldman has eighteen percent this year and they don’t have gas her Autos but they do have grocery so I guess it would be higher if you took grocery out and then because that’s a small.
Yep it’s had a huge growth but is still under index compared to like electronic or something obviously
but then you know last year they had fourteen point eight so you do see this like huge step function where we’re kind of like ticking along at 1% and then we just like surge 4% and then they show it going to 21% 2427 by 2023 the other thing I like is they have a
table that has all the different countries and you kind of think well what’s are you know what’s the high water mark can you look down this chart and you see South Korea 45% you’re like wow you know that’s that’s pretty crazy and then,
they have China at 36 percent I was thought China would be higher than that but.
[35:13] Yeah I’ve seen Pre-K covid that and again everybody has a different definition so it’s really hard and data from China,
is harder but the numbers I see tend to be that e-commerce in China pretty covid-19 38 and now it’s in the 40s.
[35:29] The just a super
I Louisville thought a framework I found useful in we employed this the in the last episode in a way we do this every year with our prediction show when you have these different opinions.
Instead of arguing in the timeframe of now I found it is I have historically found it this is true for,
my own companies and stuff it’s interesting to make predictions track those and then learn from that experience of
oh gee I was really wrong why was I wrong what was I looking at it was wrong what did this other opinion look up so so it’s kind of cool to have the gold mini-com in marketer
kind of off a little bit so then we can kind of see you know which of these is a better you know
predictor and what can we learn from those predictions that we can feed back into our models of how we think about these things.
[36:16] Yeah for sure and and both are super thorough methodology so these are not like you know just just throw away forecast that people whipped up right like.
[36:31] Then they had the last one last little tidbit on the Goldman I wanted to highlight as they do have some Trend data,
they look at kind of how did things do kind of pre-pandemic and then post pain to me so the categories that over-index to do the pandemic our furniture and appliances that’s kind of that nesting or cocooning thing going on,
cpg which you know you follow closely is largely people switching their grocery habits Home and Garden is interesting so a lot of people are
because they’re Sheltering in place or like you know I could use some fresh paint in here with or you know fixed that thing that’s been.
I don’t know what else do you have a lot of categories there are kind of neutral to- like we’ve talked a lot about apparel and accessories,
biggest losers event tickets and then toys and this was weird because I’ve seen all these other articles that,
toy sales are surging so I couldn’t reconcile the toy when do you have a point of view on toys.
[37:25] I don’t the emarketer showed toys were one of the fastest gainers online so they said 36 percent of toys
is were sold online pretty covid so this is February 2020 their estimate was 36% and may 2020 they said 47% of all toys were sold online so that’s one of the biggest jumps.
[37:46] Goldman’s shows
toys going from kind of a in line growth of six percent before the pandemic to a 45 percent decline so that that is where I think they probably differ the most and where I would kind of circle this one’s and say hmm,
that smells a little weird you know I’ve read all these you know like Hasbro I think he was Hasbro was saying they just haven’t been able to keep up
for the demand of coming direct to their website and target has been sung through toys at a pretty good clip so that makes more sense to me if your kids are I don’t have toys age kids but you certainly do and I imagine you’re buying toys at a frenetic Pace to keep your son occupied.
[38:25] I don’t because Uncle Scott just keep sending him new Star Wars stuff so that’s actually.
[38:29] One of us yeah yeah between the two of us we do yeah.
[38:33] He’s very appreciative you and he are very aligned on interest which either means he’s very mature for his age or there’s another hypothesis that I won’t share.
[38:42] He is super mature young man unlike his father.
[38:44] Exactly yeah the bar.
[38:47] Cool unfortunately another news item was another bankruptcy and you know you keep a slide that has been following these bankruptcies in that is a very full slot.
[38:59] Yeah my designer is pissed because like every time they redesign it I’m like can you squeeze everything together a little bit more to throw a scene on there and yeah that’s rough.
[39:10] Yeah so Cena file Chapter 11 and remind us what all them.
[39:16] Yeah so a Cena is a big house of Brands and Taylor would be one of their big Brands Catherine’s dressbarn is a brand they actually closed a little earlier this year but that was one of their big
they also Own Lane Bryant which is a plus-size brand so yeah and they probably have 30 brands in the portfolio and they’re mostly Mall based apparel,
and they were significantly distressed before covid and so that
it had been a family-run business the jaffrey’s like grants the son of the founder of dressbarn was the CEO for a long time and he stepped down earlier this year and so they were
trying to do a turn around
you know facing a lot of head winds as a mall based apparel retailer and then you know covid just made that impossible so so they had to declare bankruptcy they expect to do a reorganization they’re definitely going to
you know Coulson Brands and Cole some stores and and try to reopen and we’ll see how that goes.
[40:25] So I saw another report that we are year-to-date at 7432 foreclosures which is more than half of last year which I guess we’re at half of the year last year was twelve thousand three hundred and seventy so we’re pacing it
prior to the 20%.
[40:43] And if you just count flags that went bankrupt like we’ve had 25 this year we had 20 all of last year so there’s more more brands that closed as well her bankruptcy.
[40:55] Yeah and a lot of times these beasts or had the sequence of the bankruptcy there’s a
period of time where they have to go through a process that’s also down due to covid and then they closed the store so this is the store number should lag the bankruptcy number Out imagine
unless they don’t start counting those upon announcement they wait for the actual date in a store to come in I think that has to be kind of a you know a known thing.
[41:20] And of course retailgeek tin or ma get in or whatever you want to call it is bigger than just those bankruptcies so a lot of healthy retailers are
taking the opportunity to dramatically close stores right so Nordstrom
is closing 17 Mainline stores there’s what I’ll call some hidden bankruptcies Microsoft had a hundred stores and they’re closing all of them they’re getting out of brick and mortar retail right and so that’s not a bankruptcy because,
the rest of Microsoft is pretty vibrant but but there’s a awful lot of stores closing.
One that is bankrupt that had a big announcement today was Neiman Marcus so they’re in bankruptcy we knew they were going to close some stores
but the and one that was speculated to be on that list and was confirmed today is
they’re closing what their newest flagship store in Hudson yard that literally just open Grand opened a year ago.
[42:12] Yeah that’s that’s crazy that’s like a big anchor like the whole thing is designed around that.
[42:17] Yeah it’s the top floor of this entire mall so it’s a huge deal to Hudson yard and now is an awesome time to find a new tenant.
But unlike the cost to open that strike they can’t they couldn’t have come close to recovering the cost to open that store and sort of close it is just like it’s,
it’s crushingly heartbreaking and then here like a
a slight little bitter irony as all these doors were closing in miles before covid the big play of you are a mall owner was let’s get more mixed use let’s open condos but most,
of all let’s open gyms and restaurants so guess what the only two categories to do worse than retail is in.
[43:06] Yeah Jim’s and.
[43:07] Exactly so it’s pretty pretty rough.
[43:10] Yeah tough times
one thing I wanted to ask you about in this topic of Mulligan is one of the mall operators Simon properties is buying a lot of these these kind of chapter 11 retailers who are essentially their customers their kind of buying their customers and the thing that kind of
as an e-commerce guy that blows my mind is there’s a his cap physicality here that is much more complicated right so let’s say you end up with three or four of these retail these fashion brands
the effectively compete with each other so how do you reconcile that and then also now don’t you own properties and other malls who are your competitors and you’re paying rent to your competitors what’s your what’s your thought on that whole incestuous
[43:54] Yeah so my perception and I’m far from a real estate expert is these are not strategic Investments on the part of Mal operators that say like oh man,
Eros ball could be super profitable and and we want to own it and turn it around and run it at a huge profit there,
protecting their rent and they’re protecting their tenant agreements with other other tenants like one of the problems is when vain
vacancy start opening up and particularly when anchor start opening up a lot of these other tenants have these Co tenancy agreement so you’re paying
expensive rent and all kinds of extra fees to a mall because there’s a ton of traffic in the mall right and when the Apple Store we use them all
there’s way less traffic and everyone makes less money and so a lot of the we Siz have Clauses that when
the the anchor stores closed or when two men are too much of them all is vacant that they don’t have to pay rent or have to pay less rent or can break their ridiculous 10-year lease and.
[44:59] I think it’s less like Simon saying like man this is a super Strategic investment and we’re buying it because we think we know how to run retail and more
that some of these retailers that have a big footprint in their moms they need to keep those those stores occupied even if they’re not.
Operated profitably so this this first one back in 2016
Simon got together with Brookfield then they said hey together we have most of the are spot I always say it wrong do you.
[45:35] Aeropostale e.
[45:37] Yeah it’s a bad news when you’re when you’re turning to the guy from North Carolina for pronunciation help.
[45:43] Aeropostale Aero pistol.
[45:47] Arrow pistol yeah you guys turn everything into a gun there that’s crazy.
[45:51] Sur La Table.
[45:52] Exactly also bankrupt yeah.
So I think they bought them to sort of protect that that we stand I haven’t seen a lot of data that they’ve like dramatically turned it around or change the operational model and so then this year.
Forever 21 like is an anchor for a bunch of these malls and so there was a lot of speculation and and it seems like they made an investment to try to keep some of the Forever 21’s open but I feel pretty your point,
the more they they do that that the returns become diminishing right like you know,
if they’re not profitable and you own it it’s a anchor on on your overall Enterprise profits,
and you’re you’re buying these properties that are you know potentially competing with each other right and so it’s now the big thing whenever a big mall brand is at risk of closing.
The rumor is that the mall owner is going to invest in it because there they have.
The most interest in keeping it as a growing concern and so that’s a ongoing rumor about JC Penney stores that are closing or if JC Penney is enable the to reorganize out of their bankruptcy.
[47:05] It also comes up a lot I’ve lost track of the names of all the entities but you know there was this big fight about,
the Victoria’s Secret Brands and when a bunch of them were going to close their actually like the second largest tenant in most of the malls in the US and so that would be a big hit so there were rumors about that,
but the economic analyst I have read,
I feel like they’re not going to make a lot more of these Investments because it’s going to be increasingly challenging for them and their point was there’s no way they could absorb JCPenney like it UI.
It just it just wouldn’t work so well.
[47:44] I find it interesting though that they’ve got a much better balance sheet than than any of their customers so I don’t know how the mall operators escaped this Hina kind of high leverage kind of thing but the apparently they did but the Retailer’s didn’t so.
[47:58] My my original retail Mentor Wayne huizenga was a big fan of buying something once and renting it forever turns out to be a pretty profitable model.
[48:07] Yeah sounds good then was at Blockbuster.
[48:10] That was yeah so you buy a movie for for 30 bucks and you rent it 30 times for 3 bucks it turns out that’s a good business.
[48:17] And then you get late fees.
[48:18] Yeah we don’t have.
[48:19] And then you ignore Netflix and they crushing.
[48:22] Nope okay so now I gotta defend Blockbuster we.
seven years later we sold it to Viacom for 9 billion dollars in 1994 which would be 15 billion dollars today Netflix wasn’t worth close to 15 billion dollars in there for seven years of operation so,
started the company hugely monetized it got the heck out and some much later owner-operators screwed the pooch on Netflix but like to be clear the entrepreneur that started Blockbuster was brilliant and did quite well.
[48:59] Okay the other big news that we want to cover is Bigcommerce so they release their s-1 so they’re going.
[49:06] I see what you did there with the big big by the way.
[49:08] I’m not going to get into the debate over Netflix and Blockbuster that’s we’ll save that one you can
you can rest that Blockbuster one the.
[49:24] You can see how large I’m living on my Blockbuster money.
[49:26] Yeah this this probably has some DVDs in Price Hill and return the,
the good news is no one’s there to collect late fees the so the Bigcommerce s-1 dropped and
that’s ones as you know one of my weird Hobbies is I love to read these things and this was a good one the shame here is become urse appears to be a great company when you read through it and if they had gone
public in the in a world where Shopify didn’t exist then it would be much easier for them but everyone’s comparing them to Shopify and you know,
not only that they’re comparing them to Shopify today when they’re really should be compared to Shopify like 2014 so I pre-ipo Shopify because you know when you go public it really,
can add a lot of fuel to the fire because you’ve got this access to Capital that’s a lot you know.
[50:21] Bigger deeper than kind of private Capital so,
so just some highlights so Bigcommerce is doing annualized a hundred twelve million.
Growing 22 percent year-over-year this is all 2019 numbers and then you know what you have to do in a in an s-1 is keep updating out with amended numbers I’ll get to those in a second.
One one Stand Out is their gross margin is 76% Shopify
2014 was 59 percent gross margins and then now those have actually gone down to 55 percent which is kind of interesting but it kind of indicates maybe there is a
yeah so I think payments the more payments you do the lower your gross margins because you’re kind of skimming so you’re running like 3% through but your cogs is like 2.5 so that can
put a lot of pressure on the gross margins things like that so but anyway it feels like much more of a SAS business at some kind of 76 percent gross margins
they are still losing money but you know
they’re clearly on this path to profitability just like Shopify was in 2014 and ultimately got there and it’s been quite profitable so the the most private most interesting thing is everyone’s using it as a re to the Shopify.
[51:37] So for example you know
because they’re not public yet and they have to update their s-1 we have this view into March April and May which is very it was very curious about how Shopify did in those
we know March but we don’t know April May so it’s a view into Q2 and March they again they’re they’re kind of
prepayment growth rate was 22% a Bigcommerce March it bumped up to 33% April a hundred and six percent
May 86 percent so a lot of people are taking that you’ve probably noticed shopify’s stock has gone on a bit of a run it’s kind of ironic because I think a lot of people are using this s-1 and they’re reading in and saying well if.
[52:20] Big Commerce did a hundred and 686 for April and May let’s say June was a step down at 75% that’s like 90%,
growth analyzed that would just like blow people’s minds so
so it’s gonna be interesting to see what kind of happens shopify’s growth rate is about 54 percent so so a lot of people are kind of reading into the Bigcommerce s-1 that Shopify is going to have a quarter where they effectively
double their growth rate and so that’s going to be really interesting to watch and see what happens as that plays out are they over reading that or not
so then a couple other the other thing I would mention to folks is it’s really good to read these things because the,
the way to read an s-1 is unless you’re a financial like a Warren Buffett he always starts at the back.
[53:09] The boring Financial disclosures and the audit and then Works forward I like to read the Management’s discussion and Analysis called the md&a section so unfortunately the way.
The way the lawyers want you to write an S one is kind of what I would call it poop sandwich so you have to start out and you essentially say,
in a very boring way his or her business and then you kind of almost have to say here’s kind of like why it sucks and then you
did you have to say but here’s some good little pieces to think about and then again you have to kind of come and then this is the risk factors and you have to kind of say yeah and again it kind of sucks and what you’re doing there is your
you’re protecting yourself from making any forward-looking statements or anything that an investor could see you for down the road so you have to kind of like.
[53:52] Reading these things can be very boring if you start at the front because you’re going to the kind of the,
cover your butt side of it so getting to that md&a is really good and I was like to hear.
[54:03] Because actually you know haven’t been one of these you actually write that and yet goes to refinement but you really kind of need to write it because no one else can write that for you so it’s really the management team really putting down
on paper they’re words how they’re they’re doing the business and I thought the Bigcommerce one was was very good the other thing that I love to do is,
you know when Enron and play ODed it caused all this new regulations to come out one of those is regulation FD which is full disclosure so ever since then everyone’s Roadshow actually gets published out there in a video
um now this is weird because I find most people don’t know about this and they don’t they don’t know to watch these the
the thing that’s tricky though is the video has to be out there while you’re on your road show and then most companies take it down because you don’t really want that artifact so there’s this window of usually,
a week sometimes two weeks sometimes three days where that road show is up and I’ve been watching every day for Bigcommerce it usually will start to
we’ll update this one with some new data and then start I imagine next week or the week after I’ll let I’ll try to bring it up on the podcast but I’ll definitely tweet when it goes up.
And it’s at this really Arcane website called retail Roadshow where you can go watch these things so so I’m eager to watch this one because it’s going to be kind of interesting to see some people do kind of a like the Uber one was really good it was kind of like hyper if I like a Super Bowl.
[55:25] Some have very high production.
[55:27] Yeah yeah some have high production and then some you know most of the ones in the e-commerce category are super low production where you know they’re they’re almost like,
Shark Tank VC level pitch which I,
I prefer because you kind of get to the meat and potatoes so I’m going to watch for that and and see how they present on that and see what that looks like so so that was my takeaway is did you have anything from becoming she wanted to.
[55:52] A few other equipments first of all I feel like Warren Buffett probably starts at the end because he’s a very old man and he doesn’t know how much more time he has.
[56:00] Who could be.
[56:01] It’s just a theory and I also like to read them but I’m weirder than you I like to start at the risk factors because I feel like there’s just so much positivity in my life right now that.
[56:11] You’re such an Eeyore.
[56:14] Yeah that I just I just need to bring it down and.
You tell me if I’m wrong but unlike the the the sections that like each each entrepreneur clearly does write for themselves I’m pretty sure the risk factors are a popular boilerplate item.
Because they tend to have like all ten plagues in them for example.
[56:33] Yeah you’ve got to talk about cybersecurity you can have an internet outage you’ve got a lot of competitors you’re not profitable.
[56:40] And then nowadays they’re just one one bullet called like Amazon right.
[56:44] Yes you got to have an Amazon bullet in there.
[56:46] Exactly so a couple of things are interesting to me and looking through the s-1 so like,
you didn’t mention it but so they are tiny compared Shopify today they’re like 117th the size of Shopify but,
their business is more different than Shopify than people might realize so one thing the revenue per account is much higher so there’s a.
You know a common narrative that they’re there,
more mid-tier Brands tend to use Bigcommerce and there are little closer to Enterprise and Shopify tends to be along like the long tail and a lot of startups.
And the this s-1 kind of bears bears that out like the there they have far fewer clients they’re making more Revenue per,
client but also the mix of the revenue is quite a bit different you alluded to it a little bit in the payments but what’s interesting is.
[57:45] There’s there’s recurring Revenue which are the fees they collect for hosting right like that the fundamental charge is you have for using their platform and then there are these variable fees which are,
not guaranteed to be recurring but for things like
fulfillment in the payment fees when you you shopify’s echo system and the overwhelming majority of shopify’s Revenue come from fees not recurring so,
the despite the fact that there are SAS company their recurring revenue is a menorah T of there,
their revenue and that’s way less true on Shopify shop the bulk of shopify’s Revenue is coming from.
[58:26] You mean bad Converse.
[58:26] I’m sorry yeah the opposite strip Bigcommerce the bulk of their revenue is coming from charging rent for this platform SAS platform that you’re getting and they seem to be making a lot less from,
from supplement they think they have much less supplemental services so that’s that’s interesting the thing we always we never know about Shopify that were always really eager to tell and the Bigcommerce doesn’t give us any insight is like what’s the churn,
like they have all these clients but you know how many of them are are economically meaningful and how many are still active,
but in some ways the Bigcommerce model feels so although much smaller safer because they have these clients that are more locked in and it’s a you know more more material to their to their business.
[59:17] You know you know you just did a talk on this and I don’t want to do any spoilers we’re going to Deep dive but Magento just really doesn’t come up in the conversation where it’s like they just fell off the face of the earth I don’t know if that’s just me or have they have these hosted platforms just really displace them.
[59:31] Yes and no they still come up a lot with me like so they’re owned by Adobe and so you know you’re starting to hear people say Adobe instead of Magento the analyst.
So Forrester just published their wave and and adobe’s a weed or in the wave which is Magento,
and Gardner is about to publish their wave and I can’t confirm or deny that I’ve seen it but you’ll probably see them in that too.
The I would definitely say like.
[1:00:06] A lot of Magento is at the moment feels to me like our past their Prime like they they were the long tail solution before Shopify,
and nobody’s successfully moved a bunch of those,
those clients up Market or to newer products and so it does feel like they’re losing momentum in that regard Adobe has a lot of juice so maybe you know Adobe will be able to turn them around what we’ll have to see but for sure the future is.
Cloud native platforms and I’m saying Cloud native as distinct from like just putting your product on the cloud.
So Magento is an example of adobe and others have put Magento on the cloud.
By just you know running a private instance of Magento on a on a virtual server instead of a an on-premise server.
It’s not really service-based and it’s it has a lot of problems whereas Bigcommerce Shopify,
and and Salesforce are our Cloud native Solutions and a lot of the newer platforms that are in the market are all Cloud native nothing everything is service-based and.
I feel like there I wouldn’t if magenta where step is stock I would not be buying.
[1:01:17] Yeah alright anything else on become worse.
[1:01:22] Nope nope I think that’s going to be a good place to wrap we have used up more of our time given that we have two shows this week then I had expected to but as always if there’s something that piques your interest let us know on Twitter or Facebook.
Please please please jump on iTunes and give us that five star review.
[1:01:42] Thanks everyone and…
[1:01:45] Until next time happy commerce.
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