A weekly podcast with the latest e-commerce news and events. In episode 258 we cover some recent industry news, including new information on owned brands at Amazon, Target, and Bed Bath & Beyond.
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CPG’s and other traditional houses of brands, have not had a lot of recent success launching new brands. Challenger brands get a lot of buzz, but they are struggling to scale. Meanwhile, retailers are quietly launching new “owned brands” every year that sell over $1B.
In this episode we cover the latest owned brand news from Amazon, Target, and Bed Bath & Beyond.
Episode 258 of the Jason & Scot show was recorded live on Monday March 29, 2021.
Transcript
Jason:
[0:24] Welcome to the Jason and Scott show this is episode 258 being recorded on Monday March 29th 2021 I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-host Scot Wingo.
Scot:
[0:40] Hey Jason and welcome back Jason Scott show listeners Jason hope you’re having a good week and you have no blockages like the Suez Canal.
Jason:
[0:48] I know this was a bad week to plan a vacation in the canal.
Scot:
[0:51] Do you do you often vacation in the count.
Jason:
[0:56] I haven’t yet but you know I was thinking about it there was a super funny tweet I saw on Twitter though that some some someone wrote everyone’s anti Godzilla and told there’s a twenty two hundred thousand ton boat that can’t be moved.
Scot:
[1:09] Yeah and then I saw I think they got it kind of dislodge today and then the wind blew it back into it’s original position I
I can’t tell what’s the truth anymore like parody has become so close to reality but I saw that as if it was new so I think he is still jammed is that your understanding or do you think.
Jason:
[1:27] I don’t have an understanding but that would make sense because I would say that recent news reports were conflicting about whether it was still blocked or not so that maybe,
that’s the story maybe it got unblocked and then re blocked,
it is I have clients that are pretty bummed though because it’s a it’s a pretty big deal our as you know our supply chain is super,
just in time and so when a major thoroughfare like that gets blocked like it has an impact on product availability over here.
Scot:
[1:57] Yeah yeah it’s yeah the the pictures that show the boats waiting it’s just amazing how many how many cargo-carrying boats are just jammed up because of this one single point of failure worse popped.
Jason:
[2:07] Yeah and the plan B is not ideal it’s a so long way around.
Scot:
[2:14] Yeah yeah it’s amazing to then you can see a lot of the boats aren’t doing that now because they kind of have to.
Jason:
[2:19] Yeah I know you’re a better investor than me but I’ve actually been buying into a lot of pirate stocks because I think this actually puts a lot of that cargo.
In Pirate territory yeah.
Scot:
[2:31] I didn’t know you could buy a pirate ATF that’s so smart.
Jason:
[2:35] I’m lying but I wish I was that cool.
Scot:
[2:38] Cool well tonight’s episode we wanted to keep it kind of light and fluffy and just catch everyone up on some news because it’s been a while since we have done a news episode.
And of course it wouldn’t be a Jason Scott show without some Amazon so here’s some.
Jason:
[2:59] News your margin is their opportunity.
Scot:
[3:08] Jason I’m usually our Amazon Fanboy here but this one I really wanted to kick over to you for your perspective you’ve been tracking
the entrance of Walmart into the healthcare space and Amazon
his announced recently that they are going to expand the what they call quote-unquote Amazon care you know to not only all their employees but employees at other companies what do you make of that.
Jason:
[3:34] Yeah it’s it it’s a pretty big expansion so.
For the very few people that haven’t listened to every single episode The the Reader’s Digest version of Amazon’s Health they’ve leaned heavily in a pharmacy they bought pillpack they rolled out a national Pharmacy Amazon Pharmacy,
um they partnered with,
Goldman Sachs and Berkshire Hathaway on this health initiative called haven to kind of reinvent Healthcare and then they pulled out of Haven this year or late last year.
In the rumor was that it was because Haven was too slow and they felt they could go faster on their own and what they were going faster on is this thing that they call Amazon care so they piloted this in the Pacific Northwest with all their seattle-based employees,
and it’s,
it’s a telemedicine based Healthcare System where all Amazon employees can get a doctor on a video conference in under 60 seconds and kind of avoid a lot of in Office visits,
and so the big news is they’ve announced that they’re expanding Amazon care to all 1.3 million of their employees so that’s a.
[4:41] Very substantial expansion of the pilot and they’re also offering the pilot to other companies I’m not sure if they’ve,
announced that they have any takers on that yet but but it seems like they’re their efforts in healthcare rapidly expanding and you know they did invest in,
telemedicine and even buy some,
some companies in that space kind of before covid and then you know covid has really you know accelerated the adoption of telemedicine so it seems like annoyingly,
that’s another good investment that seems like it’s starting to pay off.
Scot:
[5:17] Yeah and Josiah Cairn reminds me what as you’re describing it reminds me of that made me a feature that candles used to come with her I don’t know if they still do or not we get like just press a button and some would be like hi Jason are you having problem opening a book,
is that Zack kind of how it works.
Jason:
[5:33] That’s my understanding I say I don’t think they still offer mayday,
I know kind of sad that for a while that was the differentiating feature on that platform but I think it went away but yeah I.
I haven’t had a chance to kind of get a first-hand tour of have the Amazon health system works but.
[5:55] You know pre-pandemic there was a lot of.
Challenges around HIPAA laws and stuff and so people were really going slow and cautiously on telemedicine and there was generally a lot of friction.
Um and you know nobody wanted to like store anything information in their platform and all these things and,
um I would say a lot of healthcare providers like suddenly discovered out of necessity that there are plenty of HIPAA compliant ways to do telemedicine and Amazon has both.
That that sort of visual video interface and you know it’s it’s on on a HIPAA compliant version of AWS which they have a lot of HIPAA compliance services on AWS now.
But they also bought like an artificial intelligence symptom diagnostic tool so kind of like a,
machine Learning System for you know converting your WebMD queries into a diagnosis so,
um I think that’s part of this system and yeah I don’t know I’ll be I’d love to hear from some Amazon employees that have tested.
Scot:
[7:05] Yeah covid-19 really helpful here because there was all these rules around you had to be licensed in this state to do telemedicine in the state and they wave to those so it makes it a lot easier to do telemedicine when you don’t have to,
have a doctor in the same state as Where You Are.
Which never made sense to me anyway I don’t think medicines that difference between that hopefully it’s not that different between North Carolina and Chicago.
Jason:
[7:27] Yeah and then I mean we just have so much so many challenges on friction in the healthcare system that we should like we shouldn’t be like fragmenting supply and demand with all these arbitrary virtual borders I guess.
Easy for me to say two e-commerce guys talking about health care what could go wrong.
Scot:
[7:48] Add to cart that’s not my own.
Jason:
[7:51] Exact exactly just buy more Advil any other Amazon news you saw this week’s hot.
Scot:
[7:57] Yeah so Wells Fargo one of their analysts at was out and this was like a combo between their internet and their retail folks,
and they have officially proclaimed Amazon to be the largest seller of apparel.
And this one is fun because I think we actually cover this we’ve been at this podcasting gig for quite a while I think we’ve been at commerce cumulatively between the two of us for.
Akash 50-60 years there’s one but we’re even podcasting in 2016 and I remember one tarry longer than the CEO of Macy’s said.
And I’m going to quote here the Amazon threat is overstated Macy’s nearly 800 stores offer a huge advantage over Amazon.
Given how Shoppers tend to buy the same item in multiple sizes when they order online,
Macy’s can use it stores to handle returns which lowers the shipping cost and offers a chance to win some sales while those customers are in there are stores.
So he kind of was pounding his chest and bring on Amazon this is there’s no way they’re going to catch up with the mighty Macy’s,
and you know I have been at this long enough to know that the biggest career limiter is to say that you are safe from Amazon that did not end up being true for mr. Lundgren,
um he left me sees a while ago and they’ve had a series of other folks roll through their I don’t think they have 800 stores anymore you where they down to like.
[9:22] Six hundred four hundred I don’t have to let’s have one of our research team looking into that,
so yeah so I thought that was really interesting that you know the a lot of people think they are not threatened by Amazon and they are and I’ve seen the drugstores kind of take a similar stance to Amazon coming into Healthcare and I think,
it would be wise to be careful there because Amazon is really good at taking care of your customers if you don’t that’s what they did to Macy’s.
Jason:
[9:54] For sure In fairness to tarry longer and I would say two things he said that he said he probably sounded way more distinguished when he said it then you did.
Scot:
[10:03] That was my distinguished.
Jason:
[10:05] I know that was your decision.
Scot:
[10:06] He has way better hair than you and I together times a hundred he has good hair he’s got CEO here.
Jason:
[10:11] He definitely has CEO hair and then I feel like one of the fun things about doing this podcast for five years is in the e-commerce space if you can do it for five years you are going to get a lot of I told you so’s.
Scot:
[10:24] Yeah exactly.
Jason:
[10:25] And so we definitely get one so I want to say that there are currently like 430 Mainline Macy’s stores.
Scot:
[10:36] I won’t let that that’s feels a lot smaller than 800.
Jason:
[10:39] It probably feels that way because it is that way and for for sure Amazon.
Caught and dramatically surpassed them in a Peril I want to say from that Wells data,
Macy’s was it like 16 billion in apparel sales and Amazon was estimated to be at 41 billion so almost 3x,
but / Wells Fargo TJ Maxx and Walmart also passed Macy’s so there there was a point when most people felt like Macy’s was the largest apparel retailer and,
in the US and now / this analysis their fourth.
Scot:
[11:16] Yeah I think I think Amazon is three to four times the size of a season wow ouch,
wasn’t there isn’t this also a double win because didn’t Scott Galloway kind of famously think that Macy’s what is going to crush Amazon wasn’t any kind of on that that,
that that should have been we should know it was over the second he said that because he’s you’ve got a really bad Trekker.
Jason:
[11:40] Exactly I feel like Everyone likes to make fun of his anti Tesla picks but to me by far his,
his my favorite thing was his his prediction that the future of Commerce isn’t Amazon its Macy’s and omni-channel,
and like there’s if you if you look at the Macy’s stock from the day he said that to today it’s basically a straight line and you can imagine what direction it’s going in.
Scot:
[12:07] Wow ouch all right any other news you want to cover Jason.
Jason:
[12:13] Yeah there’s all kinds of stuff going on.
There was an article that made me think of you because we talked about this at least once a year New York Times ran a big piece about,
Google aims to be the anti Amazon of e-commerce it has a long way to go that was the subtitle of the article I kind of felt like you wrote the subtitle.
Scot:
[12:36] That is a that is a journalist that has done some research.
Jason:
[12:43] Yeah yeah and so I mean I don’t think there wouldn’t be anything.
New in the premise of this article to our listeners I mean the the just was you know they talked about Bill ready coming in to take over commerce for for Google and opening up,
um the Google shopping ads and making them free and you know essentially becoming a Marketplace offering this integration with Shopify to make it easy for Shopify sellers to,
to list their products on Google and Google is for all intensive purposes becomes a Marketplace what was.
Surprising to me and maybe it shouldn’t have been was in the article they profile this this small business owner that I think sells roller skates,
and they talked about how she happened to be sitting on a lot of roller skates at the beginning of the pandemic which became a desirable item during the pandemic,
um and she started experimenting with with Google’s kind of artificial intelligence ad format this it’s called the smart shopping app and so essentially.
You don’t have to pick your target or anything you just kind of give Google a budget in Google figures out the best place to put your ads so she put 1800 dollars into these Google smart shopping ads,
um and that generated 3.6 million impressions and what do a quarter of a million dollars in sales for her so.
Scot:
[14:09] I’m not in the ad Biz like your it was that a good Roi.
Jason:
[14:12] Yeah yeah except in the ad Biz we call it row as.
Scot:
[14:15] Is that a good bro ass.
Jason:
[14:16] That is a good row as the.
The the smart question to follow up to that would be how much of that was incremental how many of those roller skates were she going to sell without Google but we’ll put that cynical question aside for a minute,
what was interesting to me in the article was after having that initial success.
Google flagged her account because they via some crawling bot that they had decided that she was listing her roller skates in the Google ads at a higher price than she was selling them Direct in,
Shopify which is apparently against the terms and conditions of these Google of these free Google shopping ads.
[15:03] Many marketplaces have that that Clause Amazon famously has that cause I wasn’t aware.
It’s not I’m not surprised but I wasn’t aware that Google had that cause or that they were trying to enforce it so they essentially put her in the Penalty Box and don’t allow her to whist.
Her Shopify products in Google,
and this is not going to come as a great surprise to you neither Shopify in or Google have remotely effective customer service to remediate this problem right so she’s calling Shopify and they’re saying hey talk to Google it’s not our fault,
and you know there’s no one to talk to a Google to get out of this Penalty Box and kind of have a fair dispute resolution so this woman had some initial success on the Google platform and then got locked out.
Scot:
[15:48] Yeah that’s a little scary because you know Google puts all these things these to have separate little centers for all these different products and now they’ve Consolidated all into one,
you’re kind of part of their ad Centre or whatever they call it now and I imagine you can’t just get locked out of one part of it I bet she’s locked out of I bet she can’t even buy keywords or anything now so that’s.
That’s pretty terrible.
Jason:
[16:09] Yeah and I mean it’s a big reminder like all these platforms have traffic that can be valuable for you and there’s a lot of.
Like favorable Roi to some of the customer acquisition things but,
but you should remember like you don’t own any of these platforms like no one should be building a business exclusively based on the customers they can rent from Google or Facebook or Amazon because.
You know there are going to be winners and losers in the ground is going to shift under UI in favor of those platforms.
Scot:
[16:41] One of my favorite up into Google like 50 times and you’re always sitting in the lobby of like a building whose name is something wacky like pie or moles constant or something or C the speed of light and you wait there for the person to come and get you,
and so I’ve probably collectively spent 40 hours in the lobbies of different Google things just waiting on people,
and invariably the phone is like ringing off the hook at these lobbies and it’s someone like this poor lady trying to get a human and they somehow rattle into the building you know,
the the building Lobby and the people there are actually temps and you know you hear them this side of the conversation we like.
Man I don’t I don’t know how to get your listing into Google no ma’am I don’t I don’t know how to solve that,
have you tried our website this is like crazy sitting there listening to the conversations that go on.
Jason:
[17:34] Yeah although I’m thinking you’re doing it wrong because you’re not supposed to be listening to the receptionist you’re supposed to be eating all the delicious free snacks and all those lobbies.
Scot:
[17:42] Where they don’t put a lot of snacks in lobbies.
Jason:
[17:45] You’re going to some different buildings than me I only go to the snack friendly buildings.
Scot:
[17:50] You have to get in the back room where all the good stuff is the snack snack stations.
Based on our episode last week where we dug deep into the IDF a and by the way I got a lot of good feedback on that apparently you’re pretty good at explaining this stuff so so kudos to.
The I saw an article that face book shops announced they have over a million active Sellers and 250 million people interacting on,
the Facebook shop so you are my.
Theory I’ve seen a lot that I kind of buy into but I want to see it play out is Shopify could be in a crunch and I thought it was really interesting that Facebook was kind of,
pounding their chests about how many people are using their shops,
today I know they’re they’re not super useful it’s just kind of a presence but I do think because Facebook is going to want more first-party data because the third-party stuff’s going to get cut off,
be it on the app side or the cookie side / website I think they’re going to pull in the checkout and the discoverability and it’s going to be an interesting day when that happens.
Jason:
[18:57] Yeah no I totally agree I think they’re going to lean into that check out but I wouldn’t be surprised we may never know.
It wouldn’t surprise me if the cumulative gmv from all that Facebook stuff is already bigger than people imagine right because.
I don’t think there’s a lot of high-volume sellers that are hitting really big numbers yet but there is a very active long tail and I just think that’s,
like unless Facebook chooses to disclose the DMV like it’s harder to count like you know of those million active sellers if they’re you know.
Why teach selling a hundred dollars that’s a hundred million dollars in GMB.
The you know I don’t know I don’t think there’s any billion-dollar sellers on that platform so we don’t hear about it as much but I think like Shopify the bulk of it is this quite small volume High churn long tail seller.
Scot:
[19:51] Yeah and then so you’ve got these little shops you’ve got Facebook groups that have kind of,
we’ve got these groups that are very active and some of them are around neighborhoods and categories and so there’s a lot of activity there and then this interesting have you seen this one startup that’s called.
[20:08] Comment counter something like that which is kind of amazing to me that it still exists but you know people,
people there’s a lot of comment Commerce that goes on where where people will post a picture of something on either like Instagram or something and I know these guys have their own checkouts but there’s still this weird thing where,
these people will run these little boutiques,
and then you can say something like you’ll say bye to and then you’ll do some other little code and then this bot will come in and send you a DM to check out.
I saw this startup in that space raised like considerable amount of money and a lot of gmv which I thought was really interesting because it’s like.
Feels like 1985 that some check out bot is messaging you to enter your information but there’s still a lot of Commerce that happens that way and then the Facebook Marketplace has a ton of Commerce and if if I’m Facebook you know they’re thinking about how do you roll that up into one.
Kind of a it doesn’t have to be a seamless experience but one Mega Commerce area that,
it kind of reminds me of Ali Baba where you have this family of pockets of Commerce going on and then you can provide some interesting gateways into that like
if you search for Star Wars you to see shops
groups and then the marketplace and you know is there an interesting way to coalesce those listings across those three properties and have an interesting experience.
Jason:
[21:29] Yeah yeah no I think there’s a lot of that going on it’s funny in my I’m as old as dirt in this space I remember like one of the First Commerce activities on Twitter was like,
Pizza Hut wants to Pizza bot and you could basically send a tweet to the pizza bot to order a pizza and that was like.
The future of Commerce briefly and I want to say a year after that like Starbucks did a.
Tweet a coffee which was my favorite feature you know I’d like a moment of silence for the loss of that feature.
[22:00] Yeah a lot of other news though so I do want to move on I saw one that I thought was kind of funny because I know we talked a lot about omni-channel attribution,
so for those that don’t know retail leases in malls are really complicated it’s not as simple as.
You know you pay X dollars a square foot a lot of those those leases have all sorts of,
rev-share Clauses so you know depending on how much revenue they generate in the store they owe some Vig to the landlord they’re all kinds of services that their stores have to buy from the landlord is all the all these sort of.
Different Clauses but with all these distress retailers there’s a ton of renegotiation of Lisa’s right now the retailers have a lot of Leverage because the mall owners don’t want to move out,
and one of the ways that mall owners are trying to preserve some upside is they’re doing drastic.
Rent reductions but they’re asking for a bigger rev-share and what has emerged as the biggest point of contention is that the landlord’s want their rev-share,
on all of the Retailer’s Revenue whether it’s in that store or online.
Scot:
[23:19] Mmm Yeah like curbside you know the malls going to want a piece of that.
Jason:
[23:25] Exactly and so the malls are arguing that like hey that store creates a bunch of visibility which is driving those online sales and so the landlord should be credited with those sales and so it’s like if you look at it superficially.
It’s it’s pretty funny that the the old model is like asking for a commission on the model that’s kind of replacing.
Scot:
[23:49] It makes logical sense the store operators themselves one credit for that stuff too.
Jason:
[23:55] But it just so you know no to retailers count that the same and so now you know it’s coming up as a problem.
In in all of these kinds of leases because you know the you’re asking for some Claws and a lease that isn’t have that that brand does its accounting.
Scot:
[24:12] Aren’t the malls going to in all the stories anyway so I guess it’s a mute point.
Jason:
[24:15] Only the bad ones as they get done kid distressed in the malls have to have to buy them yeah,
um so jumping over the pond this is super interesting to me and I don’t know how close you’ve been following pin duo duo but pin duo duo is a e-commerce site in China,
and they’re heavily focused on gamification so I kind of think of them is the wish of China which is ironic because wishes.
Scot:
[24:44] Wishes the wish Upton.
Jason:
[24:45] Exactly,
um but soap into a Duo is like hey get a bunch of your friends to go in on this deal with you and it makes the deal well or if you get enough people to buy with you you get these special deals it’s kind of gamification of deals and it’s mostly.
Like inexpensive,
stuff but they they are a public company in China and they in their their earnings,
they announced that they had 780 8.4 million users at the end of 2020,
and the reason that that is interesting is because,
Ali Baba has 779 million which means pin duo duo has more users in China than Alibaba has in China.
Scot:
[25:35] Everything in China is always like so big to which is fun.
Jason:
[25:38] Yeah so.
Along those lines China has 983 million internet users this year and so they’re likely going to pass a billion internet users next year’s and all these numbers are huge,
I would note that aov on Alibaba is way higher than the arv on pin duo duo so they’re gmv is going to be way higher.
It’s interesting that these kind of you know inexpensive gamification sites are getting so much traction at all obviously wish has by all all apparent measures done pretty well here so.
Coming back to the US I get asked a ton right now about video Commerce and maybe we’ll do a,
kind of an updated social commerce or video Commerce show in the future but a feature I thought was pretty interesting as Google kind of did there,
their new feature launched this month and one of the features they have is they’re using computer vision to recognize products in YouTube videos,
and so they are now doing automated product ads,
besides these videos so it’s kind of interesting that they’re taking all this video that already exists and didn’t have any metadata about products for sale and they’re literally recognizing the products in the video and trying this out.
Scot:
[27:08] Neat has maybe seen that workers it.
Jason:
[27:11] I have and I mean I’m I’m curious how effective it is right now the the computer vision stuff is is pretty darn good but there,
so many like super similar variance of products that I would imagine it’s still pretty imperfect but I’d love to be wrong.
Scot:
[27:32] Feels like a would go through a tagging phase where I would say hey I think I see these things that you would pick it like a human would be in the middle somehow but we’ll see.
Jason:
[27:40] Yeah yeah so that’s going to be fun to watch I did also see a super interesting article from Channel advisor and I was hoping you could explain it to me.
Scot:
[27:51] Yeah yeah so the the topic they’re so first of all Channel advisor,
it’s a company I founded 2001 still on the board so this is all public information and
they have a ton of data and one of the things I miss most about not being the day-to-day operations is having my hands on that data because it was like seeing the future
but they were kind enough CEO Dave Spitz and head of marketing Mike shocker put together a really nice blog post.
And the topic was really kind of the two different stimulus bumps are stimuli bumps I don’t know bumps from stimulus is,
bumps from stimuli I don’t know the right conjugation of that.
Jason:
[28:33] Stimulated bumps.
Scot:
[28:34] Stimulated bumps thank you all right we just had to put the explicit on there alright and,
the so if you recall and Jason you’re more political than I am there was like two thousand dollars sometime in 2022 April May,
and then we just recently had another little six hundred dollars and then a $1,400 so this tracks what a lot of people call stimmy 2.0,
which is the fourteen hundred dollars from the Biden Administration that came out in this March and it’s really interesting to see,
what’s happening there and,
you know I think the the way I would kind of summarize the broad Strokes here is the first stimulus was really towards like that critical stuff you know like.
[29:25] Food and toilet paper and then this set of stimulus was was a different set of items so one of the biggest differences was clothing shoes an apparel did really well in 2021,
versus 20/20 didn’t see much bump at all joy and watches so people are buying a lot of you know,
more I guess not essential items with their stimulus dollars,
um Auto Parts people are keeping their cars longer there’s a shortage of new cars due to a chip shortage and it’s kind of funny people are calling it chip again what’s that was was kind of hilarious given that we did ship again.
Jason:
[30:06] I wonder how many of those chips are on boats in the Suez Canal.
Scot:
[30:09] Yeah it’s only going to get worse this is.
Jason:
[30:11] The shipper chip again.
Scot:
[30:13] Yeah and I was funny because spits was.
Hit our chatting about this data and he’s like well the good news is you know we don’t have a toilet paper shortage and then the next day I saw the Suez Canal its lock clogged and I was like I wonder how much toilet paper is on those then sure enough the article started to talk about we’re gonna have another TP shortage of that doesn’t come through.
Those are categories that over indexed they did better in the more recent stimulus checks than the previous the opposite side of that would be the.
Um the categories Health and Beauty so that had a really big bump and not so much now and then computers so I think everyone’s kind of,
saturated with those items I guess in the new stimulus dollars didn’t really win and then the third quadrant would be they got kind of assumed ulis bump in both time categories and that would be home and garden Business Industrial and pet supplies.
People just spend a lot of money on that I’ve also seen you know Wall Street seems to be doing really well and,
the cryptocurrencies and in FTS so it seems like people are a lot of those dollars are spilling into really interesting categories in the economy that I don’t think we would call Essential like that first round of stimulus.
Jason:
[31:26] Yeah I mean my biggest takeaway which I have very consistently seen from all of these stimulus things is,
that that money gets spent as soon as it hits bank accounts,
um and the I mean that was like clearly evident in the channel advisor data I you know I have tons of clients where you can literally see how fast the mail is delivered like in the,
in the metrics as you watch the spike like wave across the country,
and I point that out because there were a number of analysts that were like oh you know what savings rates are so high right now and Americans are so flushed that,
they’re not going to spend this money that they’re going to invest this money and like we like to make fun of Scott Galloway on the show,
he liked retweeted a study where like the the top line of the study was,
Millennials say they’re going to invest the stimulus check on more than 50 percent of the Millennials say they’re going to invest their stimulus check on Robin Hood.
[32:28] Which did not happen side note I dug it’s– got about this and he kind of acknowledge that but I dug into the study and it was a survey of,
Millennial Robin Hood customers and listen there was a survey of like 2,000 of them like 300 of which responded,
so I teased him I followed up by said in a fall on study teenager said they don’t care about money in a survey of Bill Gates three kids one of which.
You thought that was funny.
[33:01] Yeah so but that was super interesting and then it is very interesting to see which categories are getting kind of sticky bumps versus got these,
tertiary bumps and a lot of the categories that really got creamed last year,
it does feel like they’re making a partial come back if you look at them by historical levels they’re still down but things like shoes and apparel and,
things that were way down are definitely starting to re-emerge in you know the leading products in each of those categories,
are starting to do pretty well.
Scot:
[33:37] Freckle,
nothing I’ve been watching really close is the IPO Market is white hot if you haven’t been tracking that so so see Joanne’s went out a couple weeks ago so that was interesting,
that one had a mediocre reception by Wall Street I would say I think it had to price down from its expectations.
And I watch you and II think you’ve adopted this hobby of mine where you watch the roaches,
and that one was pretty under under the quality bar is pretty high on these things now they have a pretty high production value and that one was kind of a.
Guy calling in from a payphone got a kind of a thing so that one that one did not land very well,
the one that was really interesting was thredup so those guys went public this week and last year they did a hundred eighty-six million,
growing fourteen fifteen percent so you know pretty good but you know.
[34:36] Not a barn burner by any means and then their IPO has been on fire so they have a three billion dollar market cap so we look at last year’s kind of Revenue because we don’t know what this year’s will be and they don’t they don’t when you’re going public you don’t put out a.
Projection until you have your first public quarter so you know let’s say.
Let’s say they grow twenty percent this year to be aggressive which may be are.
That was an acceleration year due to covid but anyway let’s say they grow twenty percent so let’s see that would be 636 Rosso call it to 20 this year just to kind of put a number out let’s say 250 just to be super generous.
Devil three billion dollar market cap so that’s you know you know way more than like 15 times,
most e-commerce companies are in the three to 125 time,
so you know they have got a real outsized performance from their IPO,
so it’s been interesting to see you know how that stock performs it was just trading up another 50% which I did
got them that three billion dollar market cap down feels a little frothy to me but we did have the CEO on the show it’s a great company and I think what they’re doing is really interesting just interesting to see that you got such a strong,
yeah I think I think they’re worth.
[35:57] So Joanne’s has like two to three billion and they’re worth and Joanne’s is worth like 500.
Million so they’re worth like six Joanne’s but they’re like you know a fraction of the size so just shows you what the market the market likes growth and more Pure Play e-commerce than the omni-channel stuff.
Jason:
[36:16] Yeah yeah In fairness there model is slightly different than a wholesale retail or so their cost of goods is probably a lot lower because they are.
Scot:
[36:25] Oh yeah they have way better margins and stuff.
Jason:
[36:27] So it’s not perfectly apples-to-apples but it’s still awesome I would assume I haven’t heard him say this out loud but I would assume Anthony Marino the,
the CEO thredup would would credit most of his IPO success to his appearance on episode 170 of the Jason and Scot show.
Scot:
[36:44] Absolutely it’s a seminal work and really really is if you look at the curve it’s where the elbow is in the curve when they’re on the show.
Jason:
[36:52] Yeah I will just Echo another point you made it is shocking the variance in quality of those Road Show videos.
Wag their sometimes there’s like a dude with a PowerPoint presentation and a bad one and other times there’s like amazing production value and it’s like it’s there’s drama and humor and entertainment it’s a I don’t know.
How the quality of that correlates to their IPO success but but.
It’s very obvious like who’s investing in those things and who is it.
Scot:
[37:28] And then some of them goes over the top they’re like a Silicon Valley skit where they’re kind of like you know we’re going to change the world with compression.
Jason:
[37:37] Yeah I saw this was not one of those Road shows but there was a like,
in earnings call from Intel and you know Intel has had kind of a bad run lately in so that you know the CEOs kind of owning a lot of there.
They’re missteps and talking about their turnaround plan and I was he’s a super smart guy he was really articulate he had a lot of interesting points,
but his gestures we’re like so aggressive and over-the-top for every single sentence he uttered like I couldn’t even concentrate on his words.
Scot:
[38:11] One of the favorite topics in the news these days is private labels and there’s been some interesting news here and this is really under the microscope because
Amazon is doing their private labels the one that everyone knows is Amazon Basics and,
there’s a lot of antitrust focus on this area and it’s funny you and I laugh because you know if you read the headlines it makes it seem like Amazon invented this whole idea but it’s been around,
I think I saw a Benedict even say it’s been around since like the 18 hundreds or something like there’s he found some retailer and London that it’s been doing this for.
Since like 17,
25 or something anyway some interesting news there before we jump into that though maybe remind people you have a really kind of nice nuanced way of talking about this maybe walk people through that before we jump in.
Jason:
[39:02] Yeah so there’s a lot of freezes in in this space the most common one is called private labels,
and what was happening a lot right now is not what I would call private label there definitely is some private labeling,
but the bulk of the interesting stuff right now is what I’m calling owned Brands and there’s no standard definitions here but my distinction between private label and owned brands,
is how those products are marketed in position,
so private label products tend to be knockoffs of popular National products.
And the so the value prop is exactly the same as the national brand and very often it literally says that on the box compare this while bupropion to Advil right and a hundred percent of the marketing for that wall be profilin is,
that it’s on the Shelf next to Advil right like there’s no Walgreens isn’t running ads for wall bupropion they’re not doing Billboards or TV commercials or you know there’s no wall bupropion Twitter account or anything like that.
[40:11] The it’s a private label product that’s sitting on the shelf next to Advil.
A lot of the products that successful retailers are launching right now and that I’m particularly interested in and are you know they tend to be like.
[40:24] One of the three big strategies that almost every retailer has to compete with Amazon as to sell stuff that Amazon doesn’t have in to invent these new owned brands.
To me the big distinction in the own Brands is they usually are not the same formulation as a national brand there they usually are a unique product that has some differentiated feature,
very often because the retailer used their customer data to identify a gap in the marketplace they might have used there,
there are no results found searches on target or you know non converting glances on product tiles and all these different things to kind of find a gap,
make a product where one didn’t exist and then most of the retailers that are building these successful own brands are marketing the heck out of them so the extreme example that I always like to use is is you know the as I.
[41:20] Click mute the for saying this the Amazon Alexa is not a private label Sony Bluetooth speaker right it’s a unique product that Amazon invented that has,
features that no products prior had in the market and by the way Amazon’s hired Anthony Hopkins Ellen DeGeneres.
Harrison Ford and others to advertise this product on the Super Bowl so that’s kind of what,
owned brands are and there was a lot of own Brands progress in the news this week.
Scot:
[41:57] So Ross do there.
Jason:
[42:00] Yeah so the two so I’ll start with Target because I reference them and and Target really is to me,
um the most successful retailer in this space like arguably by Dollar volume you could talk about something like Kirkland and Costco is being even more successful,
but target has really leaned into this we’re going to sell stuff that no one else has and we’re going to Market those products,
for a long time and earlier this month they announced that a product they launched less than a year ago called All In Motion which is their athleisure brand that kind of competes with Lululemon,
um had surpassed a billion dollars in sales and the that’s that’s relevant for a bunch of reasons,
it’s they watched an athleisure brand right before the pandemic kicked into full gear which is phenomenal timing that was the only apparel people were wearing,
um the it had inclusive sizes which historically will eliminate in particular was not good at you know they were an attractive Target price points,
and they target announce that this all In Motion billion-dollar brand was targets 10th.
[43:14] Owned brand to surpass a billion dollars of sales in one year and,
if you look at the list of all the digitally native vertical brands that have surpassed a billion dollars in a year the answer is none,
and if you look at all the cpgs that have launched new billion dollar brands,
um in the last five years the answer is none like only retailers are launching new products that sell a billion dollars a year and Target uniquely has launched.
10 of them so that’s phenomenal success almost every retailer I work with is like looking jealously at Target and trying to figure out their version of that model.
[43:53] To double down on that Target launched a new brand in the Craft Space you’ve touched on this a couple times but crafts was one of the retail categories that blossomed in the pandemic and so they want,
Moto AMA which is like 400 skus of arts and crafts items to compete with Michaels and Jo-Ann’s,
I just like any product with the llama in the name by the way.
And so that you know is going to be interesting to follow the more relevant to me they watched an indulgent dessert brand called favorite day,
and so I like to eat the the favorite day snacks on days that end in a why.
But you can make your own rules so that’s another food brand targets had a lot of very good.
Scot:
[44:41] We call that podcast research.
Jason:
[44:43] Exactly exactly.
Scot:
[44:44] Listeners appreciate.
Jason:
[44:45] They’re 700 excuse to try so a lot of good stuff there and then a close cousin of the owned brands are exclusive brand Partnerships,
and so target has his has been famous for these as well and they launched a new one this month with Levi’s so they have,
unique Denim and again like Target leaned into these inclusive sizes which are doing really well despite the fact that a lot of the specialty retailers haven’t done well with with inclusive sizing and kind of,
Levi’s branded products with with cool unique denim designs at a surprising Target price point so,
so two new owned Brands and exclusive partnership on top of the 10 brands that have already sold a billion dollars in the last few years,
um and a lot of those Brands were the.
[45:40] The product of the former Chief Merchant at Target who is this guy Mark Triton,
and Mark is not at Target anymore because he was hired as the CEO at Bed Bath & Beyond to sort of try to turn around Bed Bath & Beyond,
um and so and shockingly and famously Bed Bath and Beyond was horrible at own Brands and private label and in fact like less than ten percent of their sales are our own brand or private label products,
so they bring in Mark Triton and they announced this quarter that they’ve launched their first exclusive products at Bed Bath & Beyond so they launched a new bed and bath line called Nest well,
they have a second spa bath line called haven and they’re getting ready to launch their like,
entry price point items across all other categories that will be called simply Essentials so those of us in the industry are really curious to see if Mark can.
[46:40] Um kind of recreate the same magic that he had a Target at Bed Bath and Beyond those are his first three brands and then I also noticed this week that he was able to kind of,
cherry pick a couple senior execs from Wayfair and Walmart and the wafer exact is Jill Pavlich who was responsible for all the exclusive brands at Wayfarer so,
um they’re they’re building quite a high-powered own brand Team at Bed Bath & Beyond so that’s going to be really interesting to follow.
Scot:
[47:13] Now did they have a long history of of owned brands or these are brand-new to the.
Jason:
[47:19] No these are almost all brand new there are very few own brands at Bed Bath and Beyond and I would argue that like where they were it doesn’t even count like Furniture is kind of a weird category where.
They’re just.
There are very few Brands the majority of furniture retailers are reselling these kind of pseudo private label Furniture products and so the the.
Most of the private label sales have been Bath & Beyond were in these Furniture categories where they were basically just doing what everyone else was doing.
So they really hadn’t made a good effort in like trying to launch their own Brands and the old leadership team had kind of,
announce a couple of initiatives but none of them ever finished so you know we all assumed when they brought him our tried to in that that was going to become a much more.
Serious effort at Bed Bath and Beyond and now we’re seeing the first indication that that’s exactly what’s happening there so it’s.
I’m not sure I would call it a win yet and you know there’s a lot of headwinds facing Bed Bath and Beyond but that’s going to be interesting to follow and I certainly think.
They have some people there that you wouldn’t necessarily bet against so it’s gonna I hope their success.
Scot:
[48:34] Yeah if I had a good Yoda voice I would send you a gun the private label Wars have.
Jason:
[48:39] Yeah I mean the bigger picture and we could do a whole show on this is so that’s a top-three strategy for every retailer is they’re trying to become a brand,
and spoiler alert guess what every brand is doing in response to that they’re all trying to learn how to become a retailer and meet their own customers and sell direct and collect their own data.
I call it the epic battle between Brands and retailers is they all try to gain each other skills.
Scot:
[49:05] Yeah it’s going to be really interesting to see how that plays out.
Jason:
[49:09] but that’s probably going to be a good place to leave it for today we have stayed within our allotted time which I want to take the win,
so if this was valuable to you I hope you’ll jump on iTunes and finally give us that five star review,
if you have any questions or comments about any of the things we’ve discussed we love to hear from you on Twitter or Facebook page or I’ll put Scott’s personal cell phone in the show notes.
Scot:
[49:34] Sounds good thanks everybody.
Jason:
[49:36] Until next time happy commercing!
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