A weekly podcast with the latest e-commerce news and events. In episode 269 is a recap of Amazon and Instacart news as well as other industry news.
Breaking News: Instacart has appointed Facebook executive Fidji Simo as its new CEO
- Jeff Bezos steps down
- Amazon offers it’s multi-channel fulfillment (MCF) to Big Commerce customers
- Shopify Unite 2021
- Instagram leans into commerce
- Nike earnings
- Warby Parker IPO
Episode 269 of the Jason & Scot show was recorded on Thursday July 8, 2021.
[0:24] Welcome to the Jason and Scot show this is episode 269 being recorded on Thursday July 8 2021,
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 Jason I hope you had a nice restful July 4th.
[0:49] I had a great July 4th my poor dog that doesn’t like fireworks cannot say the same but.
[0:56] I love you tried the Thunder shirt.
[0:58] We’ve tried all of those homeopathic remedies and we’re now on doggies ionx and the last time we talked to our vet like he actually said inadvertently suggested that both the dog and my wife should be on Zan.
[1:11] An unrelated news he’s no longer but awesome I’m glad you did well we wanted.
[1:20] Primary care physician exactly.
[1:25] We had some breaking news and pretty exciting and I’m going to kick it over to you because it is your category of grocery.
[1:33] Yeah Scott says that like he doesn’t use groceries but the some news from earlier today that instacart announced that they had poached,
a senior executive at Facebook and I’m I’m already telling the story wrong but they they’ve appointed and I’m sure I’m going to butcher her name,
fidji Sumo who’s a former Facebook executive that is now the CEO of instacart.
And the reason this is potentially big news instacart has you know been one of the primary beneficiaries the pandemic,
they’re they’re going gangbusters at the moment there’s a lot of speculation that they’re about to announce an IPO,
and the founder of instacart is now stepping into an executive chairman roll out of the CEO role,
and Fiji has actually been at instacart I think for like half a year from Facebook but or,
I guess she was on the board of directors and so now she’s coming on as a full-time employee.
[2:36] Yeah it was interesting I was watching CNBC as I want to do and they did a breaking news alert and what to a live shot of
of her with the apoorva who is the founder and now exec chairman of instacart and they were
they were pretty directly asking the IP o– question they had to be kind of coy about it because you don’t want to.
[2:58] You can’t control the timing of that there’s another article out from the information that revealed
that this seems to be a deeper strategy on the instacart side because they have taken over 60 folks from the Facebook side of things before this this kind of high-profile one and
what’s interesting about that is the article went on and kind of dug into it and a lot of them come from kind of the korad part of Facebook so you know what what I’m reading between the tea leaves there is you and I have not only talked about this new ad Network on instacart but we had one of the leaders there is a next Amazonian and on the show
and yeah I’ve heard a lot of Buzz around this
ad Network getting a lot of play and you can imagine that that would be a really nice thing to start having grow at triple digits post covid-19
as a way to continue to monetize thing so my theory is that this is a concerted effort to really beef up the ad Network part of instacart and add a second leg of monetization the first being consumers paying either extra or a delivery fee for groceries and it’s gonna be interesting to see if that
you know then maybe that rippled all the way to the top where they said hey would it be great to have someone with a really good ad
Network chops in here and thus the addition of the G.
[4:20] Yeah no I think your speculation is probably spot-on you know groceries a tough business to make money like in way instacart isn’t really a grocer that are.
Multi-sided market place and so it’s a little easier to make money but still the best way to make money is with that ad Network and.
I feel like more than half my life right now is retail media networks so they are super trendy and the dirty secret is most of them.
Are not very high volume yet right like the retailers are investing all this money and collecting ad dollars but they don’t actually have.
Um enough eyeballs to have real scale and instacart is one of the exceptions to that so so they are a viable place to put your.
Your digital ad dollars especially as they get more complicated in the Privacy Wars,
so it makes sense that they want Executives that are good at that and I would also argue the instacart.
Advertising products could stand for some.
Some Evolution and some mature zation and so you know maybe that will be one of her focus is there is two two.
Make those products more mature and friendly to advertisers.
[5:34] And it wouldn’t be a Jason Scott show without some.
[5:43] Zon news new your margin is there opportunity.
[5:51] Well the news that popped out at me this week and this is kind of a recurring theme that we promised listeners we’d keep track of and this recurring theme I like to call
Amazon versus Shopify so you know we started out this year with a lot of
kind of back and forth between the two companies on social media there was some talk of Jeff Bezos re-engaging to help the company come up with a Shopify strategy
and so we’ve been watching this one really closely so I thought this news was pretty interesting and I’m curious what you thought about it as well so big Commerce announced that they are
partnering with Amazon for mcf which stands for multi-channel fulfillment and you know I wanted to read this quote so this quote comes from the head of the omni-channel at Bigcommerce Sharon GE GES,
and then the code is convenience and fast shipping expectations have become the Holy Grail of the online Shopper with demand forecasting becoming harder to control
he G said in a press release Amazon mcf will help our Merchants to better plan purchase fill in a much more efficient way
so I thought this was pretty interesting because first of all Amazon multi-channel Fulfillment has had kind of a rocky rocky.
[7:05] Road not the ice cream but the
you know so Amazon introduced FBA and they kind of introduced this ability to ship to other channels and then they got really rigid with it like then
people said well that’s good but we want you to ship in a different box
and your fees are too high for off Amazon shipments and this that and the other and you know what if we want to use a carrier that you don’t really lean into right now like a FedEx or something like that and
if so then Amazon you know I don’t know
well the official stances but it became very hard to use that service in volume because the filament system got full and Amazon kind of prioritized FBA over M CF so mcf had this kind of like up and down Rocky thing so I thought this was interesting because it does seem like
to getting more serious about it and then it also you know.
[8:00] My theory is if you were going to sit down on a whiteboard come up with 10 to 20 things that can start the Box Shopify in this is one of them and then if you
if you think back to the clubhouse we hosted that had Faisal on there he actually kind of said if I was the Amazon I would throw Logistics out on because they’ll never figure it out and then I’ll use that as a wedge to if I could get all shopify’s customers using
my Logistics then I could wedge out Shopify
so I think that could be part of a you know I don’t think this is going to be the Silver Bullet by any means but I think it is one of these silver shotgun pellets that Amazon is going to start firing at Shopify so I found that pretty interesting.
How was your day.
[8:43] Yeah I generally agree I’m not confident that it’s I’m sure.
Competitive factors against Shopify is is one aspect but to be honest it just good business for Amazon.
It’s another service where they get to make a higher percentage of the to the worldwide gmv and all the markets that they’re in,
um you know because Amazon’s already the biggest digital platform in most of the markets they play in that they’re shipping the majority of packages for most of these these sellers anyway and so it’s just a way to grab the rest of their volume almost every you know
the majority of these sellers selling other platforms besides Amazon,
the majority of them now have recognized they need to have their own website and so it’s kind of foolish of Amazon to I force them to open their own warehouses for those alternative channels or,
hire another 3pl so I just think.
[9:39] In the same way it made sense for Amazon to rent a WS capacity to others and you know provide some of these other services it’s a way to monetize their delivery Network and their fulfillment Network so I think it’s super smart.
Um I do think Shopify had some aspirations in the 3pl side of things and I assume.
Amazon will you know being quite a bit ahead of Shopify you know then making this ubiquitously available will cause some problems for Shopify the one thing that still gives me pause and we give me pause if I were a merchant.
Um is that Amazon as you alluded to already has a checkered track record for supporting this service right so,
um even if you’re just an FBA seller and you put your inventory in FB a Amazon is a notorious for constraining how much of your inventory they’ll accept.
[10:36] Based on their demand capacity right so there was a lot of Buzz,
um leading up to Prime day that a bunch of vendors just couldn’t get inventory into FB a because Amazon had dramatically curtailed the amount of inventory that they would keep.
Um there and there’s all this speculation in the Amazon preferences new skus versus old skus and so a bunch of vendors.
Found themselves having to go to other three pll’s to sell on Amazon because Amazon just wouldn’t accept all of their goods and so if you’re going to say oh you know what I’m going to put all my eggs in Amazon’s basket and have them ship all of my.
I need to be certain that when they get busy when they have holiday Peaks they’re not going to,
preference their own their own stuff and what’s going to sell best on their platform against my needs and at the moment Amazon doesn’t have great credibility there so I think they have some reputation.
Repair they need to do but assuming they do that like this makes a lot of sense and as you well know.
Fragmentation of inventory is super expensive so you know having having some of your inventory and radio or or you know some of these other three pll’s and some of your inventory and Amazon totally sucks because,
you sell out of one place while you have slow turning inventory in the other place in that car.
[11:57] Yet kind of invites Murphy’s Law to come bite you in the butt because the second you send a thousand widget somewhere then you’ll need a thousand widgets the other place it always happens that way it’s super frustrating.
[12:08] Yeah so I think this is a super appealing service, Amazon has a slight credibility problem that they’ll have to overcome and historically they they’re pretty good at overcoming those.
[12:17] One last one is I know eBay and Walmart all,
you know they got super frustrated that someone would come to eBay to buy something it would show up in an Amazon box so I know that there’s been a lot of talk of them either putting up rules or thinking about it or
on again off again with rules around that so I think Amazon would have to look at it and also think about the Amazon box and and.
Not ship the stuff out and kind of normal Smiley Prime box that everything else comes out and.
[12:49] Yeah no I think that is a TBD and again it’s one thing if I’m,
indigenous on Amazon and Amazon you know doesn’t is super careful about what they let you even put in the Box because they’re again trying to disintermediate you from the customer,
but if it’s my customer if I sold the you on my website and then I’m going to ship you a box and I’m just paying Amazon to ship that box for me.
Like I of course want and expect to be able to put my promotional materials in that box and that you know figuring out all of that kind of thing.
It is part of the mcf we haven’t we haven’t seen them as on solve it.
As a side note this whole category is just ballooning there was an interesting article in.
CNBC last week about how demand for warehouse space is at unprecedented levels and new cities like Columbus and Savannah are emerging as the new shipping hubs because.
The traditional ones like Memphis and Kentucky and stuff just don’t have have any more space to rent.
[13:55] Carson and then I saw some of the stairs like a next generation of 3pl that’s kind of like
F ba of vacation / we work on vacation of 3pl like ship hero we’ve had some of these folks on the show talk about
shipping carriers a lot of them are raising hundreds of millions of dollars right now so the VC dollars are flooding into the space to so it’s gonna be really interesting to watch the overall fulfillment Wars continue.
[14:21] Yeah and I something we’ve talked about a few times every week the virtual 3pls right and just you know it’s super interesting.
[14:29] And in that vein I put a little LinkedIn post I kind of tied this to fundraising it spiffy but the overall,
thing I was trying to get across is.
One of the friends of the show Brian Fitzgerald he’s one of the internet Analyst at Wells Fargo they did a bricks and clicks day and this was last week and in there they had Rob Williams who’s a former Amazon GM of global vendor management and he kind of made this off comment off
off-the-cuff comment that I thought was interesting he said Mr Williams emphasized the sheer scale of the Amazon is logistics filled out over the last two years
with over a hundred forty million square feet added which is the equivalent to the Distribution Center capacity added by Walmart over the past
50 years so that you and I have remarked several times about how how much infrastructure Amazon is building out and it’s just hard to even,
compare what they’re doing I thought that was an interesting comparison.
[15:27] Benedict Evans pointed out that he kind of argued is that a fair comparison because it doesn’t count the retail stores
I had a clever counter that that I can’t remember but you know Amazon has pixels instead of physical space so so it’s kind of apples and oranges in a way but
yeah the my point in bringing it up with spiffy is I’m out their fundraising all the time and I get this feedback from VCS that say oh wait a minute you have fans and infrastructure
yeah we don’t invest in any companies that have that and I was want to facetiously say well
well you would have missed Amazon because you know they they clearly have if asset heavy is a thing they are the most heavy and assets company out there that that I can think of that doesn’t count all the the compute centers that they’re building out for AWS but that’s a whole nother story and then,
there’s a famous Jeff Bezos ISM that he has someone asked him this kind of question around this asset heavy thing he said
you know one way of thinking about it is if you build a big enough castle that is the moat
I guess the question he was asked is you know what’s Amazon’s competitive,
and his answer was we’re going to build such a big castle we don’t need a moat and that this is this kind of reminded me of that quote as well and I tagged you in this you get the fun benefit of getting all the LinkedIn notifications for people commenting.
[16:51] Yeah I was gonna say you’re way more popular LinkedIn than me because that my insight through this is you get like
dozens of comments every morning so I get up every morning and I’m like you’ve got a hundred new notifications and I’m like nice I finally became popular and then it turns out it’s all,
Scot Wingo levers commenting on your thread.
[17:09] Wait till you live too
two things so wait till you’re working anniversary that’s a always a big day on LinkedIn and then you should put a post up this as I really need an explainer leader explainer video and automated lead generation and I think you’d be very popular.
[17:26] Yeah being slightly facetious I said the notifications are popular the emails I get I get plenty of unsolicited LinkedIn email yeah trying to sell like custodial services to pupusas.
[17:40] Hey some there’s a lot of garbage cancer that I imagine you damn thing.
[17:45] Yeah yeah I wouldn’t know because the haven’t seen enough is very much lately,
yeah so that that but that thread is super interesting there’s been a lot of good conversations there and I’ve seen some of your your debates a slight.
I don’t think this changes the spirit of this at all like Amazon has this huge advantage in logistics it’s the biggest advantage and,
that it’s something that despite the law of large numbers they’re still growing and investing way faster than anyone else but Rob’s comment was slightly off on Walmart like he what what he meant to say was,
in the last two years Amazon has spent as much as Walmart did in their first 50 years not the last 50 years and so it is true,
Walmart has dramatically accelerated their spending to not as much as Amazon but much more so than they did in their first 50 years.
And / Benedict’s point like I do think.
These omni-channel retailers are leveraging their stores as a clever part of fulfillment so I to me it’s not either or but
I do think we’re seeing Walmart and Target and Best Buy invest a lot in store fulfillment and in many ways that is working,
as a competitive oil to Amazon any other Amazon news caught your attention this week Scott.
[19:07] Well it is we’ve covered this before but Jeff is stepping Jeff Bezos I should say is stepping down as CEO
and they updated some of the company leadership values I didn’t see that as big news and a lot of people are you know the headlines are coming out already is this day too and that kind of thing
yeah I feel like.
Having met a lot of people at Amazon I think the culture has locked in every
every both deep and wide there and I think it’s going to take at least five years for us to see any kind of change in the culture there so I don’t think you’ll see them slow down there if people are counting on this to be the moment when they stopped feeling pressure and they can stop worrying about compete with Amazon that would be a mistake.
[19:55] Yeah no I tend to agree I don’t think we’re going to look back in history and say oh man Jeff Bezos stepping down July 1st 2021 that was the inflection point right.
The I would argue it’s been day to at Amazon for a while like everything’s on a spectrum so.
[20:13] Amazon is an amazingly agile company that overcomes a ton of institutional inertia I think it’s one of the most impressive things about Amazon despite their enormous size,
they have a bunch of politics and institutional inertia and sacred cow syndrome at this point just like everyone else there I mean you know it’s a 30 year-old company so you know as much as Jeff Bezos has some great slogans.
Like some of that had already said in before Jeff left and you know Amazon is just too big one person like can’t.
Like be making that day-to-day impact on Amazon that he once did so like clearly his impact is.
The culture he created and again I’m with you the company values I think what’s interesting is that they changed it all right because,
you want these to kind of be pillars that that are not trendy and don’t change every year you know based on fads,
um and so it is it’s interesting that they amended them for the first time in a long while and the way they amended them is that you know to New Missions that Jeff Bezos announced in a shareholder letter right so you know they added.
Value around being a better employer and a value around being a better.
[21:36] I am concerned about him going off into space that’s going to be yeah I kind of questioned the logic on how there’s a nonzero chance that doesn’t work out.
[21:46] I’ll be ya as an investor I like him going in that rocket a lot I care a lot more about that and it makes me a lot more queasy than him stepping down as the CEO.
Like there’s an argument that his biggest value to Amazon will increase as he like.
Stops reading customer service letters and more focuses on big-picture issues as executive chairman and largest shareholder but Rockets are dangerous man.
[22:13] Yeah yeah yeah I’m worried about that but it’s going to be exciting as well so we’ll see how that goes.
[22:21] Yeah no for sure and then the only other thing that jumped out at me that’s a little interesting in this hole.
Shuffling of the deck of Executives and things is it.
You’re starting to see you know those Amazon executives are their Amazon experience is really valuable to other companies so it’s not surprising that people are trying to recruit them,
I think with Jeff stepping down in a succession plan you know getting implemented,
I think it’s going to be harder to hang on to some of those other senior Executives so it’s going to be interesting to see.
If the biggest impact of Jeff stepping down in the long run is less retention from the other s team members and along those lines I notice that Rent the Runway which is getting ready to do.
They’re their IPO and they you know had some,
some challenging leadership Optics grabbed one of the.
The senior Executives from the the Amazon supply chain Tony Clark to who is.
VP of fulfillment and Amazon to kind of take over Rent the Runway so you know I think those kind of stories could become more common.
[23:40] Yeah yeah there’s definitely a lot of poaching going on across the industry is some of these next-generation things are scaling up and looking at going public and need to tap into the.
[23:49] Yeah and the two stories this this week I think people leaving Amazon and people even Facebook I have to believe it’s easier than ever before to peel off Executives from those two companies.
[23:58] Yeah one on Amazon thing I wanted to
pick your brain on is assume your Instagram person came out and said hey our new kind of going forward we’re no longer a
kind of square photo company we have a new Focus area in fact there’s for number one creators number two video number 3 shopping and number for messaging
I thought that was pretty interesting because we’ve seen
Instagram kind of crank up the amount of activity around shoppable ads and incorporating
extending their partnership with Shopify and we’ve seen shop pay being added all over the place and I thought you know
that’s pretty interesting what did you make of that.
[24:42] Yeah well so not surprising a those were those are basically.
Mark Zuckerberg zwei like priorities from from 2019 f8 so it’s not.
Totally surprising that they’re they’ve kind of propagated to Instagram at this point it is interesting to me that.
You know at least three and maybe four of them are all like cumulatively what I would call Commerce right like you taught you know.
[25:10] What big trends am I talking a lot with with clients about it since its creators as micro influencers its video driven Commerce its.
Social commerce and the the sleeper is.
You know customer service phone lines are going away and they used to sell an awful lot of product on those phone lines and all that is pivoting to the these various chat services and you know you talk to Consumers no one wants to
use their phone for voice calls anymore so,
so you know Commerce happening via customer service on these messaging services also is a big thing and so,
for all those reasons I would say I have a lot more clients that are a lot more interested in piloting things on these social networks and Instagram.
Are you we may have the most robust Commerce tool set right at the moment so,
makes total sense for them to leaning leaning in I would say the one bomber if you’re at Instagram today is that for some good and some irrational reasons The Social Network that has the most Buzz amongst my clients as tick-tock.
[26:20] Still smaller I would argue still has less buying intent than Instagram but it’s growing much faster and it it gets brought up in a lot more board meeting so I have a lot more panicked.
Chief digital officer is calling asking me for advice about Commerce pilots on Tik-Tok than I do Commerce pilots on Instagram at this.
[26:43] Nursery and then do you respond with some of your clever to Funk videos.
[26:48] I do I do I send them all to my Instagram Channel where I talk about Tick-Tock on Instagram.
[26:55] And you do the Renegade.
[26:57] Yeah yeah I’ve,
I was for a while but now the problem is I’ve like 23 ACLS on my skateboard trying to drink that stupid Ocean Spray so I.
I probably need to stop that yeah I tend to be about three or four social networks behind so I’ve kind of just leaned into YouTube now that it’s not cool anymore.
[27:18] Just wrapping up the Friendster account.
[27:21] Oh no I’m hang on at that bad boy.
[27:23] It’s coming back I promise.
[27:25] Exactly you guys will all be sorry you abandoned me on MySpace.
[27:30] Another industry news item is Shopify held their kind of virtual unite 2021 conference they announced a bunch of platform enhancements I didn’t see anything earth-shattering
where they get the most Buzz is they basically said hey if you have an app on our app store we’re going to give you the first million dollars free and that was kind of part of there
roguish rubbish you know app stores have obviously been in the news a lot with both Apple and Google coming out under
Apple versus epic and then Google just got an antitrust filing on this topic so you know
date they kind of very cleverly took a kind of a counter PR strategy here which got a lot of Buzz which I thought was pretty clever you know
They never said how much that’s going to cost them in revenue and the stock didn’t really kind of move around and I thought someone should have asked that question I didn’t even ask that question so it must be someone in material or or,
people don’t care I don’t know but I thought that was clever PR but I really didn’t get anything much more media out of out of the announcements there.
[28:38] Well so there are few things a I would I would say that one got a lot of Buzz
but I would say if that was actually an easy thing for Shopify to offer and it’s largely misunderstood,
the app store for Google or even way more so the app store for apple is the primary moneymaker it’s their primary economic model.
[28:59] When we talk about App Store in the context of Shopify it’s a B2B app store right so what this is is your,
you want to sell your goods on a Shopify store and you need some amenity that isn’t built into the native Shopify platform,
you need ratings and reviews so you go into the App Store and you buy ratings and reviews from one of the,
the 50 vendors that offer a ratings and reviews solution and Shopify used to take a little piece of that initial Revenue.
For for that app store right and so now they’re saying hey we’re not going to take a piece of your first million dollars in Revenue.
The so so that’s a thing and it makes it a little a little cheaper for small companies to be on that that App Store,
the reality is the big companies it’s super annoying because they already had access to those customers without the App Store.
The App Store is not the only path to get your your product instrumented on Shopify so you kind of it’s closer to.
Like Google where you can kind of sideload apps and not go through the App Store but the bigger thing is.
As a general rule Shopify would tell you not to use the app store and most of the other,
initiatives from Shopify were about minimizing the app store because it turns out when you install 50 unvented plugins from small unknown third parties.
[30:28] Destroys your stability and performance of your web store and so like.
Shopify some of the other things they announced was like a better vetting process of that app store but like in general it’s not like sellers are using dozens and dozens of apps and that there’s that’s a big Revenue stream for Shopify.
[30:50] So it the fact that they have a robust app echo system is a competitive Advantage for Shopify against other platforms.
So maybe there’s more apps available on the Shopify App Store than there are on the Bigcommerce App Store and that might make you pick Shopify and by not charging,
rev share on your first million dollars in sales and their App Store that encourages more people to stay on the app store which helps them keep that that little note they have against other platforms so.
Maybe more information than anyone wanted on that point but,
to me the more interesting thing is I shopify’s another one of these amazing companies that I still like to criticize right there doing a bunch of things right,
but I still like to highlight that they’ve got a ton of technical debt and a particular pet peeve of mine has been the
the inflexibility of their platform that you kind of like every seller gets kind of homogenized to the same experience because it’s kind of hard to get out of the Shopify box,
and that that box is not very a very good performer and from a web page load speed thing which is super important to e-commerce success.
The Shopify store starts out as mediocre and then if you make some bad decisions mediocre becomes horrific and so I would say that.
[32:10] They probably didn’t do enough they didn’t announce enough in this to make me super excited that they’re fixing all those problems but I would say they they owned all of those problems at in their unite 2021 conference and,
announced some significant progress in each of those so I think for sure.
[32:27] They’re they’re doing more to allow individual shop owners to change the look and feel and optimize their customer experience in more ways.
That are codeless which is you know what most Shopify sites want so I think they made a lot of progress in their in their flexibility on their user experience.
They’re evolving their product management system in some ways to make it more competitive with Standalone pims and to make it a more useful sort of.
Hub for marketplaces so I imagine there’s some interested followers it Channel advisor and your competitors in that space that are looking at some of the things they announced it.
And then they did make some improvements in their page performance they made a lot of improvements in letting people know what their page performance is they really improve their tools there.
Um but they still aren’t embracing things that I would say are probably things you want to be embracing in 2021 like Progressive web apps for mobile and things like that so.
So I would say they’re addressing their technical debt but they did not you know come out and say it’s we’ve wiped it all away.
[33:36] Brickell one of the last things I want to talk about is I saw this and thought of you,
United presented several times about different Trends in one of your favorites is the talk about Brands going direct one of my also favorite Trends and you frequently reference Nike as a company that’s really focused on this and they had some some interesting news there.
[33:56] Yeah yeah so they had that I want to say in the mid June end of June.
They did their their quarterly earnings it’s slightly confusing because they’re not a calendar fiscal year so.
So their Q4 ended May 31st so their quarterly earnings were Q4 whereas a lot of companies on counter years in the same season or doing their kind of what they would call their q1 earnings.
I’m sorry Q2 earnings so a they had a really good earnings report.
Which is kind of impressive because in general you would have said man shoes and apparel didn’t do very well during the pandemic.
And you know again comping.
[34:42] Kind of what would that be April major March April May of this year versus last year like the basis was really sucky last year so you would expect.
Q4 to be up but their fiscal year was way up right so there,
so they’re they’re 2020 fiscal year was up nineteen percent from the previous year which is pretty impressive in the pandemic and what’s even more interesting is you look like North America and Nike sales,
last quarter we’re up 29% versus two years ago so if you’re wondering if they’ve fully recovered from the pandemic and people not wearing shoes yes like they did really well and then digital.
You know like a lot of other companies again in the pandemic more of your sales shifted to digital so you expect kind of digital to be up last year which should make the comps this year tough,
but they were still up 54% and they’re up a hundred and seventy-seven percent from two years ago so so.
Like stupendous digital growth.
[35:49] And you know you as you alluded to the thing we talked a lot about Nike is in the 1990s Nike was a hundred percent wholesale company and they
they so choose to Foot Locker and Footlocker sold them to Consumers,
and you know over time they were really one of the first Brands to launch their own retail store Nike Town and it was super controversial at the time.
People have obviously gotten used to those initiatives and if you zoom back to like twenty ten fifteen percent of Nikes sales were direct-to-consumer well,
in 2017 Nike said hey we’re going to get really serious about this direct-to-consumer we think that’s the future we’re going to fire all of our wholesalers and mainly become a direct-to-consumer company and in fact the numbers were startling,
they said they had 40,000 companies that sold Nike shoes and they were looking to diminish that to about 80 companies,
and every year we’ve seen them fire wholesalers this year we saw them say to DSW that you’re not going to be selling Nike shoes anymore,
so Nikes really practicing what they preach and in 2020.
Thirty-five percent of their sales were direct-to-consumer so they are you know making a lot of progress there you know in that that strategy is basically working for them so it’s been super interesting to watch and I,
I talked with a lot of brands in other categories about the Nike example and it’s.
[37:12] They have their own platform and echo system with Nike Plus,
um that they’re they’re a leader in social commerce they’re doing a bunch of things really well so it’s interesting that not shocking that they had a great quarterly earnings and I think their stock had a nice bump as well.
[37:31] Speaking of stock there’s an IPO that I am eager to get my hands on but I won’t be able to right away and I thought maybe you could explain that to our listeners Scott Warby Parker has announced that they have
confidentially filed for an IPO and you’ve already taught me what that means but maybe you could explain it to our listeners.
[37:52] Yes there’s back in the Obama Administration there was this jobs act thing that allowed you to file confidentially to do an IPO and the benefit of that is
it’s when you the old school way you would file for an IPO and then
all of your conversations with SEC were public and inside of there there’s a little bit of dirty laundry thing that goes on there also.
[38:19] It almost fully commits you to the IP o– path at that point so it doesn’t give the company the ability to kind of,
test and kind of say all right we want to kind of show this you see what’s going on here and maybe we decide based on their feedback we don’t want to
do this process or maybe we do some exploratory conversations with potential shareholders and valuations off and we don’t like it we want to pull the IP o–
it doesn’t give you that opportunity so that’s what the confidential filing thing gives you now,
when companies so then why would a company announced it so the reason companies now announced that they’re doing it is too,
if they they don’t have to do it the day they file so what they probably did this filed they got good feedback and round one from the SEC and then,
they committed to the path and then it’s smart at that point kind of prime the pump and tell people you’re coming down the path a little bit.
[39:14] It still hides your SEC things you still have that small window where they filed before they announced they were doing this
to test the waters get feedback from SEC maybe they were a lot of times you’re also having what’s called a dual path kind of a
a program where you’re selling the company you’re looking at possibly selling the company and an IPO is kind of an alternative so that’s that’s why it would then be time to
to announce it is you’re fully committed to the IPO path and it’s kind of like when you list a house now a lot of people do it coming soon so it puts a little bit of a coming soon out there
to build excitement for the IPO but then also does keep the communications with the SE comp SEC confidential and it does allow you to run a little bit of a decision-making process before you announce the confidential file.
[40:02] Gotcha and so but it is true that at some point that s one becomes public right.
[40:07] Yeah yeah what’ll happen is the SEC will say
okay this SEC is out of draft mode and it’s going to you know once you update it with these things you’re good to go and then they’ll they’ll update it and then it will be kind of a hot live S1 and then that will
start the whole thing where they that starts the calendar of after X days you start your road show and then you need to price and then do the type you.
[40:36] Yeah and so I and many others are super eager to get our hands on that as a lot of listeners will know where be Parker was one of the,
the first kind of poster child for these like modern digital direct to Consumer Brands and so for the longest time,
you know every brand in America was like the sky is falling all these d2c companies are showing up in there doing much better than us and they’re getting all the buzz and the two biggest examples were Dollar Shave Club and Warby Parker.
And we’ve never gotten a chance to see the real economics behind our shift Club because they were part of a private acquisition at Unilever and Unilever doesn’t have to disclose a lot of there.
They’re their individual financials because it’s not material to Unilever.
[41:23] We’re all eager to see how big Warby Parker really is and you know I have a hypothesis that that while they seem like a good company and.
I’m sure they’re going to meaningful sales that they these DDC companies are slightly overhyped and so I think people might be surprised at like what the annual sales run rate is.
At where we Parker when when the stuff gets disclosed so I’m.
Excited for that and then you know past guest of the show Dan McCarthy like he’s having a field day with these s ones because increasingly they’re putting.
Customer retention data and cohort data in these things and that lets him do why you know the real big brain math.
To figure out the the long-term value of these companies and inward to be partners case.
They’re one of the oldest digital di disease out there so they’re going to have a lot of robust cohort so they choose to share some data that will be super interesting.
[42:23] Yeah I don’t I don’t know how often people change their glasses this that’ll be factored.
[42:28] Well part of the Moss so like a lot is annual or at least prescriptions and things like that and part of the word we parked our model is that.
It was they would say that like we’re so inexpensive that we become more of a fashion accessory and people that would have only owned one pair of glasses will own for pair of glasses and people that would have only bought glasses every three years or buying glasses every year and stuff like that so,
it’ll be interesting to see how much of that is true.
[42:55] Cope and then kind of a tease for a future trip report you are spreading your wings and find a New York to do some retail business for us what’s what what are you going to check out when you’re there.
[43:07] Yeah old time listeners will know you know I was on the road every week and we talked about visiting stores every time I got a chance to visit them I haven’t gotten to do that in a while.
I have done a couple business trips but I do have one for the end of this month in New York and New Jersey and I have reserved a day because there’s two significant new store openings that have happened this month.
There is a Wizarding World of Harry Potter store,
that opened in the Flatiron District in New York I’ve read a lot about that I got to visit it while it was under construction but this will be my first time seeing it open.
And some people will know that I often use Ali Anders Wand Shop at Universal Studios as my example of the best retail experience out there so so Harry Potter has some creds,
the Harry Potter team has some creds and Retail it’ll be interesting to see what they do in this this Flagship retail space.
And then the other company that opened a retail store.
[44:12] Arguably for the first time is Google so they’ve opened a permanent store in New York City and they had a big new cycle where they’re like we’re opening our first store it’s a huge deal,
and I would put an Asterix on that because they have done a lot of significant pop-up retail where they like open to store for six months.
And I’m not sure that the the permanent store is necessarily going to be wildly different than those pop-ups but I’m eager to see how their their retail shops have evolved and I’ll be fun to visit that store.
[44:44] Yeah I think I double dog dare you to walk in the Google Store the megaphone and just say two words OK Google and then run out.
Let’s see what happens and then at the Harry Potter store I’m excited to hear
in a future show you don’t have to reveal now if you’re not comfortable this a very personal question but what do you put at the core of your wand are you a phoenix feather guy or a unicorn hair or
Dragon spit or yeah so it’s going to be exciting to get a report on that as well.
[45:17] Yeah well Scott as you well know you don’t get to pick that because you do not choose the wand the wand chooses you.
[45:23] Ah man going deep on the HP nods.
[45:26] Yeah but adding a layer of complexity this New York store has some scarcity so there are there is a 1 for example that’s only available at the store that’s not available through any of the other properties so do you.
You pick the one that’s the best fit for your innate magic or do you you know pick the one-of-a-kind one that you can only get by visiting the store it’s.
It’s a lot of a lot of.
[45:49] Solid on door for the scarcity and sell it on eBay.
[45:52] Yeah Scott Scott I know exactly what you would do I am selling some stuff on eBay for the first time for so side note for a future show.
It turns out it’s a normal consumer it’s a huge pain in the ass to sell stuff on eBay now which is pretty disappointing.
[46:07] Yeah wait till you ship it in the people some kind of quack Ado has.
[46:10] Don’t get paid yeah oh I’m terrified I feel like I’ve gotten like all this these communications from scammers it’s like I would never advise a not sophisticated so or to try to do this like this used to be their primary model.
[46:25] Yeah it’s hard.
[46:27] It is a mess.
Anyway Scott we did allocate a shorter period of time for the show and I feel like I want to honor that commitment I know it’s summer everyone’s taking vacation so,
we don’t want to condemn our listeners to our usual our so I think this is a good place to cut it,
if you appreciate shorter shows you can thank us by leaving a review and saying hey we always love the show but we love the shorter one even more.
[46:53] Thanks everybody and until next time…
[46:57] Happy Commercing!
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