The Jason & Scot Show - E-Commerce And Retail News

EP339 - The Non-Agentic Episode In this episode, we challenge Scot to talk about all the interesting things happening in the commerce indsutry, without talking about Agentic Commerce. Including USDC Sales Data, Q1 Earnings Reports, upcoming Prime Day, and the latest on Direct to Consumer from China models from Tik Tok Shop, Shein, and Temu. Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of ReFiBuy.AI and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

**The Future of Agentic Commerce** In Episode 337 of the Jason & Scot Show, recorded on March 10th, 2026, hosts Jason "Retailgeek" Goldberg and Scot Wingo explore the transformative impact of agentic commerce, as discussed during a panel at Citi's 2026 Global Consumer and Retail Conference. Joined by experts Ron Josey and Paul Lejuez, they examine how AI technologies are reshaping retail, leading to impressive traffic growth for companies like Target and Amazon. The discussion highlights the balance between online and physical retail strategies, the rise of retail media networks, and the potential of AI-driven partnerships. Jason and Scott also analyze emerging market players, particularly in beauty and fashion sectors. Tune in for critical insights on the future of retail technology, and if you enjoyed this episode, please like our Facebook page and leave us a review on iTunes. Thank you for listening to Episode 337 of the Jason & Scot Show!

EP335 - Kevin Ertell The Strategy Trap http://jasonandscot.com In this electrifying episode of the Jason & Scot Show, recorded on Friday, October 10th, 2025, hosts Jason "Retailgeek" Goldberg and Scot\t Wingo welcome a very special guest and longtime friend, Kevin Ertell. With over 30 years of combined history, the duo dives into Kevin's impressive career trajectory, his extensive experiences in retail and strategy execution, and the valuable insights behind his newly released book, "The Strategy Trap: Why Companies Fail at Execution and How to Get It Right." Kevin's impressive background spans from starting at Tower Records to holding senior positions at iconic companies like Borders, Nike, and Sur La Table. He discusses his evolution in the retail space, the intricacies of establishing the first TowerRecords.com site, and his current role advising various businesses, including helping the Minnesota Timberwolves with their ticketing operations. As he unveils his book, listeners learn about the core theme: effective execution is the linchpin of successful strategy. Kevin breaks down the key concepts of his book, structured around the "six C's" that are critical for avoiding common pitfalls in strategic execution—co-creation, clarity, capacity, communication, coordination, and coaching. He emphasizes the importance of bringing teams together in the co-creation phase to ensure buy-in and alignment on the strategy, a central pillar in fostering commitment across the organization. The conversation touches on the significance of clarity in communication and the necessity of creating a space for people to provide feedback and understand their roles. Throughout the episode, Scot and Jason explore Kevin's practical strategies and actionable advice for leaders looking to strengthen their execution capabilities. Kevin offers insights on leveraging constraints creatively, encouraging listeners to view limitations as opportunities for innovation, much like how companies like Costco manage to maintain low prices while driving efficiency. As the discussion unfolds, the trio delves into the nuanced nature of workplace culture, highlighting the benefits of psychological safety, the impact of social incentives, and the importance of regular communication channels to keep everyone aligned within the execution framework. Moreover, they touch on fascinating concepts such as pre-mortems, a proactive method of anticipating potential failures before launching a project, differentiating it from the traditional post-mortem analysis. This mindset shift encourages teams to address concerns upfront, minimizing the likelihood of catastrophic missteps in execution. As the episode wraps up, Kevin shares his hopes for the book's impact, inviting listeners to access "The Strategy Trap" at their local bookstores or online. He emphasizes the vital interplay between strategy and execution, urging leaders to recognize that a well-crafted strategy is only as strong as its execution plan. Join us for this enlightening discussion filled with practical lessons, captivating anecdotes, and a wealth of insights from an industry veteran. Tune in, and let's embrace better execution practices for a thriving business landscape! Episode 335 of the Jason & Scot Show was recorded on Friday, October 10th, 2025 Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of ReFiBuy and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

EP327 - Kelly Goetsch Order Network eXchange (onX) Standard http://jasonandscot.com In this episode of the Jason & Scot Show, recorded on Thursday, November 6th, hosts Jason Goldberg and Scot Wingo welcome back Kelly Goetsch, now the President of Pipe17. They dive deep into the evolving landscape of e-commerce, order management, and the impact of AI on consumer experiences, taking us on a journey through the dynamic developments of the industry. The conversation kicks off with a nostalgic nod to a previous episode, highlighting the rapid shifts in technology and market dynamics since Kelly last joined the show during the height of the microservices boom in July 2021. The discussion emphasizes the transformation of order management systems (OMS) and how current customer expectations have been reshaped by giants like Amazon, pushing brands to adapt to new fulfillment models. Kelly explains how Pipe17 positions itself uniquely in the OMS space, competing not just with traditional systems but also embracing a network-based approach, citing their aim to redefine order operations for the modern era. Throughout the episode, listeners learn about the innovative concept of the Order Network Exchange (ONX) and the Commerce Operations Foundation, which aims to standardize communications between selling channels and fulfillment systems. Kelly describes the vision of a seamless, integrated environment where data flows between systems in real-time, vastly improving responsiveness to customer orders and effectively managing inventory across various platforms. The team delves into the significance of the Model Context Protocol (mCP), which allows AI to interface more effectively with various applications in real-time, exemplifying the transformative potential of AI within commerce settings. The conversation takes an intriguing turn as the hosts discuss the current state of e-commerce, focusing on how emerging technologies and shifts in consumer behavior are influencing future sales trends. Kelly expresses a bold prediction that more than 50% of e-commerce transactions will be influenced by AI in the near future. The dialogue also spans the evolution of payment solutions, summarizing the landscape of competing systems and the potential for disruption. Jason and Scot further probe the notion of the web's declining dominance compared to new AI-driven shopping experiences. Kelly shares insights about the changing nature of discovery channels and how AI can reinvent customer interactions in meaningful ways, potentially replacing traditional web browsing models. Amidst these discussions, Kelly highlights the importance of fostering collaboration within the industry, illustrating how cooperation can lead to overall growth and improved customer experience. As the episode wraps up, the conversation touches on the necessity for companies to become agile, moving away from prolonged evaluation processes towards a model that values continuous improvement. The discussion reinforces the idea that standards may provide the needed flexibility for businesses to adapt more readily to accelerating changes in technology. Tune in for this captivating episode, filled with rich insights into the future of e-commerce, AI's pivotal role in shaping customer experiences, and the transformative efforts underway at Pipe17! If you enjoyed this episode, please consider leaving a review on your preferred podcast platform, and don't forget to subscribe for more engaging discussions and industry insights! Episode 332 of the Jason & Scot Show was recorded on Thursday, November 6th, 2023. Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of ReFiBuy and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

EP330 - GroceryShop and ChatGPT Instant Checkout 0:38 Welcome to the Json and Scott Show 2:34 Catching Up After Two Months 2:59 Insights from NRF Europe 7:04 Retail Club Experience 13:22 Key Takeaways from Grocery Shop 24:09 Sampling Experiences at Grocery Shop 38:48 AI Trends in Retail 52:11 Closing Thoughts and Next Steps Join Jason and Scot as they celebrate recording their first live episode in three years for the Jason & Scot Show! Recorded on Tuesday, September 30th, 2025, this episode captures the excitement of being back together in person and highlights their dynamic discussions on the current state of retail and upcoming trends. From reminiscing about their podcasting journey since its launch in November 2015, Jason and Scot dive into the latest happenings in the retail space, especially from the two shows they recently attended: NRF Europe and Retail Club. Jason shares insights from his time at NRF Europe in Paris, where he participated in engaging discussions about retail innovations and the necessity of multi-lingual capabilities in a diverse market. With impressive attendance and notable exhibitors, he reflects on the event's success and the importance of adapting to multiple regional markets within Europe. Meanwhile, Scot delves into the Retail Club event held at Huntington Beach, California, highlighting its unique vibes with a beachside setup and a focus on AI-driven retail discussions. The event offered a refreshing departure from traditional conferences, focusing on interactive workshops and relationships rather than panels. Together, they explore the implications of AI in retail, including its transformative power over various operational aspects, and the importance of adapting to the evolving marketplace landscape. Jason and Scot also engage in a lively discussion about AI's role in shaping customer experiences, their predictions for the future, and how retailers can effectively harness these technologies while remaining competitive. They examine innovations such as electronic shelf labels, which are becoming increasingly prevalent in stores. Scot can't help but reference his ongoing obsession with the concept of "Agentic Native Vertical Brands," hinting at the evolving terminology in the retail sphere. In the latter part of the episode, they discuss their experiences at GroceryShop, where significant trends are emerging in grocery retail—especially regarding macroeconomic conditions, emerging AI technologies, and the vital role of retail media networks. The conversations shed light on how AI can enhance not only the customer experience but also the operational efficiencies of retailers. The broad-impact implications of GLP-1 medications on consumer habits are discussed as well, marking a notable trend in grocery shopping behaviors. Towards the end of the episode, Jason raises his anticipation for the upcoming trends in commerce, making it clear that the integration of AI into the shopping experience will continue to redefine how retailers operate. From discussions around inventory management, product recommendations, and dynamic pricing to the emergence of social commerce, this episode encapsulates the cutting-edge of the retail landscape. Tune in for this inspiring and enriching episode filled with insights and excitement around retail innovation! If you haven't already, subscribe to the Jason & Scot Show for more engaging discussions and updates on the future of retail. This episode was recorded on September 30th, 2025, at the GroceryShop conference, a fantastic gathering of thought leaders and innovators in the retail space, where Jason and Scot share their unique perspectives and observations on the fast-evolving landscape of retail. **Episode 330 of the Jason & Scot Show was recorded on Tuesday, October 30th, 2025.** Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of ReFiBuy and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. http://jasonandscot.com Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of ReFiBuy.AI and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

EP328 - Navigating E-commerce News and Innovations in AI Answer Engines for Commerce 0:36 Welcome to the Jason and Scot Show 4:53 Consumer Trends in Retail 5:03 Upcoming Retail Events 8:42 Insights on E-commerce Growth 10:35 Earnings Season Insights 44:13 Amazon Prime Day Analysis 51:30 New Developments with Alexa 56:00 Predictions for the Holiday Season In this episode of the Jason and Scot Show, recorded on Thursday, July 23rd, Jason and Scot delve into the latest shifts within the e-commerce landscape, emerging consumer trends, and the role of Artificial Intelligence in retail transformation. Jason has been on the road, engaging with industry professionals and moderating discussions around pressing retail topics such as social commerce and consumer behavior, particularly the growing usage of answer engines amid an evolving shopping cycle involving giants like Amazon and Google. Scot kicks off the episode by teasing insights from Jason's recent travels and virtual think tank participation, where they investigated consumer trends such as the surge of ethical purchases and the dynamics of social commerce influenced by platforms like TikTok. The duo explores the implications of consumers increasingly relying on answer engines throughout their shopping journeys, particularly in the wake of mounting competition from dedicated AI solutions. Listeners are treated to an analysis of recent U.S. retail data, highlighting core retail sales growth—a modest 3.8% year-to-date—contrasting the slower pace of e-commerce growth, now at only 6.8%. The conversation turns to the dichotomy between successful retail giants like Amazon and Walmart, against a backdrop of underperforming categories like electronics and home improvement, veering into the impact of macroeconomic factors on consumer spending behavior. The episode also takes a closer look at notable earnings releases, particularly how tech giants like Google are grappling with a shift towards answer engines like ChatGPT, disrupting traditional search methodologies. Scot shares insights on Google's recent performance metrics that seem to mask a creeping decline in organic search volume, while Jason echoes concerns about the current retail media landscape and the challenges it poses to user experience on platforms like Amazon. With light humor and camaraderie peppering deeper analysis, Jason and Scot examine the implications of Walmart's recent hires in AI technology and strategy, reflecting on how retailers are pivoting to become more like answer engines amidst intensifying competition. As they look ahead towards the upcoming holiday season, expectations are tempered by economic uncertainties and supply chain disruptions, hinting at an uneven landscape where larger players may gain traction at the expense of smaller retailers. The pair wraps up the episode by expressing optimism for the future of AI in simplifying shopping experiences while also critiquing the current voice shopping functionality on devices like Amazon's Alexa+. Join them as they illuminate the complexities shaping today's e-commerce environment while addressing the pressing questions retailers must answer to thrive in an increasingly competitive landscape. Don't miss out on their engaging discussions; be sure to subscribe for the latest insights into retail trends and innovations! This episode is packed with valuable insights and anecdotes, perfect for retail enthusiasts and industry professionals looking to stay ahead of the curve. Enjoy the show and don't forget to leave a review! **Episode 328 of the Jason & Scot Show was recorded on Thursday, July 23rd, 2025.** Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of ReFiBuy and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

EP326 - Are Retail Media Networks Mid? Happy Fathers Day! In our previous episode (326) Jason made a comment about retail media networks sometimes being over-hyped. In response, Scot recruited all his friendsd in the the industry and inticed Kiri Masters to make a rebutle. Which she did via two part linked-in post and a podcast. So in this episode Jason doubles down and defends his position on retail media networks. In addition to covering the state of retail media networks, Scot introduces his new Retailgentic sub-stack which everyone should subscribe to, and give a listen to his new video podcast focused on the latest Agentic Commerce news. Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 325 of the Jason & Scot show was recorded on Friday. June 6th. http://jasonandscot.com Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

EP324 - Amazon Q4 Earnings In this episode we do a deep dive into Amazon Q4 and Full Year 2024 results. Amazon had an overall strong quarter with record profits from their retail business unit. Amazon GMV grew 11% in 2024 vs. 2023, almost three times as fast as the retail industyr as a whole. Amazon's North American GMV also nearly matched Walmart's in 2024 (Walmart reports it's Q4 results next week). We also cover the impacts and implicates of the de minimus ban in the US (which was lifted after only 4 days). We wrap up by comparing Amazon's 2024 growth to the rest of the retail industry. Amazon, Walmart, Costco, Temu, Shien, and Tik Tok Shops representing 62% of all retail growth in 2024 (this is a revision from the 70% estimate we shared in the podcast). Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 324 of the Jason & Scot show was recorded on Monday, February 10th, 2025. http://jasonandscot.com Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Transcript Jason [0:23]Welcome to the Jason and Scott Show. This is episode 324 being recorded on Monday, February 10th. I'm your host, Jason Retail Geek Goldberg, and as usual, I'm here with your co-host, Scott Wingo. Scot [0:36]Hey, Jason, and welcome back, Jason and Scott Show listeners. Jason, how was your Super Bowl? Jason [0:43]My Los Angeles Chargers did not do well in the Super Bowl this year. Or my adopted Detroit Lions. Scot [0:50]Well, as a chief digital payment retail advertising officer for a big ad firm, I'm sure you were there for the ads. What any ads catch your attention? Jason [1:02]Were there ads in the Super Bowl? Scot [1:04]Yeah. Yeah. It's supposedly one of the more expensive places to buy an ad. Jason [1:08]Yeah. Yeah. I mean, this is kind of hackneyed, but it's near $8 million for each 30 second spot now. And what people miss is that most of these ads cost more than twice that. That both the production of the ad is quite expensive. And then there's now this whole, it used to be that you just surprised everyone by running an ad. And what everyone has learned is you get a lot more mileage by hyping the bejesus out of your ad for weeks before the Super Bowl. And so now the Super Bowl is like step four in a 10-step process and it's all super expensive. So the money is higher than ever. I would not say it was a standout year for e-commerce. Like the last two years, like two years ago, we had this surprise new, not only Super Bowl advertiser, but surprise new retailer in Timu. Jason [2:02]And, you know, then last year they were surprised in that they bought so many ads. So that was remarkable. Over the years, we've had some really interesting Amazon ads. And then occasionally we have some weird venture funded, like digitally native direct to consumer companies try to make a splash in the Super Bowl. So I'm not sure I would characterize anything that this year as super standing out from an e-commerce standpoint. Instacart was like the most significant new e-commerce player to do a Super Bowl ad. I thought they did a good ad that was well received with the famous brands. And then, you know, there's some weird stuff. Most of these ads are just to increase brand awareness. And in fact, the way they measure them is things like unaided brand recall, which are, these are metrics that I personally hate. But one of the ads for Fetch, which is arguably an e-commerce company, it's a, you know what Fetch is, Scott? It's a, it's like a purchase affinity program. Jason [3:08]So... Brands buy promotions. They're from Fetch. Customers subscribe to Fetch, and when they take advantage of the discount on General Mills goods, they earn Fetch points, which they can then redeem for prizes. So it's, it's a multi-brand customer affinity, digital native customer affinity program. And they did an ad in the last two minutes of the Superbowl that was essentially open our app right now. And in the next five minutes, we're giving 120 people, $10,000. Scot [3:44]Well, and so the. Jason [3:46]The, yeah, you had to watch to the bitter end and the game was no longer interesting at that point. But the interesting thing about that is that this is one of a handful of attempts over the years to do real activation in a Super Bowl ad versus just generate awareness. So I don't think anyone thought it was super well done or super effective, but I admire the effort to try to make some of these ads work harder. Like you'll remember past years, there were interesting, like there was a one year where the ad was just a QR code that stood on the screen for 30 seconds. Scot [4:23]Yeah. Yeah. And bounced around. It did the bouncy thing. Jason [4:25]Yeah. To make it harder to scan, which is, yeah. Scot [4:31]Cool. I liked the Instacart. That one kind of caught my attention. Jason [4:35]Yeah, I was just sad that there was no Timu jingle to get earwormed into my head this year. Scot [4:42]Yeah, I was confused by the water bottle thing. I had never seen that. Jason [4:46]Yeah, that got kind of panned. That didn't get circle or whatever it's called. Yeah. Scot [4:53]Yeah. Jason [4:54]Yeah. So it didn't get great reviews as an ad, but it was super confusing. People didn't understand what they were even trying to do. Scot [5:00]Yeah, I thought it was like a delivery network. And then I was thinking, oh, we'll have to mention this. And I was like, wait a minute. They're only delivering water bottles. I must have misunderstood the whole thing. Jason [5:08]Yeah. It's a filtering, it's a filtering water bottle. Scot [5:11]Yeah. I guess I didn't understand why they were distributing a hundred. Jason [5:14]I guess they gave away like a million starter kit sample packs, but it was not clear to anyone watching the ad that that's what they were talking about or doing. They, they tried to get too much in a short ad, but I think the, the plot in theory was that the the celebrity who's the the guy from mean girls and or pitch perfect yeah um that he who apparently is a real life fan of the product and got this contract as a result of his like, social shares about the product that he inadvertently ordered a huge surplus of the of these these products and then had to give them all away. Scot [5:54]Well we'll have to have you do a live stream next year to explain the commercials to me. Jason [5:58]Yeah i think we should get someone that understands. Scot [6:05]I got none of that whatever you guys got so. Jason [6:07]Yeah yeah that's just all the water cooler conversation i get in my company today the coolest ad in our world i should have said is starbucks that did not advertise at the super bowl but they've created a new holiday which is called i think I think it's called like super Monday and so it's, everybody's like tired and low energy on the Monday after the super bowl. So Starbucks gave all, all rewards members a free coffee today. Scot [6:40]Yeah, that was smart. Jason [6:41]Yeah. Scot [6:42]The, it doesn't work for the kind of drinks we have though sadly. Jason [6:45]Not trying to use a little. Basic brewed iced coffee does count. So I didn't, I didn't go, but I could have gotten a nice coffee. Scot [6:52]Yeah. Okay. I liked, I thought it was interesting that the Dunk Kings were, or Dunkin' Donuts was basically making fun of Starbucks. They were kind of dissing them. Jason [7:03]Yeah. Yeah. I didn't like that at all. No. And that was kind of a sequel, right? Like that was a sequel from last year's ad. Although I think Matt Damon got bumped for Ben Affleck's brother. So that, I will say the, the. The david beckham ad was pretty cute. Scot [7:20]Yeah that was funny yeah. Jason [7:21]The other david yeah. Scot [7:23]And he kicked the ball. Jason [7:25]Yeah oh it's the thing i do yeah and so this is for people that didn't watch matt damon portrayed david beckham's long lost brother that his parents never told him he had and, and the other david grew up in america versus david beckham growing up in in england obviously But at the end of the ad, David Beckham explains that he's a pretty famous soccer player. And Matt Damon goes, you mean like Matt Damon famous? And David Beckham goes, more like Ben Affleck famous. And Matt Damon goes, oh, that's too bad. Scot [8:00]Ouch. Jason [8:01]Yeah. Scot [8:03]Cool. Well, today we are going to talk about Amazon's fourth quarter. So the, before we go into there, the setup was you, did the Department of Commerce ever come out with their data for, for the holiday or we're still waiting on it? Jason [8:21]No, they did. The December data is out. And so it ended up being a good holiday. November sales were really soft by historical standards, but then December sales were really strong. The partly, I think that's partly because the, October. Literally, the holiday season started in October this year. For the first time ever, they really got consumers to buy more stuff in October. And so then there was kind of a lull in November and sales picked back up in December. Also, just weird vagarities of the calendar. Cyber Monday was in December this year, which it's normally in November. So that had some impact. But cumulatively, between November and December, sales were up 4% year over year, which NRF had forecasted that they would be up two and a half to three and a half percent. So being up four percent is pretty solid. Scot [9:13]Yeah. Good. Cool. So then coming into, oh, the other thing I wanted to hit before we get into the deep dive of Amazon earnings is the end of the de minimis thing that you've been talking about. Jason [9:26]Yeah. See, we can do a super short version of this. When you import stuff into the United States, you have to pay duties and taxes on those things and you have to meet import requirements. So you can't import products that are made with, you know, dangerous chemicals or made by a child political prisoners or things like that. But we don't have enough inspectors to make sure that everything comes into the United States meets all those criterias. So for a long time, we've had this exception on the import thing, which is if it's a very small package of low value, it does not need to be inspected and you do not need to pay customs. So if you make a container full of t-shirts and send them to the United States to sell, you pay duties on that container. But if you put a single t-shirt in an envelope and ship it to a single customer, it's under the de minimis threshold and nobody has to pay customs on it. And it was a clause that was just to save on labor to process all this paperwork. No one wanted to collect $0.30 of duties and have to spend $5 processing that $0.30 payment. But over time, that threshold crept up and up. And under the Obama administration, it got raised to $600. Jason [10:42]And so there's companies like Shein and Timu shipped the vast majority of their packages into the U.S. When they first started via that mechanism. So they, in essence, didn't pay any duties or taxes. And, you know, a lot of people felt that's unfair, that Gap is paying a lot of duties because they're importing containers, a lot of stuff, and Timu is shipping individual packages to consumers and not paying duties. And so Biden actually... Jason [11:11]Issued an executive order to cancel De Minimis from China, but he wrote it in a way that it would be like carefully considered and slowly implemented. So it hadn't been implemented by the time he left. And then Trump issued an executive order on like a Thursday saying it's, it's closed on Tuesday over the weekend. And so everyone's like, oh man, Timu and Sheehan are going to be out of business. This is going to be great for Western brands and blah, blah, blah. and it's still all playing out. Who knows what really will happen. My own personal opinion is Timu and Sheehan needed De Minimis to get started and they took full advantage of it. They are now so big that they don't need it. And both of those companies have half the goods they sell are already in warehouses in the US. They were already paying customs on it. They mostly decided that the popular items needed to get to Americans faster. So they have one and two day shipping. That's all coming from the U.S. So they're not dependent on de minimis anymore. And so banning de minimis, I think, is an inconvenience to them, but I don't think it's a death blow. Jason [12:19]Also, it doesn't necessarily save you money to use de minimis because while you save money on duties, it costs you a lot more shipping money because you're usually air freighting something instead of ocean freighting it. And that's much more expensive. So arguably, there's a trade-off between the air freight and the ocean freight. And then the secret dirty thing of all of this is every Western brand also figured out this was a thing. And so all the athletic shoes you buy get shipped in a container, not to the United States, but to Mexico, and then de minimis into the United States from Mexico. And so a lot of people assume, oh, this is only going to affect these Chinese brands that we don't particularly like doing well in our market, but it actually is likely to have an equal impact on many big brands. Jason [13:07]Trump also banned a minimus from Mexico and Canada, but then that got reprieved. So at the moment, it doesn't affect those. Nobody knew how to and still doesn't know how to process all of this. So literally the post office stopped accepting packages from China altogether for a day because they didn't know how to do this. Nobody solved the fundamental problem that we don't have enough inspectors to inspect all these packages. So in theory, if we try to inspect them all, there's not going to be any more goods in the United States because it's going to take a year for anything to clear custom. So there's a lot of confusion and uncertainty out there. I just sum it up by saying Amazon took full advantage of not paying sales tax when they got started. And it was a huge advantage and it helped Amazon scale. Jason [13:56]When we definitively started charging sales tax on e-commerce companies, everyone's like, oh, that's going to put Amazon out of business. And of course it didn't, right? Like Amazon had already gotten so big that they were happy to pay taxes and kind of pull the ladder up behind them and not let other people start with the same jumpstart that they got. And now they're happy to play on a level playing field because they know they can win on the level playing field. And I would argue Timu and Shein are kind of in the same boat with regard to De Minimus. So I think it's not going to materially stop them, but it's going to change how everyone does business. And at the moment, it just created a lot of confusion and uncertainty for everyone. Scot [14:40]Yeah. Interesting. Yeah, I saw a screenshot that like most of them, you know, overnight they had switched everything to be from Mexico and native in the U.S. Jason [14:49]Well, that's the other problem. There's a way to whack them. When you write, oh, we're just getting rid of de minimis for three countries, you're just starting a whack-a-mo game. Like, everyone will move everything to Guatemala or Indonesia. And then you'll have to issue new orders. Scot [15:04]Yeah, it does close the door for other competitors to use it as a bootstrap method. So in a weird way, it almost like solidifies Amazon, Timu, and Shein as kind of like the leaders of this. Jason [15:14]Yeah, I think that's it makes it much harder for a new competitor to be born to compete with with these guys that have already used it to get to scale. Scot [15:22]Yeah, cool. So last Thursday was Amazon. Jason [15:25]Oh, Scott, sorry. There's one other thing we have to cover before we get to Amazon. I did an event for a client, a speaking event, and a picture of it went up on the internet. And my friend Scott Wingo has too much free time on his hands and posted a whole LinkedIn article, zoomed in on my sock in this picture, which revealed the logo of the client I was doing a presentation for. And it's gone like Jason and Scott viral. So all of my supervisors at Publisys are super impressed that I got caught wearing a logo. And I have Scott Wingo to thank for that. So thanks, Scott. Scot [16:05]You're welcome. Hey, you wore the socks. It was funny. I was talking. I did another post where I went to a Starbucks one day and the new CEO, I don't know if you know this, but he's asking them if they have time to write little notes on the cups. I went to the Starbucks like two weeks ago and everything was lined up alphabetically. It was like one of those little delivery stations. And it all had like personalized notes. And I just like put it up there as like a really good example of small things are important for customer service and like wearing your client's socks. So little things like that matter. Jason [16:35]Amen. On the one hand, it was super awesome. On the other hand, the unintended consequence of that, Scott, is I now cannot go to any other client presentation without their socks. I just cost you thousands of dollars. Yes, yes. So let me just say, I've spent the last like five days, like scraping the corporate web company stores of a lot of retail and brands. Scot [16:58]Cool. So coming into Amazon's earnings, you know, it's really become all about AI these days. There's a lot going on in AI. First, we had Microsoft with Azure. They largely missed expectations on the growth of their AI piece. And then Google had a similar reaction. And what they're all saying is the demand is outstripping our ability to meet it where we're gpu and energy constrained and and fulfill a data center constrained so then everyone was kind of like oh boy it's going to be bad for amazon and there's a lot of little bit of a fear uncertainty and doubt in the market and then the big disruption happened when deep seek which is the chinese company there's there's been so much ink on this i'd be surprised if people hadn't heard about it they're. Scot [17:42]Their reasoning model, R1, came out and it was basically what they call open source. It's really open models, meaning open weights. You don't actually get the source code. So it's a little bit of a misnomer. I prefer open weights. But what that means is you can just basically download this thing and run it anywhere. And this is interesting because it's as good as the latest models from everyone that's charging quite a bit of money. And you know what what this the direct disruption here is it became very clear that the way this is priced is dollars per million of token million tokens so if you're going to use one of these llm kind of engines from an api perspective to power a feature or something like that it was really it was relatively very expensive in the early days of chat gpt and now it's gone from it's basically turning to zero very quickly so a lot of people were beating up Amazon for not having their own multi-billion dollar investment in an LLM. They are an investor in Anthropic, but they don't have their own LLM. So it's interesting because Jassy's been saying, we're kind of neutral. We just want to host them all and let the customer pick and the customer is going to go where the data is. And we have a lot of data. Scot [18:56]So then that actually ended up, DeepSeek R1 ends up really being a big benefit to companies is Amazon for the reasons I mentioned, but also Apple, because it turns out the way DeepSeq developed this thing, the whole model is pretty efficient because it only lights up a little part of the model instead of all the parameters. It uses this expert network thing. Scot [19:19]And anyway, so there's a, you know, Apple has put a lot of neural nets on chips near memory, which this model works really well for. So there's kind of like two unexpected winners in this, which are the two companies that didn't spend billion dollars on models, which were Amazon and Apple. So then, so that was kind of the setup going into it. And then... Jason [19:41]Scott, there's one super important stat about DeepThink. Scot [19:45]Yes, DeepSeek. Jason [19:46]DeepSeek. They should have called it DeepThink, by the way. But apparently Meta has 20 AI execs that all have an, each have an annual salary that's greater than the total training cost of DeepSeek. Scot [20:00]Yeah. Yeah, that's pretty crazy. It also kind of shows that these export controls may have backfired because they made them, they constrained them so much, they came up with like a really clever way to do it. So it was all very interesting. And then we didn't have any Walmart coming in. That hasn't happened, right? Jason [20:18]Yeah, Walmart has a very peculiar financial calendar, but what would be the reporting for their sales in Q4 of the calendar year happens on February 20th. So that's next Thursday. Scot [20:33]Yeah. Okay, so then Amazon came out, and much to the relief of everybody, their revenue was in line. So it was kind of a meet. If you have kind of miss, meet, and beat, it was a meet expectations on the top line, but they beat on the bottom line. So earnings per share came in at a buck 86, which beat the estimate of $1.48 by 20%. So a really nice kind of profit beat there on earnings per share. Scot [20:58]And then the guidance is what Wall Street would call soft. So Wall Street already thinks they're going to know what the guidance is. And they look at this midpoint, there's a range, and they do all this kind of triangulation. And it came in a little bit below. But they have a history of that. So people weren't too concerned. So I think there was a bit of a sigh of relief that things at Amazon were pretty good and there wasn't a big miss on AI. And then I think they got a nice benefit. Now, the stock was down a little bit. I think that just kind of happens. It's recovered most of that since then. It did signal that a relatively conservative guidance going forward where they were going to grow between 5.4% and 8.5%. Again, they beat this guidance like for the last eight to 10 quarters. So I think people know there's some conservatism in there. They did say, you know, giving the environment with like this de minimis thing, these tariffs and all this stuff that they wanted to be a little careful there. Also, everyone, they did signal in the call that they're going to invest a lot. And we'll talk about that in a second. So they're going to kind of enter this invest phase again. And a lot of it is around AI, but it's not models and things. It's really just kind of supporting AWS as a part of it. But they're also investing a lot in AI applications, they call them, for the retail and the supply chain part of the business. And we'll go into that. Scot [22:23]So then they dove into kind of more of the retail side and some of the macro numbers. Why don't you take that over? Jason [22:30]Yeah. So what they typically disclose in their earnings call is the retail business unit revenue, which is not the same thing as their total sales or what we would call gross merchandise value. So the revenue number they reported was that Q4 was up by 10.5%, which was good and above expectations. That was like $188 billion for the quarter, which would be a total of $638 billion in revenue for the year. They said online stores grew at 7% year over year, while physical stores grew at 8.3% year over year. That physical store number is interesting because, you know, the bulk of the Amazon physical store fleet are these Whole Foods that they bought. And then over the last five or six years, they've opened a bunch of store concepts, Five Star, Amazon Books, Amazon Go, and Amazon Fresh Grocers. Jason [23:32]They've closed most of those concepts. They only have a handful of the Go stores left and the grocers. So the number is back to mostly being Whole Foods, which hasn't been a great growth story. So the 8.3% growth for physical stores is somewhat encouraging for Amazon on Whole Foods. And I don't know if this is coincidental or not, but the CEO of Whole Foods got named the head of olive retail for Amazon or olive grocery for Amazon rather. Jason [24:01]So those were good numbers. I'm most interested in how much stuff they sold, which they don't tell us. They give us some data, like their breakdown of first-party and third-party sales. And we're able to back into an estimate of GMV. And all the really smart, big-brain stock analysts put together these big models and do the math for me. So in the old days, you and I used to do models. But now I just get a way prettier spreadsheet from Morgan Stanley and Citibank. So the Morgan Stanley model is already out. And they think GMV for Q4 in North America, which is, you know, mostly what I like to talk about on this show, was up 11.4%, which is huge. The, you know, again, like retail is growing about 3.8% in Q4. So it's Amazon's growing three times as fast as the overall retail industry. And then, you know, you look at that on a full year basis and Amazon sales for the, in North America, GMV was up 11% year over year, which is huge. Jason [25:09]And somewhat even more impressively, those sales are getting more profitable. The fulfillment network is getting faster and more efficient. The cost to serve is going down. Jason [25:21]I think they had a stat that like same day and early next day deliveries grew 65% versus the number of deliveries in the same quarter last year. And so if you remember, about a year and a half ago, they pivoted from this national model to this regional model of distribution, and it's totally working. They're delivering goods way faster and cheaper. And so what kind of the interesting unexpected thing here is as they're able to deliver goods faster, the mix of goods that customers are buying from them is changing. So they used to not be good at selling everyday essentials, but now that they're so good at same day and fast next day delivery, they're selling a lot more of those essentials, which is taking a huge bite out of grocery. And I would argue even a huger bite out of like drugstores and convenience stores. So the, for a long time, you know, analysts are always like AWS is the growth and retail is this necessary evil and blah, blah, blah. Well, I would argue retail was really the star of, when you peel back the onion on the numbers, retail was really the star of this earnings call for them and is really helping to, it's contributing a lot of dollars that are now getting invested into AI cloud capabilities. Scot [26:44]Yeah. Cool and then on the marketplace side the third-party seller business accounted for 62 percent of paid units kind of has ebbed and flowed between 58 and 62 for a while i mean q4 it does surge up because the first party business gets swamped and sells out and then the third party is kind of there to to take up the slack that's up 60 from 60 so in q3 it was 60 and then here it was 62. I believe last Q4, it was also 61, 62. So not a big change there. That's kind of steady state now. The revenue grew 9% year over year. These numbers used to be crazy at like 20, 30, 40, 50%. But again, we've kind of settled in with overall retail on a lot of the business. And then that came in at 47.5 billion is the revenue from third-party seller services, which includes some of the pieces of FBA and whatnot. And then the ad business is my favorite. That's the best business. Jason [27:40]I know Scott waits with bated breath to talk about the ads every year. So again, ads was a super robust growth driver for Amazon. I think the trailing 12-month run rate for ads, so Q4 was up 18% on a year-over-year basis. That Q4 number would put them at nearly $70 billion run rate for 2025. But trailing 12 months, it was $56 billion of ads. And, you know, remember you sell a banana at like 4% gross margins. You know, you sell an ad at like 80% gross margins and that's being like conservative. And so this, this ad business contributes a tremendous amount of free cashflow and profit to Amazon. Jason [28:29]A couple of notes here. The vast majority of this ad are sponsored product listings and search. And that's true for most retail media networks. But increasingly, Amazon's a more complicated ad network because they do now have a lot of network programming. They have an NFL contract. And this ad number isn't just the retail media dollars. It's all of their ad dollars. So there may come a day when, like, just like we have to have a kind of a third party model to estimate what GMV is, there may come a day when we have to estimate what percentage of the ad revenue is retail media versus other flavors of ads. Jason [29:11]But as a result of this huge success that Amazon has had, everyone else in the retail industry is worked up into a huge lather over retail media networks. So, all the big agencies like mine, you know, have now hundreds of people that, you know, are talking about and helping brands and retailers execute, helping retailers build retail media networks and helping brands spend more money on those retail media networks. And every tiny little retailer is hiring a bunch of ad execs to launch their own network. Jason [29:41]And while I do think this ad business is great for Amazon, I think it's pretty good if you're Walmart or Instacart, I think it's wildly overhyped. And what people are missing is the only people making money on retail media networks are retailers with huge traffic at the top of the ecosystem that all have one thing in common. They're marketplaces because all of those third-party, those sponsored product listing ads are being bought by third-party sellers. It's not being bought by the first-party sellers. There's a little bit of revenue coming from first-party sellers, but that's the revenue that they used to get that they called shopper marketing dollars or trade dollars. The growth engine here is marketplaces get to make money selling ads. And so I just point all this out because I see more and more like small regional wholesale retailers with no marketplaces spending a fortune to launch a retail media network thinking they're going to have the same success on a smaller scale as Amazon. And it's not true that this retail media business is tied directly to the success of the robust third-party marketplaces that you predicted. Well, when did you predict marketplaces? About 70 years ago, was it? Scot [30:56]Yeah, it feels like it. Jason [30:58]Yeah. So just an interesting part of this whole thing. But for sure, if you're Amazon or you're another big retailer like Walmart or Instacart, it's another competitive advantage that helps the big get bigger at the expense of the smaller players. Scot [31:14]Yeah. And then I love that business and not facetiously because it's basically pure margin. Like it just makes the whole thing work. I do feel like it's got to, as a consumer, whenever I go to kind of top of the funnel, wherever I'm kind of like researching and try to find products, I feel like it's definitely, kind of ruined is a strong word, but greatly diminished the shopping experience at Amazon, which is always debatably not great. It's very kind of transactional to begin with. It's very hard to find the product you're looking for now because you're just like inundated with ads at this point. I think they've, they've reached the, you know, almost jumped the shark levels of the amount of ads, but that's a personal preference, I guess. Jason [31:57]No, no, no. I think most people agree with your evaluation there. Like, you know, they're for a long time, Amazon tried to make this argument that it's always about the customer experience and customers like these helpful ads. But I think that's, that's a pretty hard argument to make. It's, it's every digital platform in the history of mankind, like started out super useful and ad free and they slowly turned up the sponsorship over time, right? So when Google was 10 blue links, when you did a search, it was super useful. Now, you know, all the pixels on the front page of Google search are paid for, you know, Facebook used to, you know, Elevate all this organic content from people in your social graph. Now it's predominantly ads. TikTok with Instacart with the interest graph and now predominantly ads. It's the same thing. The problem is if the product is the ad and not the customer satisfaction from selling goods, this is the foreseeable outcome. And all of these businesses have just realized selling ads is a better business than being a wholesaler. Scot [33:06]Yeah. Cool. So then they rolled into the AWS part of the program. The AWS revenue reached $28.8 billion for the quarter, growing about 19% year over year. And its operating margins were 36.9%. That's actually an improvement of 732 basis points. So, you know, even though, you know, this thing is growing really quick, it's both growing fast and improving margins, which is good. And then you can think about AWS as having kind of three things. There's like a storage component where they can store your data, and that's commonly called the S3 family of offerings. And then you can basically rent, compute in traditional fashion, which is CPU. And then you can rent AI, which is on a GPU. So there's kind of like storage, CPU, and GPU. Scot [33:56]I think margins went up because of the strong demand for GPU. When supply outstrips demand, you can have pretty aggressive pricing in there and higher margins. So I think what's happening with the advent of AI is the workloads are really tilting towards that GPU side, which are much higher margin. And speaking of AI, Amazon is one of the two companies. So Google has their own GPU called a TPU and Amazon has Tranium and they came out with the version two of Tranium they announced was generally available. And it is much cheaper than other GPUs, which basically what they're the other big player in town is NVIDIA. So that's kind of what they're saying. And they still offer NVIDIA, but you get to pick. So what they said when they announced Tranium two is if you choose that is 30 to 40% better price performance and other GPU instances. So let's say your company and you want to host this deep seek open weight model, you now can host it on Tranium and run it yourself. It won't connect to China because you're controlling the infrastructure and you can basically have your own model. All you can eat just paying for the GPUs. Whereas when you go to like a open AI API or Anthropic or anything, you're paying for the GPU, the model and their margin. So this is what's driving that price per million tokens down towards zero. Scot [35:13]And in fact, to that end, they basically said that they would have had a much better quarter on AWS, but they are at maximum capacity for these GPUs, both their in-house and third party. And this is the same story that we're hearing from everybody is there's so much, so many people want to put out these GPU based AI workloads that they don't have the infrastructure for it. And it's not only the chips. So they're chip constrained, data center constrained, and energy constrained, and refrigerant constrained, and so on and so forth. So it's kind of a crazy time that there's so much constraint around this one part of something everyone wants. Scot [35:52]They did, when they file their 10Q, they put out a backlog and it was pretty material, which got people excited. So there was like some backup data to that. And then, you know, they did announce they're going to make some investments to the tune of $100 billion in 2025. And this is crazy because Meta came out and said something like 25 to 30. Microsoft said a number that was big, like 65 to 75. And then Amazon one-upped them all and said $100 billion. So that's pretty eye-popping. They didn't specifically say exactly how that's going to be, but it was like in the conversation of we're at capacity for AI. So I imagine they're going to build a literal tons of these Tranium chips and deploy them as well as whatever GPUs they can get their hands on from the folks out at NVIDIA. I already mentioned that it feels like they're really doing well here. And they talked about that. They didn't specifically talk about DeepSeq, although they quickly announced that they had it on their infrastructure. Scot [36:51]Jassy's been saying all along that they're not going to bet on an LLM. They're going to be neutral. But what they're going to bet on is people are going to want to run them near their data. And so because they have all these traditional CPU workloads, they have all their data. So if you're a big ad company, you're running all these calculations on ads, you're probably doing that in the cloud. You want the data to be near the compute so that it's fast. And now if you're going to run any AI workloads, they're going to want to be near the data because they're usually not just running an LM, you're running it through your data through like a retrieval augmented generation so that you can get insights from your data and either present them internally or to customers. So Amazon has really set up very well for this. And this part, a lot of the, you know, prior to kind of recently, most of the GPUs went towards training these models. Well, training is becoming a commodity, and it's really the inference part, which is where the models are actually running. And so they're really well set up for this whole thing. So I thought that was really interesting that they had the foresight, and they ended up being right. You know, they and Apple were the ones that were right, and everyone kind of thought they were crazy for not investing hundreds, tens, if not hundreds of billions of dollars in these things. Jason [38:07]Yeah. Yeah. That worked out pretty well for them. Yeah. Scot [38:11]The jury's still out, but like, as of today, it feels like they made a pretty good decision. Now, if, you know, OpenAI is the only one that has a, you know, ASI and AGI and all these fancy, you know, superhuman like capabilities, then maybe it's a problem, but seems like, you know, even then, are you really going to want that to be kind of running through your corporate data or something? You know, that starts to be even kind of scary. So I think this use case of making my internal data smart has many, many decades to run before it runs out of steam. Jason [38:41]Yeah, I hear them all talking a lot too about this AI application layer that they're investing in. So not the underlying LLM, but all these industry-specific, vertical-specific application APIs that sit on top of those LLMs. So like at NRF, they were focused on the hundreds of retail-specific patterns they had for AI applications that get to take advantage of every time there's an iteration or an improvement in the underlying LLMs. Jason [39:16]I wanted a couple of things that jumped out at me on the AI side. Number one, in our last podcast, you made a prediction about the profound impact of agent-based AI in commerce. And we started to talk a little bit about like, is this friend or foe to retailers? Are retailers all going to be blocking the AI agents from scraping their sites? Or are they going to be partnering with the agents? And I just want to say that that whole narrative got like hugely picked up and discussed on LinkedIn. It's super interesting. And we're definitely in the near future going to have to do a deeper dive on the podcast on the implications and ramifications specifically on retail of all this AI. But I do want to point out in the short term, you know, it's not all roses. There's two big negatives to AI. Like number one, every time Scott Wingo does a search on perplexity, it is taking out a small rainforest in Brazil. Jason [40:12]So like it's not clear at the moment like that all these things can scale, that there's enough electricity for all these things to scale. Unless these more efficient models like DeepSync end up winning. Right. Because one of the benefits of it is like it's a lot more compute efficient to to build a new model. But the the bigger negative ramification to me is you cannot buy a darn graphics card for good video gaming in the world anymore yeah all the all the the ai hosts have have bought all the chips and and you know if you just want to run call of duty at 240 frames a second you you are mostly out of luck which is quite irritating in the goldberg household. Scot [40:56]Yeah and whatever was available, the crypto bros grabbed. So you're kind of third on the wait list there. Jason [41:02]Yeah. Yeah. So I'm, I'm a little bitter about that, despite the fact that I'm, I'm very bullish about the profound impacts AI is going to have on commerce. I will say it is interesting in the, in the AWS world, because it feels like there's, there's two kinds of compute loads in the, in the world. There's the traditional CPU based compute loads that, you know, Amazon's been making a lot of money as people migrate from on-prem compute loads to the cloud. And then there are these new GPU-based AI compute loads. And the GPU-based compute loads are totally constrained by capacity. Like Amazon could sell more loads if they had more chips. They only have so many chips, and that's why they're going to spend a fortune on chips. The it does appear that the rate of growth of the cpu loads has slowed down which what is a worry sign to some investors because they they have excess capacity there if there were more people that wanted to move more of their loads from their on-prem to the cloud amazon could make more money today whereas if more people wanted to do ai they like they're they without more chips they really can't do anything. Jason [42:20]And so what's interesting to me is that it has not slowed down because all the world's compute is on the cloud. Arguably, well less than 25% of all the world's compute is on the cloud. So there's still plenty of compute happening on premise that could be moved to the cloud. But I think the double whammy is that all the easy compute loads got moved to the cloud And all the ones that had a particularly high ROI of being hosted on the cloud moved. And now all these older legacy compute loads are harder to move, are less appealing to move. And we were joking earlier, a lot of them are probably written in COBOL. And so, yeah, it's going to be interesting. They may ironically require AI to port all the business logic and COBOL code to cloud loads to kind of reinvigorate the cloud growth. Scot [43:18]Unless there's some kind of a simulator thing or, you know, emulator mode, there's no running COBOL up in AWS. So those loads are going to be stuck on some old mainframe for a very long time until something can rewrite it. Jason [43:32]Yeah yeah but it won't surprise me if the the ai bots get really good at porting all those those cobalt applications to to some modern architecture on the cloud. Scot [43:41]Yeah open eight sam just yesterday he was sam altman was speaking in japan and said they have an internal open ai, developer agent that they think is the top 50 developers in the world and they think they'll have the best one in three years yeah and these he says all this wacky stuff and it's kind of like, it's easy to say because it's unverifiable. So, you know, it's very hard to tell if he's hyping, but he's a pretty, you know, a lot of what he said has actually come true. So it's like, there's evidence that he's not making stuff up. Jason [44:15]I think that's very fair. And then there, like there are real world examples, maybe not quite that profound, but like of this stuff working, right? Like, so going back to Amazon earnings, like on the investor calls, they've talked a lot about, I'll tell you what workloads AI has been awesome for us on coding is porting all of our end of life Java 4.1 code to Java 5 that in the old world would have taken a hundred million man hours to do. And now takes like 10 man hours because of AI, right? Like I'm, I'm dramatically exaggerating because I can't remember the numbers, but, but it's, there are things that used to be hard and expensive to port that are like, are real business savings for big companies like Amazon now as a result of the AI being an adequate coder. So forget even being one of the best coders in the world. Just being adequate is saving Amazon a fortune. Scot [45:08]Yeah. I hate technical debt like that. Rewriting for some new version. Yeah. Jason [45:13]Doesn't add any benefits. You have on Sundays. So I want to bring this all home for our audience that's mostly focused on commerce, right? So if we zoom back to the retail side of Amazon, I'm just going to recap for you that Amazon probably sold $540 billion worth of stuff in North America, which was 11% more than they sold the previous year. So they're, they, they added $56 billion in sales this year. Jason [45:48]The U.S. Department of Commerce said that all of retail grew 3%, 3.6% this year over last year. So 11% growth is way higher than the industry average. And the whole industry added $183 billion in sales. So Amazon alone is $56 billion of the incremental $183 billion that happened in North America in 2024. Jason [46:20]So then the other huge retailer is Walmart. So you'd love to compare Walmart and Amazon growth to U.S. Department of Commerce. But as we mentioned, Walmart's earnings aren't going to get released until the end of next week. But we have three quarters of earnings and we have estimates, right? And at the moment, people are estimating that Walmart's Q4 is likely to grow about 4%. So if they see 4% growth Q4 this year versus last year, it means that Walmart will grow 5% for the year. So half as fast as Amazon, still meaningfully faster than retail, right? Retail is growing at 3.6%. Walmart's growing at 5%. Amazon's growing at 11%. That means that Walmart contributed another $26 billion of incremental sales, if that plays out. And then our friends at Timu, Sheehan, and TikTok probably captured about $50 billion of sales in 2024 that they didn't have in 2023. Jason [47:23]So you take $26 billion from Walmart, $56 billion from Amazon, $50 billion from Timu, Sheehan, and TikTok, and that's $132 billion in growth. When the entire industry had $183 billion of growth. So it basically means Amazon, Walmart, and those three Chinese companies are 72% of all retail growth, which is super scary. Obviously, the big are getting big, and we're seeing this huge gap open up between those leaders and everyone else. The other super interesting thing, if these numbers are right, it means Amazon sold $540 billion worth of stuff in 2024. Walmart in North America will have sold $547 billion worth of stuff. So Walmart in North America is still slightly larger than Amazon. And when I say Walmart, I mean Walmart Inc., including Sam's Club in the U.S. Jason [48:21]Walmart has international sales. Amazon has even more international sales. The U.S. economy is faring pretty well. A lot of other economies in the world where Amazon in particular does business are not faring as well. So there's more headwinds on the international side of Amazon's business. But apples to apples in North America, this is really turning into a two-horse race with these Chinese entrants taking a huge bite of the market, but clearly not taking a bite out of Amazon or Walmart, which is super fascinating and super concerning. Jason [48:58]And Scott, I roll all this up and I say to myself, huh, all of these companies that are growing, the thing they most have in common is their growth and or their primary business model is all coming from marketplaces. Like increasingly you can't name a huge super successful e-commerce wholesaler that buys goods and resells them the like amazon keeping 62 of their sales as third party is even more impressive if you remember i said that amazon selling way more essentials than they ever did before historically essentials were all one p so for them to keep 3p at 62 that means 3p is growing really robustly based on the mix change at Amazon. So they're increasingly, I'm looking at all these numbers and I'm going, man, it is just getting harder and harder to make a living selling other people's stuff that you either have to make your own stuff and sell it to consumers and be content not to be one of the largest retailers in the world. Or if you want to be one of the largest retailers in the world, you have to be really good at a marketplace. And then that unlocks all these supplemental revenue streams and retail media revenue streams and all these other things we've been talking about on the earnings call. So you may have seen this a long time ago, but like, It's increasingly seeming possible that marketplaces will eventually kill off the wholesale model, which is crazy to think about. Scot [50:24]Yeah, it's kind of like what happened in China, though. So it's, you know, it's something that a lot of people have predicted for a while. It's actually taking longer than I thought. I'm a little perplexed why all of e-commerce isn't growing a little bit faster, but that's a topic for another time. Jason [50:39]Yeah. So last week we did an overly long show. And so this week we worked really hard to bring it in slightly under our typical hour. So I'm happy to say we have not used up all our audience time, but hopefully this was a helpful recap on Amazon's earnings, a forecast into Walmart's earnings next week, and gives everyone a really good kind of feel for how 2024 played out in North American commerce. I'm always Debbie Downer. I want to leave everyone with one piece of good news. The U.S. Government data for January sales comes out next week, but the National Retail Federation has a new data source called the Retail Monitor, which uses a huge panel of credit card data. And that data came out this week and they report that January sales are up 5.7%. So, again, all of last year grew at like 3.6%. Holiday grew at 4%. January being up 5.7% over last year is really encouraging. and certainly we'll hope to continue that momentum for the rest of 2025. Scot [51:42]Look at that Jason ending on a positive note. Who would have thunk it? Jason [51:46]Yeah, it's the new wear your clients logos and think happy thoughts version of Jason. Scot [51:53]Cool. Well, thanks everybody. And until next time. Jason [51:57]Happy commercing!

EP322 - 2024 Holiday Recap Episode Summary: In today's episode of the Jason & Scot Show, Jason and Scot recap the 2024 holiday season, and give a preview of the upcoming NRF Big Show. The week of January 20th, we'll be publishing our annual predictions show. If you enjoyed the episode, help us reach more listeners by leaving a five-star review on Apple Podcasts. Thanks for tuning in! Episode 322 of the Jason & Scot show was recorded on Wednesday, January 8th, 2025. http://jasonandscot.com Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Transcript Jason [0:23]Welcome to the Jason and Scott show this is episode number 322. Being recorded on Wednesday January 8th I'm your host Jason retail geek Goldberg and as usual I'm here with your co-host Scott Wingo. Scot [0:38]Hey Jason and welcome back Json is Scott showed listeners happy New Year Jason. Jason [0:45]A happy New Year and happy holidays Scott it's it's been a while it's been it's fun to catch up. Scot [0:50]Yeah you're kind of crummy when do you start giving people a hard time for saying Happy New Year I I was kind of a little worried because I was thinking I bet Jason draws the line at third or fourth of January and here we are on the 8th so I feel like. Jason [1:05]I accept all all well wishes I'm totally merry Christmas happy holidays as long as you want any of those variations are totally acceptable despite the fact that I'm nominally Jewish. And I'm New Year's at least through January my lights are still up out front. Scot [1:21]Okay good I'll I'll try to for the Valentine's show I'll make sure I don't say it that though I'll stop from there forward. Jason [1:29]If it helps people not judge me I think my Amazon smart plug is broken so I think the holiday lights might not be on. But they're still out there it's too cold to go out and get them is the problem. Scot [1:41]Yeah yeah you and I both went warm places for the holidays so that was good because I think we're both facing a cold spell here and I think actually here in North Carolina we may get snow whereas in Chicago you're not going to isn't that weird. Jason [1:56]That that is super weird even if we're both getting snow I'd be a lot more worried for you than me because I feel like we're we're a lot more used to it but yeah it's even weirder that like it's not not snowing here and you guys are going to get get dumped on. Scot [2:11]Yeah yeah we're just going to shut down and hopefully we don't lose power, the so it's been a while since we laid down a pod there's a lot we could talk about any any trip reports you you've been super busy you've done some vacationing but you grocery shopped before the break and then we definitely want to talk a little bit about holiday to kind of go through some of the tea leaves that are starting to come out on how things happened let's start let's start with a trip report anything interesting there. Jason [2:38]Yeah so at least anyone worry I have been traveling a lot I just got a note from my my favorite vendor United that they've invited me to their secret. Highest status program for for another year and this year I'm going to cross 2 million miles with United so um. Yeah I feel like that I had mixed feelings about that like it's a a cool accomplishment slash it kind of signifies that I have a sad life. Scot [3:05]And it's like congratulations all you do is fly would you like to fly some more. Jason [3:10]Yes and the general answer is no um so I did do a lot of traveling last year there were a bunch of trips running right up to holiday but, but a lot of them were sort of Private Client gigs more so than, industry events and I've been on 2 weeks of vacation so I frankly can't remember where I was right before those but the Big Show of course that I don't think we talked a lot about was was grocery shop which, isn't you know focused on the food restaurant and grocery industry in October in Las Vegas and that show continues to get. Bigger and better longtime listeners of the show will know kind of I talk a lot about how. Every industry is getting wildly disrupted by digital just not all at the same pace so some of the you know first categories to get disrupted. Digital where things like like Borders bookstore and Blockbuster video and then Circuit City and Toys R Us and the gap. Jason [4:08]And that at the moment it's the Auto industry in the grocery industry that are getting most disrupted by digital so I feel like grocery shops are particularly interesting show because, in many ways that's where all the, the rapid Evolution and action is in the in the digital space so it was a a good vibrant show and. 1 of the things I'll I'll give props to the show organizers for is you know they always get good Keynotes they always get big names on stage but they share more so than many years in the past I felt like. A lot of the Keynotes had like actual interesting. Information and insights in them it was less like sort of CEOs giving the the prepared PR. Can speech and more talking candidly about what was working and what wasn't working and and you know what the priorities were going to be and what was being deemphasized in the future so I I would just say overall again it was back in October and we're in January now so. Don't press me for for a ton of specifics but I walked away. Feeling like there are a lot of useful takeaways and of course like all the all the networking and hallway conversations were were super helpful as well. Scot [5:21]Cool were you leader of any sessions. Jason [5:25]I was as per all of these events I'm I'm wildly Overexposed and so I I both presented a session I also moderated panel. The like I probably can't even remember exactly who was on my panel so. Scot [5:45]It's been a long time you've got you've got vacation fog we'll give you a. Jason [5:47]I do I do I'm gonna call it vacation fog and hope it's not dementia but yeah. Scot [5:53]Yeah and then on the holiday recap we kind of have to wait that first week of February last I looked is when Amazon's going to announce and then right after that I think you got some Walmart and some of the other folks Target and whatnot kind of put out their data so we won't really know what happened until we get some of that but several of the folks that do pontificate have some data out did you see any data that was interesting that you want to run through I I I saw some of the Adobe stuff I was going to just run through. Jason [6:21]Yeah well so maybe I'll just wait the groundwork a little bit like so again there's. In general we see 2 kinds of data like there's people that talk about what happened in retail which is all all of retail so it's brick and mortar mixed with eCommerce and then there's people that just talk about digital so I know you're going to jump into the Adobe 1 which is, exclusively talking about e-commerce, but of course a long time listeners of the show would know you know the history of the last 10 years is that retail tends to grow about 3 to 4% a year, and e-commerce has grown about 10 to 15% a year for each of the last years so 2024 is an interesting year we you know it's still a week or 2 before we have the final data for the the whole year, but with 11 months of data. Retailers slowed down a little bit like it's growing closer to 3% than 3 to 4% and e-commerce has slowed down it's grown about 7% this year versus the typical 10 to 15% and. Jason [7:22]You know it could be that this is a down year it also could be the law of large numbers as e-commerce is getting you know to be a bigger and bigger part it's hard to grow as fast so it's e-commerce is still growing at more than twice the speed of retail. But that's that's a smaller Delta. Then it has historically been so that's kind of the the backdrop coming into this holiday and then this is 1 of the weirdest holiday seasons of my career. So traditionally what we always talk about is. There's an arms race to start holiday earlier that like you know retailers used to open up their stores on. Black Friday the day after Thanksgiving and they were creeping earlier in the earlier in the morning on Friday originally when I started my career they opened at 10:00 the normal opening time and then they're like wait I'm going to open at 9:00 and get people to get in the line of my store before your store and then I'm going to open at 8, and then retire starts saying hey we're actually going to open Thursday night after dinner and then oh we're going to be open all day Thursday, and fast forward 30 years hey we're going to run our big Prime day sale in the middle of October right and so, every year we talk about how holiday starts earlier and earlier and these sales start her early and earlier but here's the Dirty Little Secret. Jason [8:39]The retailers may offer deals earlier and earlier but consumers have never spent earlier. So if we look at October sales growth it's the same every October for the last 30 years so I get it has it it's not like October has become more important over time as these sales have gotten early and earlier and so when. Amazon announced a huge sale in October and Walmart and Target quickly followed suit I actually. Kind of thought it was a nothing burger like I I didn't expect it to have a big impact and. I was wrong so October is actually been 1 of the most robust months of growth we had this whole year like it was a big spike much bigger than we had any other month. And I thought oh man that's interesting like these these sales really are having a meaningful effect this year. But then we got into November in the first 2 weeks of November were abysmal. And so you go huh we we had a bunch of big sales in October it appears people jumped on those sales uh we sold more stuff in October than ever before but we probably just pulled a bunch of demand in that would have happened in November because. Jason [9:47]The beginning of November was awful and so then we got to Holiday the turkey 5 week and you go well what's going to happen is it going to stay soft like it has most of November but it actually bounced back and so we had this, we had this low from November 1 through November you know 26 and then, it jumped up and we had a pretty robust not not like World beating but a pretty robust turkey 5 and so then you go wow you know and by the way the turkey 5. Extended into December this year because of the the way the holiday schedule works, um and then we've all been real curious to see what would happen in December and the real answer is we don't have the December data yet we have a couple data points so. Jason [10:30]Market MasterCard spending pulse. Is 1 of the companies that publishes an estimate of total retail sales and they published an estimate of November 1st through December 24th so not catching the last minute holiday shoppers, that said all of retail for November and December was up 3.8% so if that's true. Will take it that's that's the industry average growth that's the high side of the nrf's forecast for holiday this year and it, would kind of mean that that, December sales were pretty robust to make up for the kind of anemic November sales so so that's, the big data that I followed about overall retail and then you know we have some better more granular data on the e-commerce side and that that's where like that adobe data comes in so you want to you want to break that down for us. Scot [11:24]Yeah it's kind of interesting as you as you talk about you know kind of pulling it in October we we always talk about the shape of the holiday right and we used to have kind of this you now as you described it it sounds like a w where the the left side of the W is like that October Spike and then you had a little decrease in early November and then the turkey 5 you come is the middle of the W and then you come back down and then we always seem to have this procrastinator kind of pop at the end I don't know about you but I I fall into that for a lot of my things I'm kind of like I get busy at work and I'm like, holy cow it's December 18th I better think about this holiday thing so you always see a little bit of a spike and some of that's driven it's kind of a self-fulfilling prophecy because that's when all the best prices happen there's the you know the Garff used to call it. Turkey chicken game of chicken discount chicken do you remember that. Jason [12:17]I do I do. Scot [12:18]Yeah I saw he changed jobs that was you're not going to be able to do selfies with him anymore yeah Rob gar. Jason [12:24]Going to do selfies with Rob and I, uh NFS coming up in a few days so I I hope to see them and we'll for sure take a selfie but you're right Rob Garff a long time friend of the show and I I want to say 4 or 5 time guests left Salesforce this year so a big big change he was kind of, face face of Commerce at Salesforce for a long time. Scot [12:42]You have to give us a an inside scoop of what's going on there it reveals secrets you get from the show on our podcast, okay so on the Adobe data, you know they they they call this November and December and they're saying online came in at 8.7% year-over-year growth which to your point is kind of below that 10% where we've been going. But we're getting to a scale where it doesn't surprise me I I think ultimately the lines for retail and online just kind of merge and blend and kind of become the same thing they did say that Shoppers they called it event based they were waiting for events which were basically price drops and they were kind of I guess they don't want to say discount chicken maybe that's not as uh fancy so they called them Event Event based shopping. Jason [13:29]Yeah and if you think about it was invented by their competitors at Salesforce so yeah. Scot [13:34]Yeah oh true yes sorry wrong uh wrong 1 and then this I thought you I thought interesting and it basically said groceries was the fastest growing at 13% so I guess with inflation people were just gifting groceries or or did groceries are just growing fast enough now that you know that's just faster than the holiday what what's your read on that 1. Jason [13:55]Yeah well a couple of things so like when when if adobe's right that it grew e-commerce grew 8.7% over holiday to me that's that, totally makes sense and put your point it's lower than what we would historically expect but it's actually higher than the year to date averages for e-commerce so e-commerce is growing about 7%, through the you know the whole first 11 months of the year so growing 8.7% over holiday actually means. Jason [14:26]E-commerce was a more important factor in Holiday than brick and mortar which I I believe and think was true so that that was kind of my first takeaway from the Adobe data and and as I mentioned, you know there's some really mature categories in e-commerce I mean you know 90 something percent of all books and music is is digital now right like you know well over 50% of electronics and toys. Jason [14:50]Our digital 50% of apparel is digital but. You know less than 8% of groceries are digital so it's still it totally makes sense that grocery e-commerce is growing faster than anything else I don't think it's gifts. Although you know people host a lot more over holidays so they do spend more on groceries than usual. But I think it's just reflecting the the fact that we had lots of busy families that were availing themselves of the convenience of grocery delivery. And you know another Factor overlaying all of this is we we've had this kind of thing that I like to call A vibe session this year that. Consumers have really curtailed their spending on non-essential purchases so when you break down the actual categories uh all year people have spent a lot more on deeply discounted goods and on food and have to have and they've spent less on want to have so you know consumer electronics it's actually been a poor year a parallel you know has been a little mixed but generally a poor year Home Improvement has been kind of a poor year. Jason [15:58]But you know these these have to have categories like grocery have been 1 of the stars all year so if you kind of factor in that, you know people have tended to spend more on grocery just in general and the e-commerce is a you know more substantially growing part of of grocery than it's ever been before it makes sense that grocery would win the e-commerce race for holiday. Scot [16:23]Yeah interesting. Then they said this the so groceries number 1 at 13% the number 2 category was Cosmetics at 12.2% I think the Wingo household contributed a. A pretty big piece of that, I go to Sephora a lot against my will and then they said that category hit 7.7 billion and then they pivot into discounts they made this quizzical statement where they basically said retailers discovered that for every 1% price drop demand went up 1% being forces I was like well let's look at the edge if you dropped 100% demand would go up 100% it seems like demand would actually go up more if it was 100% off anyway I didn't really understand what they were trying to say there it's it and it made it seem like it was just like new revelation I'm like wait a minute this is called. Supply demand curve and I learned it in economics anyway I must have misread it or something I didn't kind of like grow what they were trying to say there. Did you did you have a hot take on that 1. Jason [17:24]Well just a reminder most of the people that were good at Econ economics like don't get jobs at Adobe so I I would just remind you of that but no. I'm just kidding all my friends at Adobe who are super smart um the yeah I. Of course like lower prices generally drive more sales that that certainly true it's probably not a linear scale I think they're more saying like observationally like on their data set that it happened to play out this year that that there was kind of a linear, who asked the city between price and demand but the my bigger takeaway is I think. Jason [18:02]This was a highly promotional holiday period right and this was kind of expected I mean again overall 2024 was a soft year in retail. We we just we'd had a couple really good years after the pandemic of of really strong growth and this is going to be kind of a. You know we'll be lucky if we get to out to an average year it's probably going to be a below average year of growth and, you know there are all these extraneous factors like you know there's there's positive and negative economic indicators but the consumer confidence has been really poor they're they're only spending on Essentials they're all trading down to cheaper Goods so you know more discounted goods and value Goods, and there was a super polarizing election that you know distracted a lot of people and it was the shortest holiday season we we get on the calendar with fewer days between Thanksgiving and Christmas than we ever than we get any other year. And so for all of those reasons retailers were desperate to sell stuff and what desperate retailers do is they discount deeper and so what we always worry about in these kind of years is that retailers will. Jason [19:11]Go deeper discounts to kind of hit their Topline sales goals and clear out their inventory but it actually means that their margins, are going to be really poor and that's 1 of the things I really worry about this year is, I think when all the dust settles we're going to find out it was a below average to average holiday season but way below average on profitability right and that's going to have a carryover effect in 2025. Scot [19:39]You know that's what's really matters right you know you can sell the Top Line doesn't matter it's the basically the profitability. Jason [19:46]Bonus on the top line. Scot [19:47]True but I have a feeling the more sophisticated people are are the kind of caught on to that trick they talked about Electronics was the deepest discount to your point of demand being kind of sluggish at with a 30% off there and then toys was number 2 at 28 toys is just a. Terrible category these days because kids don't really want toys they want to just play electric electronic games we're talking about. You can't climb baby geek anymore but you know uh. Jason [20:15]The little geek we're going with. Scot [20:16]Little geek retail geek Junior. You know he's into games and wants digital currencies and stuff the good old Roblox dollars and and whatnot so yeah it toys are just tough so that that 1's kind of an easy call at 28% and then they said apparel had a fair amount of discounting to 23%. So I thought that was interesting traditional Trends we've talked about for. Kind of going on a decade at this point you know this may I hope you're sitting down but a lot of people shop on their phones that was up to 55%. Another call out I thought was interesting was they they saw a buy now pay later a pretty significantly at 9.6% year-over-year and you know. It's hard to tell if that's kind of a new consumer Behavior or there's all this data that's out there that shows the consumer's kind of increasingly Under Pressure they're they're starting to get a bit of a debt thing going and. Interest rates going up have made made home buying slow down all those kinds of things are putting pressure on the consumer so, it's hard to tell the buy now pay later people would tell you know it's a whole generation likes to buy that way I'm a little skeptical that maybe it's just the you know part of the the consumer being under pressure that saw a climb there. And then they on that they said Cyber Monday was a record day for buy now pay later where it it came very close to a billion I guess 991.2 million of transactions had buy now pay later. What do you think is buy now pay later surging so is that about. Jason [21:45]I do think it is I I do think it's it's kind of a combination of 3 things like I do think it's legitimate that that younger consumers look at debt and credit differently then then older consumers and and so I there is a legitimate thing that's hard for people our age to understand which is like even consumers that you know young consumers that have economic means to buy something. Don't like to go into like debt on their credit card and they do view these like fixed installment things where you you know buy something on 4 payments as. Jason [22:22]Is a different kind of debt than credit cards and so I do think there's an actual consumer preference for younger consumers to, that credit vehicle so I I think that's what genuinely part of it and the buy now pay later Services continue to grow and be more ubiquitous so they're just offered, more places more retailers have them and more retailers are offering them both online and in store than ever before so, so there's more places you can use it and there's more consumers that have a preference for it that's part of it I also think, there were more distressed consumers coming into holiday so there were you know more consumers that were forced to use it and the the thing that I don't love for the economy and that scares me about these services, are some of the really inappropriate categories, that consumers are using buy now pay later for right like if you're buying a durable good and you you buy it on installments and you know that like we could argue about the economic Prudence of that but I I don't personally have a problem with that. But if you're buying a monthly consumable on installments. That's concerning right so you know you shouldn't be buying food on buy now pay later right and yet like buy now pay later is showing up and getting used at grocery stores. Jason [23:33]The that you mentioned Cosmetics are up Cosmetics is 1 of these weird categories where there's been this bifurcation. There's some inexpensive Cosmetics that are kind of an affordable luxury and they're doing really well, the the true expensive luxury cosmetics and the whole luxury category we saw get really soft and Q4 this year and historically, luxury is the category that survives economic downturns right because you know more fluent people tend to be. To be more resilient but this time around we have this kind of it's It's a negative vibe as much as it is an economic factor and so even a fluent people are like, don't feel great about the economy I'm going to cut back on my spending and so luxury overall especially in the United States. Jason [24:18]Got really really soft but buy now pay later got used a lot for like consumables like lipstick and things like that so that's a a little bit of a, a worry and so I I think you've got kind of and then the the third factor that I think helps buy now pay later is, people don't like pulling their credit card out of their wallet and typing it into an e-commerce site it's just a pain in the neck and economies that have digital wallets like China sell a lot more stuff online than econ then economies that don't have big digital wallet penetration, and so for some American consumers, PayPal and Shop pay our digital wallets for some American consumers Amazon pays a digital wallet but for some American consumers a firm is a digital wallet and so there is a, lower friction more convenient checkout experience that that you know I'm not saying it's the biggest part of buy now pay later but it's another incentive that some consumers have to use it so I think, the combination of those 3 things. Jason [25:18]You know younger consumers with different attitudes about credit consumers that you know are buying stuff that they don't necessarily have the cash to pay for and consumers that like the convenience of. Of the buy now pay later checkout flow all are helping buy now pay later continue to grow for the moment and we'll have to see if that. That carries forward but it's definitely a big thing. Scot [25:40]Interesting the other data and I know you love this is from MasterCard spending pulse and they said retail X Autos was up 3.8% and that was kind of they had a couple other things but I know that that 1 has not 100% tracked the the Commerce Department data that that is the gold standard. Jason [25:58]Yeah yeah so it's weird it it it should be a really good data source all all of these data sources are dubious right like the only. Jason [26:06]Economic indicators are really care about are the public retailers earning statements right because those those are like audited um and and you know. Tend to be pretty reliable although although Macy's had a glitch this this last quarter that was kind of interesting. The the retail earnings reports are are are pretty credible all of these estimates the the US Department of Commerce data I I'm deep in that data I use it all the time I find it really helpful but you know it's it's very flawed at best and then most of these other data sources are more far than that so so MasterCard data is, a big panel of credit card users right and MasterCard has a lot of users so it it should be a good data set. You know there's a lot of people that pay with cash and so the the MasterCard data set is skewed and the economists at MasterCard would say they normalize the data to reflect All American spending even though they only see a subset of American spending, but I have to say historically of all these data sources I've seen the most fluctuations in mastercard's data versus everyone else's so, they're the only ones that have put a flag down for December and they're saying it's 3.8% which again would be decent I hope the other data sources they will get next week come in and are similar but I I'm. I'm not prepared to to say I'm very confident at this point what what the December numbers are going to be. Scot [27:33]Yeah what was the I missed the Macy's flood what was that all about. Jason [27:36]Where like a week before they they were scheduled to do their Q3 earnings call. They acknowledged a massive fraud by an employee in their accounting department and had to delay their earnings and restate their earnings for the last several quarters. Scot [27:53]Wow holy cow that's a that's a pretty material fraud. Jason [27:58]Yeah yeah and yeah you never that's never a fun message to give to the market and then you know of course. Meses is in a really challenged category department stores just aren't doing well and are generally declining and so you know odds are we're there and they did you know come out with a soft earnings report, you know that there's a couple favorable things in it but the top line is is that they're shrinking. And you know that's bad news just anyway and then when you have to you know taint it by saying and we're not even sure that that that all the all the losses we've reported the last 3 quarters like aren't even the full story it's it's it's. Investors do not love that. Scot [28:37]Yeah that's terrible all right 2 other topics I want to talk about we have NRF coming up and you're going to be attending for the Json and Scott show where do you expect him to see there. Jason [28:49]Retail media networks and AI I think everything is going to be a retail an AI driven retail media Network. Scot [28:56]Some combinations of the letters a r m n i looks like a uh Wheel of Fortune kind of thing. Jason [29:03]Yes and generally I throw up in my mouth every time I hear either of those acronyms so it's kind of it'll be a super pleasant pleasant week we. Scot [29:11]Well I can't wait to hear your show report. Jason [29:13]Yeah I have approximately 10,000 emails in my inbox right now which are you know from someone that wants to meet at NRF that is inviting me like today. Despite the fact that my internet schedule booked up about 3 months ago. To see their new Innovative AI driven retail media Network solution to that's going to revolutionize the retail industry. That's that's the exact extent of the pitch no more detail than that. Scot [29:40]Do people say as the chief digital Commerce retail payments officer at pubis do you have any uh are you interested in e-commerce in in retail Solutions you must get the craziest email. Jason [29:53]Yes exactly yes whenever they do that exact pitch I know it's from you. Scot [29:59]Yeah for those of you that see Jason make sure you give him a hard time about his title that's it he he really enjoys it it's the only thing that brighten his day and being pummeled by the AI and Retail. Jason [30:11]It it does because every time I hear it it makes me think of Scott and and Scott Scott is just 1 of my happy places. Scot [30:17]That's nice, 1 thing I saw in this kind of came from my you know so so I do investing here in the Research Triangle Park area in a bunch of startups and, you know AI you're going to do this but AI gen AI to be specific and you know the the change in consumer behaviors from that are really fascinating so a lot of these folks that Source deals and they're trying to you know do lead gen by emailing you constantly, no none of these companies you're not in their target but they they do send out a lot of cold emails. Scot [30:50]None of that works anymore except LinkedIn which is kind of odd because I get so much LinkedIn stuff I can't even hardly use the messenger. But anyway and then the other thing they said is content strategies under a lot of pressure because, the amount of traffic going to these these blogs and other kind of you know content you put out there hoping to get some inbound interest is kind of falling off a cliff and you know I talked to a couple of them and dug into it and and then I started poking around back into our world of retail and e-commerce and and started to see some interesting things. Scot [31:21]You know number 1 what you're starting to see is SEO is changing and you know search engine optimization because Google largely dominate search with like let's call it 80% share and you know it's been pretty well known how the algorithm Works they do tweaks and things and whatnot but it's generally well known with patreon and all that stuff for for decade now or decades, but what you're trying to see is enough traffic is starting to go through openai perplexity and some of these things that and it's pulling the content up a layer your site your content that you put out there may have been part of the answer but you're not getting the traffic anymore and therefore people aren't seeing the form to generate a lead or you know oh my gosh this this is a vendor that can offer me a solution to problem X on researching so so that's interesting and then I I noticed in that same Adobe report that kind of had this little little call out where, they said and this is a quote 1 of the newest factors nudging spending is AI powered shopping assistance such as chat gbt and its competitors traffic to retail sites that came from gen AI powered chat Bots, shot up 1300% 1300 percent compared with a year ago holiday season now I'm sure it was small last year so maybe it was like 5 people in this year it's like you know. Scot [32:41]What's the math on that 1 6000 but you know just relatively that those kinds of numbers, but still I thought it was interesting that we're seeing it over in 1 part of the world and it it's definitely kind of forming over on the e-commerce side and then, a lot of it is Shoppers are now turning to that technology for gift ideas and for you know kind of what you would call the research and and maybe a little bit of finding the product but we've got this research you know what do I want to get, Jeep this guy named retailgeek he's hard to shop for certainly not a gadget because these are get 10 of everything and they're like how do you find find narrow it down and find it and then. What's the best format to buy it in so that that kind of top of the funnel it seems like a lot of consumers are using that and I thought that was pretty interesting and the quote from the Adobe dude was you have a consumer that's a very strategic and thinking a lot about their strategy around where they're buying when they're buying what's offering the best deal and then that's where they're using gen AI the assistants are helping the consumer and co-piloting that Journey so I thought that was interesting and then right before after we did our last pod but right kind of towards the end of the holiday I saw several articles but this Business Insider 1 was like a good Recaps where. Scot [33:54]You know there's been such an explosion of stuff out there that is increasingly hard to make a decision so there was this 1 article November 4th willing to it in the show notes and it basically was this couple trying to buy a mattress and they were just or a bed frame and they literally spent like 8 to 12 hours and just gave up they just kind of felt like it had become their job and I I do think that's kind of happening it's like it's so hard to find stuff in it I had this problem where I needed 1 of these you know dumb little dongles for my second HDMI thing for my camera and this 1 died and I had a webinar in 3 hours and I do Best Buy I had 1 but it was the 1 that's far away from me so I had to like find how instacart so then I had to back into instacart tell it. Scot [34:38]Work address and then I went to work to pick it up and like you know seems like all this stuff is out there but the you know the the consumers are just having a hard time parsing through it all so it it's going to going to be interesting to see next year I think we're going to find perplexity has some shopping features we talked a lot about chat GPT has to be working on it, Google Gemini has some really cool stuff that I've been using their deep research and and if it was shopping capable uh they also put out a paper about agents that actually kind of has a shopping agent little placeholder on it, travel agent you know so you could see them kind of turning Google shopping and Google travel into little agent things that go do stuff for you somehow or at least give you some information it's going to be really interesting to see how this changes e-commerce because the consumer, feels a pain point and they want wanted to change but I don't know what it's going to look like on the other side what what do you think about all that. Jason [35:33]Yeah yeah well so I I I think you're right I think it's complicated because AI is both an annoyingly overhyped buzzword that I'm sick of people AI washing everything and expecting it to sound interesting. And simultaneously I do think that there's there's a ton of AI use cases which are, totally disrupting traditional business processes all across the the Commerce ecosystem and and I think that this, kind of the idea that you started to touch on this idea of AI agents and you know people not having to go shopping for stuff and find stuff and do research and just have the the robots proactively solve shopping problems for you before you know you have them. I I I'm not going to say oh that's for sure the future and and all stores are going to go away, but I think there's a very high likelihood that it becomes a meaningful part of the consumer's tool set and I think it's going to be wildly disruptive so, I don't think it's, it's there yet and I so I don't think it's economically meaningful at this point and so in this Adobe data I feel like is a little bit it's ironic like it's it's they're kind of SEO keyword stuffing when they're implying that SEO is going away. Jason [36:51]But the, I I think it's a you know a very small number of people were using AI chat Bots last year and now 13,000 you know 1300% more which is still a very small number, but I think bigger picture we used to all discover products, at this place called the retail store on a shelf and now a huge huge percentage of Discovery happens at this thing called the search engine right and and you know 15 years ago that would have been unimaginable how important Google would be to the to the the shopping process today and increasingly I feel like that that search traffic is under threat part of it is from retailers with better databases so you do the search on Amazon or Walmart instead of on Google part of it is, then I would argue the biggest most disruptive part is on social that you're discovering new products to buy on Tik Tok instead of on Google and, you know it's still tiny but an increasing number of it is happening on these AI platforms and this is even really before the AI agents have rolled out like what happens when there's really powerful AI agents built in the series and Amazon and Gmail and they're all plugged into every email and text message we get. Jason [38:07]You know what what's the world going to look like then you know I think this is the disruption that we're all living through right now I think it's really hard to predict, exactly how it all plays out but I think you know if you're in the space you need to be paying attention to this and you need to be contingency planning you know how you're going to be good at all these things and what you're going to do you know as these things do become meaningful because I think it's entirely possible that, AI agents are as important to Commerce in 10 years as Google is today as the store shelf was 15 years ago. Scot [38:42]Yeah and what's it mean like to all your, all this front-end stuff when the e-commerce basically kind of was like headless Commerce but with a you know you're not putting a you're not building any front end there's just like the front door is now the. It's not even API it's like some kind of a a genetic thing that's like calling into the API and doing stuff like hey you got 1 of these uh what's your price okay I'll order 1 of those it's going to be it's going to be tricky because a lot of the things that add a lot of extra margin like check out add-ons and you know recommended products and you previously bought this all that stuff. Maybe it goes away in that world and in some extent so it's going to be I guess retailers are going to have a hard choice to decide to even want to participate in that and you know because in the early days. I remember like the Twitter's been at this like 6 times they've tried to have e-commerce and they always try to bypass the checkout and that's kind of like what perplexity is doing and you know you can imagine a bunch of retailers. Like I think it's 1-800 Flowers they get so much from all the upselling that they do that you know maybe there's certain sets of folks that just kind of opt out of that world but then if your competitor opts in what do you do it's going to be interesting to see what happens here. Jason [39:59]Yeah no and and 1 version of that is already happened like. The when I say we used to discover stuff on the Shelf we used to put a lot of stuff you didn't know about on the Shelf next to the stuff you wanted right, and you made all these unplanned purchases you made all these impulse purchases do you know what the most profitable real estate is in a grocery store it's the cash wrap. It's the the the Widow refrigerator that has 1 can of Coca-Cola that you can buy right as you're checking out that you drink on your way home from the, the the Kroger store, or the the mints or the gum that you didn't think you wanted that you decided you you had to have while you were standing there that those impulse purchases were a huge part of retail and when. Grocery has gone a digital grocery you know what nobody's buying on digital grocery single single cans of Coke or gum. Scot [40:51]Yeah yeah. Jason [40:52]Right um those those impulse items like nobody's figured out what the digital version of those impulse items are right and and you're you're absolutely right when when shopping goes from implicit I have to build a list figure out where I'm going to get that list, proactively go give someone money and then get all those things, to implicit like all the stuff that I need to run my life just magically shows up in my pantry and I don't have to lift a finger or ask anyone. Jason [41:18]Tons of opportunities I had to upsell and influencer brand selections, and you know Drive impulse purchases are going to go away and some people will see that and say doesn't matter if the future that's where I got to go and they'll embrace it and other people will say no I'm going to hang on to the old model as long as I can right and that that happened in retail too do you know who 1 of the greatest retailers is in the modern era it's Costco they're amazing do you know how much Costco loves e-commerce, they freaking hate e-commerce right like they they say on their earnings call why would I ever encourage someone to go to my website when they'll buy so much more stuff if I get them into my store right and so they're they're 1 of the biggest laggards in digital Commerce because, they're so good at brick and mortar and, like we're likely to see some of those same same kind of companies you know resist moving to AI agents or social commerce or you know what whatever things comes next but these are all the. The disruptions that are playing out right now right and it's it's super fun. Scot [42:24]Yeah yeah well guess what Jason it's happened again. Jason [42:29]We've wasted a perfectly good our of our listeners time. Scot [42:33]Yeah yeah and uh I meant to mention it at the top of the show but we were going to do our predictions but 1 of us which was me did not get a chance to work on them so we're going to make this a 2-part so we're going to this is kind of the the wrap the 24 w and then we're going to do our prediction show next time when Jason gets back from NRF and he's going to have an amazing trip report with with lots of Garff gossip. Jason [42:59]Yeah and here's the good news if you are going to interfere in New York this week I I leave Saturday I come back the following Thursday and you are a planning on on attending, any event or content at NRF, I will see you there because you talk about Overexposed I think I'm on stage like 8 times at at NRF this year so I owe so many decks that I haven't done yet. But it it's going to be fun I'm looking forward to seeing everyone I think there's going to be a lot of interesting stuff that you know it's going to be a real vibrant exhibit hall with a lot of new, new exhibitors there's an Innovation Pavilion which is always super interesting which is you know where a lot of startups go and and there is going to be a bunch of good content, it all wraps up on Tuesday I'm doing a session on the big stage on Tuesday which is kind of going to be fun it's like a point Counterpoint debate. So a good friend and way smarter colleague of mine Christine Russo and I are going to be on stage and a bunch of our our friends in the e-commerce industry have sent in video questions and Christine and I are going to debate. The the pros and cons of of each of those questions and so I'm desperate for people to go to the show attend that Tuesday session and route for me because I think, there's about 10 Christine fans for every Jason fan. Scot [44:18]The Jason fans are small But Mighty stuff well uh they'll be allowed loud and proud. Jason [44:22]My my wife and son are both going to root for Christine I'm just saying um so any any any help I can. Yes anyhow if I could get his appreciated but so yeah so so interest is going to be very fun but busy. And I as Scott alluded to I have already written my predictions for 2024 I do reserve the or 25 got to get better at that, I do reserve the right to update them if I learn anything new at NRF so so maybe the fact that we're doing the prediction show after NRF this year will give me a chance to to be slightly more accurate than I've been in the past which would not be a bad thing. Um but hopefully. Yeah you got some value out of this show and we've teased you with the next show in just a couple of weeks and as always if you if you did enjoy the show we'd love for you to jump on iTunes and give us that 5-star review. Scot [45:11]Thanks everybody and until next time. Jason [45:14]Happy Commercing!

EP320 - News, First Half Recap, Early Holiday Preview http://jasonandscot.com 0:23 Welcome Back After Hiatus 2:51 Upcoming Events in Retail 7:28 GroceryShop 16:02 Retail Growth Trends 21:28 Concerns for Holiday 2024 30:27 The De Minimis Provision 40:27 TikTok's Impact on E-commerce In this episode of The Jason and Scot Show, we discuss the current state of retail and e-commerce. We analyze macroeconomic factors impacting the retail landscape, noting a 3.4% growth in core retail and a maturation of e-commerce, dominated by giants like Amazon and Walmart. We address consumer sentiment heading into the holiday season and the potential influences of the upcoming election and interest rate changes. The episode also covers the role of AI in enhancing personalization experiences, challenges faced by dollar stores, and supply chain issues. We conclude with insights into Amazon's recent earnings and their strategies to engage younger consumers through TikTok Shops. Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Download the complete 54 page deck of all my insights from the US Dept of Commerce Retail Data for the first half of 2024 here https://rgeek.co/retail2024 Transcript [0:23] Welcome Back After Hiatus Jason [0:23]Welcome to the Json and Scott show this is episode 320 being recorded on Monday september 16th 2024 I'm your host Jason retail gee Goldberg and as usual I'm here with your co-host Scott Wingo. Scot [0:38]Hey Jason and welcome back after a very long time, Jason and Scott show listeners Jason our last show was an early May so it's been about a little over a 4-month hiatus and when people ask me I always blame you do you blame me. Jason [0:57]I do blame you and I'm bitter because in my mind. Nobody's really complaining to you but like I I've gone called out on stage by like I've I've been heckled by people that are like what are you going to do a new show. Scot [1:15]It's part of our it's it's a Nintendo like strategy where you you dribble you know if you could really constrain Supply scarcity that drives demand so yeah. Jason [1:25]Yeah it it we are we are playing 3 dimensional chess in a world of checkered players. Scot [1:31]Exactly the the real reason is as Chief digital Innovation retail and payments and grocery officer your title's gotten bigger and your your more famous your allies on a plane I can never record because I'm like how about now he's like Paris how about now Australia how about now India so you've been flying all over the world. Jason [1:52]I sadly I have been it does feel like travel is back there there have been more International trips this year than any year before coid so I I can I can only partially deny that accusation. Scot [2:08]Cool well we're glad that we have you here for for an hour give us an update what are you any uh show you know what's going on out in the world of retail as you've been expanding the globe for the Json and Scott show. Jason [2:20]Yeah it's been another Super interesting year for retail we'll we'll certainly get into some of what we think are the key topics that have been planned out this year but I have attended a bunch of events I I can't even remember which ones where since this this last show visited a bunch of customers out in the field which is always great learning new things from them [2:51] Upcoming Events in Retail Jason [2:40]but the upcoming show is in early October is grocery shopping in Las Vegas so I'll be moderating a panel on. AI enabling Next Generation personalization, at at that show which I always look forward to to grocery shop and then a week later they're they're shop talk is moving their show their other stuff to Chicago so they're going to have their first, fall shop talk that will be in my backyard in Chicago so I'll be curious to see how if the world wants another another iteration of shop talk every year. Scot [3:18]Yeah give us the behind-the-scenes did you like throw down the gauntlet and said shop talk must move to Chicago or I'm not going to attend or and run all the speaking stuff. Jason [3:28]I basically did that with everything I told every client that they had come to Chicago I told shop talk and I told you you had to come here to record the podcast and yeah you'll note we haven't had a lot of podcasts and you know I still have the same 3 customers here I've always had. Scot [3:44]But you got to show them to me for at least that's a 1 w. Jason [3:46]I did but they really just added a show they're just looking for more Revenue so like it seems like it's probably not. Not just me but I feel like your LinkedIn feed has been more active than me and mostly with accolades for for the the fund that you helped kick off. Scot [4:05]Yeah yeah so the just to update everybody I'm in a post spiffy world so started spiffy in 2014 and then, you know decided to to we got to kind of north of a 60-ish million run rate which is plenty big lots of employees lots of things going on and I had started this little side hustle well first of all I started this thing for our little local ecosystem here called the tweener list in 2015 which was just a little passion project and then started a little fund around that called the tweener fund which invests in early stage startups so I've I've really enjoyed that and decided to, move on from spiffy and make this my full-time gig so have been really enjoying doing that and actually have. I'm sure you do this where you have a list of things you're kind of like want to learn about and you can hardly ever get to it and I've been doing a lot of that the last 4 weeks and 1 of the big 1 is AI I've been going really deep on AI and it's been been a lot of fun to play around with all the cool new stuff going on there and I got a couple interesting ideas I'm not going to reveal anything but there's some interesting if you think from a AI native remember how we used to talk about mobile native well now thinking AI native I think there's some interesting things that could happen in the world of e-commerce so I'm going to I may go back to thinking more about e-commerce so we'll see. Jason [5:23]Come on back though we're we're waiting for you the water is fine man they're they're for your point there's a lot of super interesting stuff the grocery shop will be fun a a show after that that I'm looking forward to is NRF because you know they have this Innovation Pavilion and they've kind of upped the the, rigger around recruiting exhibitors at The Innovation Pavilion this year and I think it's going to it's a big year for Innovation so, probably be a cool time for all of us to meet in the New York in January with global warming it's not even cold anymore. Scot [5:58]Not been there not too long ago and it's still pretty darn cold for this North Carolina. Jason [6:04]Oh okay fair enough fair enough I'm just last year was the first time it snowed in like 2 years in New York at at in her uh and then. Scot [6:10]Okay yeah yeah last time I remember trudging through like 6 inches to get to your hotel which was painfully far away. Jason [6:17]I mean that's yeah that's been my normal life so it's been weird that you haven't had to take the heavy coat to New York so although I wouldn't recommend that if you go to New York in January I'd bring that vote uh. And, I feel like in addition to everything else I know we're going to jump into the retail but all the Apple software updates dropped today so cool new icons and emojis and and delayed chats so I can have, like Emoji based chats hit Scott Wingo at every hour of the day now it's amazing. Scot [6:48]Nice I look forward to that at 4:00 a.m. I'll have my do not disturb on to counteract your your attack. Jason [6:53]Yeah although I may need you talk about new things you want to learn 1 of the things I want to learn is how to make Do Not Disturb work right in the the modern app like the system because I feel like all the focus modes have made it complicated. Scot [7:05]Yeah I have to have you know that that kind of funny YouTube where the dad puts on 6 seat belts that's me putting on do not disturb I have to do the physical thing check the moon do my watch hit D and D in a profile and then that's that that combination of things I don't know which of them does it but that seems to stop everything. [7:28] AI in Grocery Shopping Jason [7:23]Yes I feel like I'm in a similar boat but it would be interesting to figure out how to do it for as intended. Scot [7:29]Yeah or just we know it works so just keep doing it do so just give us a preview of grocery shop can AI do better recommendations than kind of the old school way we used to do it. Jason [7:42]So 1 would hope certainly it can do it at greater scale than we used to do it there's some anecdotal evidence that it's. Better it you know part of it I'm I'm curious to talk to some of these folks So So Meta will be on my panel. They they have a strong POV you know what's going on in the digital ad space right now is all the the ad platforms are trying to talk you into going hands off the wheel and turning over. The bidding to their AI engines and I would say at the moment it's an uneven playing field there like if I if I talk to my. Performance media folks they'll tell you that the the AI robots from some of the platforms are very effective and tend to outperform a manual bidding and on other platforms that they they wildly do not so. Jason [8:33]That it'll be interesting to kind of hear their perspective 1 of the panelists is hungryroot, which to me is a super interesting example they they're truly doing AI based recommendation so they're essentially they're a ger. That is mainly filling out your whole cart for you proactively with AI based. Recommendations so you manicure a Char a cart that they recommend to you versus you hunting and pecking for each individual item and putting it in your cart and they they have some pretty interesting sales metrics using that methodology so they're all in, there you might almost think of them as like the Stitch fix of food and so they'll they'll be interesting to hear, and then my friend Ben from Endeavor and Endeavor may be familiar to some listeners not to others they're the largest adult beverage and hospitality company in Australia. And so they they have a nationwide chain of beer and wine stores that are doing some really interesting personalization hubs and kind of Shifting all of their customer touch points to to 1 to 1 so. I'll be curious to hear how effective they all claim to be. Scot [9:47]How do these it seems like you're going to need some training data like how do they Kickstart that do they look at like your email or credit card data to kind of get an idea for what you like or they just kind of start you at a demographic Baseline and build from there or do you know. Jason [10:01]Yeah well so in many cases you've been a customer of theirs for a long time right so they have you you have a significant amount of personal data I mean Walmart launched a predictive cart feature, in January that's in beta so I think it's only available to a select group of. Of Walmart Plus members but yeah it you it's trained on all of th those members pass purchases leading up to the launch of that product. Um so I yeah good question what signals do they use for a net new customer but I think the first crop where customers where they they already had a significant history. Scot [10:40]Got it cool well that's gonna be a good panel riveting it's also pretty wild they have them so close together now that's like 10 days you're gonna have to kind of like Zip back home rest for a couple days and jump in. Jason [10:50]I I do I was going to zip back home anyway so it's not an inconvenience for me but I my heart does go out to all the the shop talk folks that that have responsibilities of both shows because that I'm certain is not fun for them. Scot [11:02]Cool which of the shop talks is bigger now the. Jason [11:09]Shop talk is still the biggest show that's their March show um and it's it's north of 10,000 people so it might have been like 11,000 this year I'm not sure they, release an official number so hopefully I'm not disclosing something proprietary and grocery shop is only about half that size. So think closer to 5 500 attendees and then this fall shop talk this will be the first time so so. All all bets are off I I certainly wish them no ill will but part of me thinks it's a it's a big lift to get people. To add yet another event to their schedules. Scot [11:48]Yeah maybe the Fallen will be more Regional like you know folks in the midwest or east. Jason [11:53]Yeah I mean that that would be my initial assumption but you know they've they've been able to build up some really good shows in the past so so you know we'll see how they do with this 1 I certainly, would like to see a good show in Chicago they're in as you would remember in the old days you know there was like internet retailer here which still exists but I would argue it's it's probably well past its prime. Problem is when you did the orientation and used to teach everyone how to do e-commerce on the first day. Scot [12:20]Amazon yeah that was fun that was they were like well you do this and I was like well how many people come and they're like I usually 100 and I did it and there's like 700 people say dude you vastly underestimated your crowd size at this thing the um. Jason [12:32]I know I know you're a big draw. Scot [12:34]Yeah well of course the uh and what was always funny is people would want to meet I forget what hotel it was either Hyatt, or a Hilton and there was 4 of them around that convention center and like No 1 could ever find each other at that that Hotel chain because they know 1 realized they all had the same name I'm sure that's still a problem. Was always funny to watch the chaos ensue. Jason [12:54]Yeah. Scot [12:55]The only thing works is in Las Vegas when you're at the Mandalay Bay when the hotel is called the hotel and the bars called the bar it's like a whose first kind of scenario trying to get. Jason [13:04]Yeah I'm sure they thought that was really clever when they. Scot [13:07]Yeah that was the worst worst naming. Jason [13:08]When they first named it yeah. Scot [13:11]Cool well you guys have been waiting for it and we are recording this mid-september all of our friends and Retail and e-commerce are making their final changes to their sites they're implementing their new features they're putting new vendors in place and going through the final QA test, before the big October code freeze so. This is when the Pod turns to really thinking about a holiday of 24 it's a fun to believe that we're already here this fast and Jason to tee that up let's set the table a little bit you put out a really interesting kind of adjacent Mega deck on LinkedIn that was really good and I thought maybe we could go through a couple slides of that and kind of tee up, you know how the year has gone so far and then that'll take us into kind of a little bit of a prediction of how holiday 24 is going to shape up. Jason [13:58]Yeah yeah yeah happy to do it thanks man so maybe setting the table. I don't want to go back and get too deep we'll put a link to the deck so anyone that wants it's like 54 pages of data visualizations about about the Commerce industry so anyone's welcome to download it and check for themselves but the the highest level metric that I like to think about is this thing that NRF calls core retail so that's, all of retail sales from the US Department of Commerce US Census Data uh except restaurants Gas and Automobiles and. Jason [14:33]If you go back in time and you say how how much does core retail grow year-over-year for the last 20 years core retail grew about 3.9% a year. And then of course we had this this huge anomaly more recently which was Co. And you know I like to joke that like well you know some people feel like oh man those were really hard years for retail what they forget is we mailed 5 trillion dollars in extra cash to everyone and didn't let them spend any of that on flights or Taylor Swift tickets. And so those were actually the greatest growth years in the history of retail like we like the the peak year was like 14% growth for core retail. So we had that this like Giant mountain of unusual growth 3 years that were twice as big as the normal 3.9% growth, and then 2023 happened and 2023 was right back to the average 3.9% again, and so now we're halfway through 2024 and we're actually below that average a little bit so we're at 3.4% growth year to date. Which is you know meaningfully off from 3.9% like that you know these are these are big numbers so that's 2.9 trillion dollars worth of sales year to date. Jason [15:50]And the you know. [16:02] Retail Growth Trends Jason [15:53]When we look at holiday I I mean we'll we'll talk about it in a minute but you know that's kind of setting the the table for retail for holiday but of course. People on this podcast are probably particularly interested in e-commerce and will know that historically at least in the modern era e-commerce has grown much faster. So the problem with talking about the average growth rate of e-commerce is of course it only started about 24 years ago and so it's. You know the the rate of growth has has decreased over time if you look at the last 24 years e-commerce is growing 17% a year versus that 3.9% for retail. Over the last 10 years right before coid e-commerce was growing at 12.4% a year. Jason [16:37]So I kind of tell people think about you know e-commerce typically growing at 12% a year retail typically growing at 4% a year is kind of the. The the basic ratios so 4 times faster but this year 2024, retail is only growing at 3.4% and e-commerce is only growing at 7.5% so still twice as fast growth but a meaningful slowdown from the, historic average and you know at the risk of of giving away a spoiler. I I don't think that's like some bounce because of a spike during Co I actually think it's just an indication of the maturing of. Of e-commerce and e-commerce is a you know increasingly big chunk of of the whole retail pie it's. E-commerce is 21.8% of core retail so almost 22% so you know we'll spend over 7 trillion dollars this year and you know well over a trillion of it will be e-commerce. Scot [17:38]Interesting cool so that's the full year. Jason [17:41]Yeah well. Scot [17:43]Basically kind of an average year. Jason [17:45]So so last, yeah so so well so last year e-commerce had already started slow down it it grew again the average was about 12% it grew 10% last year and we're only growing 7.5% year to date this year. Scot [17:59]Okay got it okay. Jason [18:01]But. As I keep pointing out to people the story depending on who you are the story is either vastly better or worse than that those industry averages I just shared because the real story of of retail in 2024 is. This this concept of bifurcation right that there are 5 retailers that are vastly outperforming those industry averages. And they are eating up all of the growth in the industry so these 5 retailers represent 51% of all that growth so if you're 1 of those 5 retailers, you're having a great year if you are not 1 of those 5 retailers you're having a way worse than average year in in most cases so that's, Amazon which alone represents 16% of all retail growth it's Walmart which represents 15% of all retail growth, and it's it's Tik Tok which, you know was well under a billion dollars in sales last year and is trending towards twenty billion dollars in sales this year so they're the fastest growing retail, in the history of mankind and then rounding out these top 5 Growers are the the fastest growing return history of mankind from the last 2 years T-Mobile and shien so, it's kind of T-Mobile Sheen Tik Tok Walmart and Amazon's world and the rest of us are just living in it which is you know somewhat alarming for the rest of retail. Scot [19:26]Yeah yeah definitely is it seems like those the chinese-based guys seems like they're taking share from somebody but it's not Amazon is it dollar stores because it's kind of like this convenience-oriented lower price kind of stuff right. Jason [19:42]Yeah so it it it it's it's inexpensive variety Goods the, it it very likely is taking share from from the the dollar stores the dollar stores have not fared well which historically, you know there's there's some economic headwinds there's a thing going on in the United States that I I like to call A vibe session which means, some of the the economic fundamentals are actually pretty decent but people are really, consumer sentiment is down and people are really cutting back on their spending there's a lot of evidence that people are trading down and and trying to be more frugal, and that kind of climate normally has favored the dollar stores and yet you know they're they're definitely performing below these, these industry averages so certainly a chunk of of the Tik Tok team mushy and growth um is coming at their expense. Some of the sheen growth is coming at the expense of luxury which you know historically luxury has been been insulated from downturns in the market but you know we're starting to see. Some softness in their earnings and for sure softness in their guidance. So you know the you know people that would have bought more designer stuff maybe they're still buying some designer things but they're mixing it in with really affordable fashion from. From shien like I I am sure Amazon is losing some sales to Tik Tok shops that they would like to have but for your point. Jason [21:08]Amazon still you know growing much faster than the rest of the market and so yeah it's not it's not eroding Amazon's any share it's just eroding their Tam. [21:28] Concerns for Holiday 2024 Scot [21:19]Got it okay so that's the setup so e-commerce has slowed down a bit retails kind of doing its thing what what does that mean for holiday. Jason [21:29]Yeah so I I have become Debbie Downer I am concerned about holiday this year, so if we just kind of extrapolate out these Trends again 3.4% growth is below our historic average so if something dramatically didn't turn around if consumer sentiment didn't get a lot better. For this holiday you would expect this to be a slightly soft. Holiday and I I really think this trend of winners and losers is likely to continue through holidays so I think you're going to see a handful of retailers perform really well holiday at the expense of everyone else and I. I I think on average that's going to mean that revenue is kind of similar to traditional holiday growth. But I I suspect that that's that margins, will be even further eroded than usual so so usually for Holiday retail grows about 4.3% e-commerce grows at 12.9% I don't think we'll see either of those numbers for holiday this year and I think. Jason [22:34]You know if if retail grows at 3.7% and Ecom grows at 8% you know I still think you're going to see Amazon Walmart and Tik Tok grab, disproportionate share of that holiday spend which is going to be bad news, for a lot of other folks and those are just kind of the macro Trends you have to layer in that that there's a couple of reasons to to be worried about this holiday regardless of the trends going into this holiday so. We have a different calendar a number of days in the holiday season every year, and this is our worst year this is the year when we have the fewest days and holiday which actually you know historically does depress sales if there's fewer days to shop then then we sell less stuff and so this is the shortest holiday season that we ever get, and historically an election year is not favorable to Holiday spend right so traditionally there's some some anxiety and you know. Competition for attention, that plays into these November elections that impacts holiday and I I think you know this will be the most polarized election ever and so I think it's you know no matter what the outcome is half the country is going to be pretty depressed and that that likely you know translates into not an awesome holiday so so we got some things working against us. Scot [23:53]Yeah so if that's the headwinds I'll throw in a Tailwind so as a our celebrated CNBC junkie the all they talk about is the Fed meeting tomorrow where you know it's pretty clear the fed's going to lower interest rates and the big question is is it going to be a quarter point or half a point I think I I I'm not a prognost prognosticator on that I think whatever they do it's going to be wildly popular and relief a lot of this kind of interest rate pressure we've everything's been on so even if it's only a quarter point I think it'll be somewhat euphoric for the market and for for hopefully for consumers to feel like interest rates are coming down a little bit so maybe that'll like bump start some house buying and selling and they'll be a little bit more liquidity in the market so so I'm going to think of that as more of a Tailwind so there's some positivity going on there do you worry about the election because I think it's just going to take forever to figure out who won and, everyone's going to contest it and it's gonna be like this unknown thing for a very long time so we'll see how that goes. Jason [24:55]Yeah and you live in a swing state so I can only imagine what's happening to your media. Scot [24:59]Yeah we just kind of we can't even like the male is an inch thick full of like Gunk and you kind of have to sort through all the stupidity I'm not a political person to get to like you know the bill and make sure you pay it and that kind of stuff and then the you know, at the TV is just crazy but thank goodness I'm not in Pennsylvania I think they're getting just totally hammered right now. Jason [25:18]Yeah probably so and In fairness while we're covering Tailwind like this could be a headwind or a Tailwind but like I will say in general the macros are getting a little better right so inflation has been steadily coming down the 1 the most stubborn version of inflation had been. In in this core retail category is is food and even food you know they're all down below 3% which like pre-pandemic they were kind of in that, 2.1 2.3% and the FEDS sort of stated goal was to keep inflation between 2 and 3% so, you know we still had all the pain of the high prices over the last couple of years but like. Prices really have started to come down so on the 1 hand that helps consumer sentiment you know just like in announcement from the FED would and so that that's favorable you know most of the jobs reports have been you know pretty good there's there there's some decent news that in theory should make people feel better, the flip side is inflation going down actually hurts retail sales because the stuff they sell is cheaper and so when, comping with low inflation against a previous year of higher inflation it actually can make your comps more challenging. So yeah it's a a complicated mix of stuff going on. Scot [26:35]Yeah does that if you boil all that down do you end up with a like a semi prediction like if your clients were to say to you give me a number what what do you spit out. Jason [26:45]Yeah I I'm saying buckle up I normal retail holiday growth is 4.3% and I think we're retail growth is going to be below 4 this year. Margins vary wildly depending on the category but I think average margins are going to be down across the board like there there are going to be some some outliers like the the interest rates have really been brutal on the Home Improvement guys right like if you know people can't get loans they're trapped in their house uh they don't buy new houses they spend a lot less in Home Depot and Lowe's and I think it's pretty likely Buy holiday that there's some, some movement in the in the interest rates which like at the at the very least is going to Goose. That housing market which is going to have a trickle on effect to the the Home Improvement guys so I I suspect they'll have. Better holiday than they have the last last couple of years but overall I I'm not optimistic, you know with the caveat that some some really good operators or some people with a really clever model like the Amazon Walmart Tik toks are are likely gonna you know have a really good run this holiday. Scot [27:51]Okay cool I will I do not have a prediction so I'll stick with yours. Jason [27:58]Usually that doesn't work out well for you but thanks. Scot [28:01]I have to go review our it's been so long I have to go look at our New Year's predictions because there's always start to be coming to fruition here soon. Jason [28:09]Yeah yeah yeah I've kept half an eye on some of them and there's there's going to be some some are going to come down to the wire some I I would have thought were safer but like you know surprisingly Amazon's pretty slow getting their their AI stuff out the door so we'll see. Scot [28:23]Yeah yeah there's the so this is a sidebar that we didn't really prepare for but did you see they tried to build their own and they kind of couldn't and they had to punt and they're using and. Not anthropology the 1 that starts know they're using anthropic. Jason [28:41]Anthropic that's right yes I did see that um. Scot [28:44]Yeah so that's got to be embarrassing I mean they invested like some bazillions of dollars. Jason [28:47]To I mean Amazon is kind of a not invented here company so like when they have to give up on the internal initiative and and rent someone else's Tech that that probably doesn't feel very good. Scot [28:59]Yeah I made the mistake of changing my action button on my phone to the chat GPT voice and then I've been I switched from Google in my search to perplexity so I've gotten used to asking these pretty complex questions and then I chat with Alexa and I feel like I'm talking to a kindergarten I'm like I'll even like ask it something you know play this song from this album by that artist and it loses itself halfway through half the time I feel like it's brain is melting and it's just like getting Dumber even though I know it's at a Baseline. Jason [29:29]Yeah no absolutely and and I would say it's even more acute in my household because I live with a 9-year-old um and and his default is that, it should know all of this stuff right and it asks he asks these really complicated questions and I like can't tell you how many times a day I have to say to my son she's not going to know that. Scot [29:50]Why dad why. Jason [29:54]But but for your point hand him like, you know he basically lives to play Roblox and watch you to Awful YouTube videos um and I can hand him chat gbt 40 and like it's about as entertaining as Roblox to him which is amazing. [30:27] The De Minimis Provision Scot [30:13]Gotcha does uh so you mentioned Teemu and all that jazz you have been tracking this rule that allows China to use our postal system to send stuff free what's going on with that puppy. Jason [30:27]Yeah so that is famously called the Dominus provision and it's this rule that got. Put into the US Customs Enforcement in like 1938 and the idea was hey if people are going to ship stuff in the United States like we want to charge tax on it we want to charge duties and we want to have rules about what kinds of things from a safety standpoint and from a a human interest standpoint can be imported into our country right and so so normally you ship something from another country it has to go through inspections it has to go through duties but gosh there's this new kind of peer-to-peer marketplaces and there's eBay sellers selling stuff in London to people in the US and we don't have enough Customs agents to inspect all these little, packages that Scott Wingo is helping people sell on the internet right so we're going to pass a rule called the Dominus provision which is if you ship something that has less than 5 dollars of value, you don't have to declare it you don't have to pay taxes on it it's not getting inspected by anyone and it was really just a labor savings for for the the Customs agents in like you know originally in 1939 when like it was it was an e-commerce it was mail order back then. Jason [31:44]But in like 1996 that that. 5 Dollar limit got bumped to Dollars and then in 2016 the hundred dollars got bumped to $800 and that really opened the floodgates that's when companies like shien and tiemoue figured out that hey instead of filling up a container of stuff, and shipping that container to the US and having to pay C duties on that container and having that container come over in a boat and take a long time to get here I can put each. Sale in an individual envelope, and Air Freight it to the US and it'll be under the 800 hour minimum so I won't have to pay duties on it I won't have to get it inspected. And you know these these factories in China, and these these marketplaces of these factories in China you know quickly built a huge business shipping individual packages to Americans right and so that's. Jason [32:48]You know today they they quote unquote exploit what we call the Dominus provision. To to ship all those packages right and so there's been a lot of complaints by people that have to compete with the, the those those you know cheap Imports and there's been a lot of saber rattling in Congress about how you know this is exploitation and all these things, and so last week Biden proposed, that he was going to issue an executive order that goods from China no longer qualify for the de minimis exception and so what that would mean is regardless of the value. Every single package that comes from China would have to go through customs would have to be inspected would have to meet all of our import requirements and so, you know some people are looking at that and saying oh man that's going to put a huge dent that's going to make shien goods and Tik Tok goods and tiemoue goods more expensive. And that might rebalance you know all of these trends that that you and I have just been been talking about. I regrettably am a little more skeptical that it's going to have a huge impact. Jason [33:58]Couple of other sort of interesting facts to know about this Dominus thing so first of all. Not going to shock anyone there's a lot of american-based companies that are now taking full advantage of this de minimis Clause right so. Jason [34:12]Not going to name names on the podcast but there's a lot of big sellers that are us-based that import containers of goods to Mexico and then put those, unpack those containers in Mexico and ship, the goods in individual packages from Mexico to the US so they get relatively fast delivery and they get to bypass all the duties and tariffs and you know that's that that's being done by by a number of like big famous, uh retailers and brands in the US so this kind of Dominus rule if it if it affects goods from China. I guess the first thing I would expect to see is Tik Tok and team who are going to start shipping containers to Mexico and importing them from another country right and so we're going to get kind of a a wacko, situation and if you if you Google section 321 which is the the. Part of the the Customs law that that that amendments provision is in section 321 shipping you're going to find that there's dozens of 3pls that specialize in in doing this for you so. I think it's going to be harder to knock down than 1 executive order but the bigger problem is. Tik Tok to and shien together are by some estimates sending about 900,000 packages a day. Jason [35:33]2 of the United States and so if you could magically wave a wand and say all 900,000 of those packages have to be inspected before they can come in. Think what that would do to the rate of goods flowing into the United States right like all everybody's Imports all the containers would get slowed down because, we have the same number of Customs agents we've always had an executive order can't hire a bunch of new Customs agents that would require new budget from Congress and that seems a lot less likely. So just like the reason the Dominus was there is we didn't have enough people to look at all these packages and that was when they're way less packages than there are now so. If we could somehow like do away with Dominus like would it, reduce the number of shipments probably but it still would be way more shipments it would still overwhelm well customs and would likely suddenly mean all those goods that are I guess holiday Goods for the most part are already on the way are already here but like, it it would probably have a dramatic effect on on q1 availability of goods because it would just gum Up Customs so while I I like the ex the spirit of trying to, update the laws to have a More Level Playing Field I kind of doubt in practice that 1 Executive Order is is going to fix this super complicated problem. Scot [36:51]Yeah now that we're through earning season did you hear anything else interesting in earnings that we were not able to do an Amazon's earning podcast there wasn't really anything super exciting other than. You know kind of more of the same I think you know the AWS did better than a lot of people thought which was good, and that everyone's really focused on that because of the AI stuff everyone's worried Amazon's going to lose share but they seem to be holding their own and then e-commerce and, the retails were were kind of in line so they didn't really slow or speed up, if you have any there was a little color around Prime day but nothing Earth shattering any other interesting things from earnings Seasons you saw. Jason [37:31]Yeah so so again like what you've you've kind of had 3 kinds of retailers right you had those 5 retailers that I mentioned only only 2 of them have like earnings calls in the US which is, Amazon and Walmart. Tik Tok is owned by bike dance which has has earnings calls in China and team was owned by poor which has earnings calls in China she and is trying to go public they're trying to list in in London so we haven't really seen any, any earnings calls from them so they they've had interesting things you've actually had T-Mobile stock took a pretty big hit after their earnings because they, reported great sales but by dance like lowered his guidance and part of it is I believe. In in response to how much share Tik Tok shops has captured so this is 1 of I think 1 of the most interesting stories of the year is. Jason [38:23]For probably as long as I've known you Scott like we've always talked about social commerce and people are always talking about like. Hey there's all this attention on Facebook are people going to be able to sell Goods on Facebook and just not even need e-commerce sites anymore and the narrative we've always had is man it's been tried dozens and dozens of times and it so far hasn't worked it seems like. Us consumers don't want to shop on their social platforms they want to interact with their friends on their social platforms and they want to shop on their shop platforms, but the 1 place in the world where this does seem to be working is China where, pendo Duo on Alibaba had been you know pretty successful 10-cent had been pretty successful with with social commerce and, that narrative is kind of over right now because Tik Tok shops is selling twenty billion dollars worth of stuff direct to Consumer and Tik Tok is. Really winning with consumers attention and especially with younger consumer consumers attention so you know. Jason [39:21]Gen Z Shoppers are are gen Z consumers are spending like an hour a day, on Tik Tok like the Olympics didn't do very well because nobody watches long form video on television anymore like they're all watching all this this short form content on Tik Tok and Tik Tok has been able to turn that attention, into sales so much so that you know the most successful e-commerce site on the planet while Amazon has has kind of said like hey we can't beat him so we're joining him right so Amazon announced, a deal with Tik Tok where you can run an ad on Tik Tok have direct Commerce in that ad and check out with your Amazon credentials and have your order fulfilled by Amazon Prime, in an ad on the Tik Tok platform so that is super interesting and Amazon has said and we're going to start shipping Goods direct from China just like Tik Tok and T-Mobile and shien so they've announced that they're going to, [40:27] TikTok's Impact on E-commerce Jason [40:19]direct to Consumer from factory model you know presumably to take advantage of some of this these same de de minimis. Jason [40:27]Provisions that we we talked about earlier so it's kind of interesting to see Amazon have to kind of match some of the, the offerings and play with some of these Frenemies you know historically you know that's that's gone the other way right like it was it was the old Legacy retards that were having to begrudgingly or brands that had to begrudgingly, moved to Amazon so interesting to see Amazon moving to Tik Tok so that was a super interesting. Jason [40:56]Sort of evolution this year I'm going to be really interested to see whether the, the Tik Tok thing you know it's mostly inexpensive impulse Goods at the moment and, you know can that get traction with staples will people buy more premium Goods we're starting to see more and more Brands I just spent some time with, Keurig which owns you know a bunch of the coffee brands and they're now doing direct Commerce on Tik Tok shops so it kind of went from all unbranded stuff on Chinese factories to, you know we're starting to see branded merchandise in the Tik Tok shop so, that super fascinating and then on a much more scale 1 other thing that really jumped out of me in the investor call after the Amazon earnings is the Amazon CFO talked about. Jason [41:43]The softness that people have seen in the drug channel right and so Walgreens write a CVS haven't been having a very good run lately and and he called out that like Amazon probably got a boost in sales because the the Walgreens so helpfully locked all the products behind cages and that like uh. You know was an impediment to sales at Walgreens and caused a lot of those sales to happen on Amazon instead and so you know if you remember last year a lot of retailers were claimed you know crying about shrinking complaining a lot about shoplifting you're not hearing a lot of conversation and earnings calls about shrink this year. And now you know Amazon saying like man we're we're a beneficiary of all the the eroded customer experiences, that that have resulted from an overreaction to shrink. Scot [42:34]Hu yeah I saw there's a CVS has a thing where you can actually tap with your phone I guess it has an NFC chip in it and so I imagine you have to have the CVS app and be logged in and then you can tap to get into that cage so at least you don't have to wait an hour for someone to wander by and and get you your your pack of gum. Jason [42:55]Yeah which I have mixed feelings about on the 1 hand I really admire The Innovation and that's a clever way to reduce the friction if you are going to put all these products and product jail which is what I call those those cases the, the pro you know the the argument would be, in CVS's case you have to be a member of their Affinity program and have their app on your phone in order to unlock the cases and so like in practice essentially what that means is you know all of America used to be able to shop at CVS now it's a members-only store right like now it's it's it's essentially Costco like you you have to be a member and give them all your data or you're going to have really inconvenient access to the razor blades and so you know, I could see that going either way like if if you compare it to Walgreens or Raid where you don't get that option like it might be looked at favorably but if you kind of look at it in big picture and say wait a minute you're going to lock up all this stuff and then you're going to make me be a member of your Affinity program in order to, to just be able to do what I've always done or at least since the 1920s when Piggly Wiggly opened up all this stuff. Jason [44:01]I you know I could imagine consumers not not reacting super well to that, I don't actually know if the CVS is is like Bluetooth or NFC but you did bring up another point. IOS 18 launch today and 1 of the cool features in iOS 18 is they have apple is for the first time opened up the NFC chip to third-party apps so. Under iOS 18 it would be possible for CVS to use that NFC chip to unlock the, the uh their their smart locks that would not have been possible in the previous operating system so that's a fun Commerce innovation, that came to uh Apple today, and I haven't seen any announcements yet but I'll I'll be surprised if we don't see some some cool evolution of some of the digital wallets to take advantage of that new feature as well. Scot [44:50]Pretty cool yeah so anything else before we wrap up that that you want to prep listeners for as we go into holiday. Jason [44:58]No no I feel like we covered a lot of ground again I'm I'm super sorry on my behalf and and Scott's behalf that we've been a little sporadic with the shows we really appreciate all the kind words people have, been sending our way and for sure I take it as a compliment that people are mad at me that we haven't been putting out shows so hopefully we'll we'll be able to find some good Windows throughout the rest of the year to get some, some shows out there I you know certainly want to do a recap after grocery shop coming up and we'll certainly want to cover holiday and maybe we can do some. Go old school and do some live shows from interrupt this year if we can get you to come to to New York Scott. Scot [45:35]Yeah yeah the we'll look at the weather and see how it goes. Jason [45:39]Yeah yeah yeah if if you're an investor in his fund use use that leverage to pressure him to do it. Scot [45:45]Hey that hurts. Jason [45:46]And if you're not an investor nurse fund why the heck not. Scot [45:49]Heck yeah between your fund.com come on aboard. Jason [45:52]Exactly well Scott that's probably going to be a great place to leave it if you're super ecstatic that we are back on the air feel free to jump on iTunes and give us that 5-star review we want to refreshen those up and. Until next time happy commercing.

EP318 - Temu Deep Dive with Earnest Analytics Episode Summary: In this episode, Jason "Retailgeek" Goldberg and Scot Wingo dive deep Temu, the online marketplace operated by the Chinese e-commerce company PDD Holdings, that has become the fastest growing retailer in history. Joining us on the episode is Michael Maloof is the Head of Marketing for Earnest Analytics. Earnest works with world-class data partners to acquires, anonymize, and productize insight about the entire U.S. Economy. They have posted numerous insights about Temu in the US this year: Feb 28: Temu's 2024 Super Bowl ad blitz failed to accelerate growth March 5: Temu is growing fastest among high income earners March 12: Almost half of Wish, AliExpress customers shop at Temu In this episode we cover who Temu is, how big they have become, who their customers are and what retailers they are likely impacting, their go to market strategy (and especially their marketing spend), the controversy around their use of the Global Postal Treaty, and some of their potential risks. We also explore where they could go next. If you're in the commerce space, you'll want to make sure you are up to speed on Temu. Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 318 of the Jason & Scot show was recorded on Wednesday, March 13th, 2024. http://jasonandscot.com Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Transcript Jason: [0:23] Welcome to the Jason and Scott show. This is episode 318 being recorded on Wednesday, March 13th, 2024. I'm your host, Jason "Retailgeek" Goldberg. And as usual, I'm here with your co-host, Scott Wingo. Scot: [0:39] Hey, Jason, and welcome back, Jason and Scott show listeners. Jason, one of the topics that is coming up a lot this year, we talked a lot at a lot in our recap and our preview is Temu. By many measures, people think they're one of the fastest growing e-commerce companies in history. If you watch the Super Bowl, I think they spent $8 trillion on ads there. So we want to do a deep dive into this and cover a number of topics. We want to talk about a little background around Temu. What's it mean for U.S. retailers? And, you know, it's a Chinese company. Does it even matter? If yes, why? Because Temu isn't public and they are a Chinese company, they don't really disclose any information. So we wanted to bring on a guest that is basically a Temu expert. So we looked around and we found Michael Maloof. He is the head of marketing at Ernest Analytics. Ernest works with world-class data partners to acquire, anonymize, and productize insights about the U.S. economy. They have posted lots of articles. This is how we found Michael. I think you know him as well from the trade show circuit. So he's going to help us do this deep dive into what's going on at Temu. Welcome to the show, Michael. Michael? Michael: [1:59] Yeah, thanks so much for having me on the show. Big fan of your annual predictions and the work you guys do. So I'm head of marketing at Earnest Analytics. We're the leading credit card retail pricing and healthcare claims data provider for investors and retailers. Before Earnest, I was actually a tech and telco analyst over at Goldman. The two credit card data sets we work with now, Orion and Vela, are probably the most pertinent to my conversations about the consumer economy and certainly this conversation today about TMU. They sourced respectively from a large account aggregator, like a budgeting app, and part of a POS system in the US. And Ernest essentially takes these massive and messy data sets, normalizes structures, and then puts them onto our platform so everyone from portfolio managers to marketers can see this third-party data. For example, you'd see market share, competitive benchmarking, customer behavior, revenue predictions, and macro trends for thousands of companies, including TMU. Scot: [3:03] Awesome. Thanks, Michael. And then, so which sector did you cover when you were an analyst at Goldman Sachs? Michael: [3:08] Tech and telco. So anything in the tech space, we had a few marketplaces in there, telecom companies. It's been a while though. Ernest has been my home now for seven years. Scot: [3:20] Okay. Was this in the Anthony Noto era you were there? Michael: [3:23] This was in the vera rossi era she was my my lead where we recovered uh latin american tech and telco. Scot: [3:30] Very cool awesome yeah they did goldman did the channelizer ipo so i get to know the team there pretty well awesome well before we jump into the data which we're excited to kind of hear what you have to share here jason i know this has become a very hot topic in your world you you You spoke on it at NRF. In your day job, you're getting tons of questions about this. I think you're booked out solid with Tmoo briefings. So those people pay big money for it, and our listeners don't pay. Give us the free version of your backgrounder on Tmoo. Jason: [4:05] Yeah, thanks, Scott. And I'm sure we'll spice in some other tidbits as we go, but I'll try to give a concise bullet. it. Temu is a subsidiary of a company that used to be called Pinduoduo in China. It's now called PDD Holdings, which is infinitely easier to spell, by the way. And PDD Holdings is one of the largest e-commerce companies in China. On a market cap basis, they keep flip-flopping with Alibaba. So they're super competitive. They're way north of like $400 billion in GMV in China and had a really interesting trajectory, but a couple of years ago, they launched Tmoo into first UK and then US, now 49 other markets as a new retail concept. And so a couple of things I'd want folks to know before we dive in with Michael, first of all, the name is a loose English acronym for team up price down. So I always pronounce Tmoo as in team. [5:08] There are multiple pronunciations out there, even from Tmoo employees. So I'm not sure there's an official pronunciation. In the United States, they launched in September of 2022. So they're about 18 months old now. And most folks were not familiar with them until, a surprise, three months after launching, they bought a Super Bowl ad. So they became familiar to millions of Americans with the Shop Like a Billionaire ad that ran in the Super Bowl in 2023. And then as Scott alluded to, they bought five ads in the Super Bowl this year. So they haven't disclosed what they paid. A normal 30-second spot in the Super Bowl costs about $7 million. They ran four ads during the Super Bowl and one during the postgame. So estimates are in the kind of $20 to $30 million that they spent just on that ad. There's a bunch of estimates for how big they are in the U.S. I'm eager to hear what Michael thinks, but his old rivals at Morgan Stanley have them at about $16 billion in GMV in the U.S. But more interesting, Morgan Stanley estimates they're going to be $32 billion by 2030. So you think about a retail company that launched in September of 2022, and then in the first year, business sold $16 billion worth of stuff. That's the fastest growing retailer of all times. We do know from other sources that they get more traffic every year than Target. [6:36] They've been the most downloaded shopping apps on the Android and Apple app stores since they were born. So they've kind of owned the top of that list. And a couple other little interesting things. They are a marketplace. They have invented a model they call next generation manufacturing. So they're a marketplace. It's all three-piece sellers that are selling goods on Temu. But unlike traditional Western-based marketplaces, Temu does a lot more of the work, of listing the products and fulfilling the products for the factory. So they may, if you're a factory, they say the only thing you need is a cellular internet connection, and they provide you all the infrastructure to become a successful seller on Temu. There's somewhere between 80 and 100,000 Chinese factories that are currently sellers on the marketplace. And then one big innovation is this week, they're turning on the ability for U.S. Marketplace sellers to sell and fulfill their goods from the U.S. as well. So one interesting question about a marketplace is, are they competing for sellers with Amazon and Walmart? And now they're bringing that fight to American soil. So that, I feel like, is enough to get us started. There's certainly an interesting company that's worth following. [7:52] The way I originally discovered Earnest is through this show. One of our most popular guests, Dan McCarthy, has been on a few times talking about his his CLV methodologies. And our listeners have really enjoyed his his commentary. He has partnered with Earnest Data several times to do some really interesting analytics. And you guys at Earnest have published a couple of those as thought leadership. And so that's how I first met you. And then, Michael, I noticed you published like three articles on Temu this year. Michael: [8:22] That's right. Right. Teamio has been one of the top client asked for themes. It's definitely something we're seeing a lot in the press. We work a lot with those thought leaders as well. And that's something that we're getting a lot of questions on from everyone from business to fashion to Dan McCarthy. So glad to answer any questions there. We are kind of in a unique spot, kind of have the dashboard on the consumer economy, if you will. Basically what's going on within the last few days we can see everything from customer acquisition they have to their gross market merchandise value. Scot: [8:56] Got it let's let's start at the basics and let's pretend you know so i see Temu and you know it looks like they've got and you know one of my theories is it feels a lot like wish.com so it's really kind of cheap stuff slower ship going to what i would call value-oriented and consumers, you know, in your data, what, what kind of customer are, is buying this and then how fast do you think they are really growing? Michael: [9:22] Yeah, let me answer the second one first. Timmy's growing very quickly. Like you said, from late 2022 onwards, our data is showing double digit month to month growth, which is just explosive, right as it became a household name. In the first three months, for context, it had roughly as many weekly active users in the US as the largest fast fashion brand, Shein, and within 10 months had surpassed Shein in sales. And it had taken Shein years to get to that point. So really, a much shorter timeline. For an idea of size, about 18% of US households have shopped at TeamView since its launch. And in terms of GMV, in February, we saw about 1% of Amazon's US GMV. If you look at that, if you just break that out over the whole year, I believe in 2023, their net sales were something like over $500 billion. You're looking at around $50 billion in gross merchandise value moving through the service. But nevertheless, it's kind of not made really meaningful inroads with the largest online brands. I mean, it's still 1% in a good month. And that's actually decelerated since 2023. In fact, February of 2023 had fewer sales than January, despite the really heavy advertising spend you mentioned. [10:47] So yeah, there's some signs that the growth is kind of changing there. Mainly that retention is increasing even while this like... [11:01] New customer acquisition-based sales growth model is slowing down. TeamU's average customer lifetime value tracks higher than Walmart. And we're seeing customers becoming much more loyal. So that's an interesting kind of plus for them while sales in total are kind of hitting a lull. But yeah, let's talk about who those customers are too. It's definitely been one of the more interesting finds from our data. Despite the really low price points and that kind of gamified discount system, TeamView's US customer base skews middle to high income, actually. Sales among customers earning that over $190K, which is obviously very high up there, they're the fastest growing income bracket. And that's from May to January, May of 23 to January 24. So those sales to customers earning under $55K, like less than the median U.S. household income, that's actually the slowest growing. So today, about 44% of TeamU sales come from earners making over $130K. Not only do high-income earners account for the largest share, they're outgrowing. We just think that TeamU resonates mostly with customers with more disposable income. income, people who can afford to take a gamble on an item that might not work out. [12:27] You buy a floor mat for $5, it doesn't work. A middle high income person might just say, hey, it was $5 wasted, but the poor people don't always look at that. They're looking for a little bit more bang for their buck, can't afford that type of gamble. Yeah, it's interesting. Scot: [12:46] Cool and then you've you know you mentioned that they're you know basically their ltv is going up do you have any insight into why are they getting better at like maybe predictive analytics or recommendation engine or you know they see jason bought some gadget and then they they know he's now a gadget geek and they kind of start targeting do you have any insight into what's driving that that bump in LTV? Michael: [13:09] That's a good question. So I don't really have much insight into that. I try not to get out over my skis in terms of the data that I have available to me. We're looking at retention. We're looking for what's called a smile. Dan McCarthy talks about it all the time, which is over time as a company starts to bring back more customers that stopped stopped spending with them. And that's been pretty rare to see in e-commerce history. That's something they've managed to do. How they're doing that, I'm not totally sure. So it's definitely going to be the key for them to continue growing as new customer growth slows down, though. Scot: [13:52] Yeah. Jason, do you know? Jason: [13:54] Yeah. Well, so I don't know. I just want to point out that while Michael is wisely trying to not get over his skis, I live over my skis. So I'll tumble down the ski slope once again. One of the things I maybe should have said up front or maybe apparent to a lot of people is T-Moves marketing spend isn't just that Super Bowl ad. They're spending a fortune on digital ads and almost certainly losing a lot of money on every sale. So there's a Wall Street Journal article that came out this week that said that Temu or PDD overall spent over $2 billion with Facebook and was Facebook's largest advertiser. They're also Google's largest advertiser in the U.S. And so they're buying a lot of customers. And the the Wall Street Journal estimates that they're losing $6 on every sale. They're spending so much on customer acquisition. And so in that first year, they're doing a ton of marketing. There's a ton of people that never heard of Temu. They're acquiring those customers. They're getting that first order. [14:54] And, you know, a mini version of this is what Wish did until they ran out of money. But though it doesn't seem like there was a lot of evidence that Wish ever got traction, right? Like they didn't get those repeat orders. And what I think we're seeing And what I've seen in some of the data that Michael shared with us is that Temu very much is growing that LTV, getting repeat orders, even as the flood of digital marketing they're spending is sort of losing some efficacy as the law of large numbers kick in. And then I would also say Pinduoduo in China and now Temu in the U.S. Is very well known for their gamification. So they have lots of clever gamification mechanics on their websites, group buying, contests, gifts, one-time deals that are all like very carefully crafted to entice you to make an incremental purchase and to make an unplanned purchase. So I think all of those things appear to be working and then they hit you on social media with, you know, a huge spend, you know, right when you're, you're doom scrolling and expressing some, some purchase intent through your clicks. Scot: [16:08] Very cool. How about you, Michael, you mentioned this, this, this slowdown, which is exactly opposite of what I would have thought given the Superbowl ads. What do you, does the data show you anything there? Is it? Normal or like what what's going on. Michael: [16:23] Yeah i mean i don't know i don't know what would be normal for this company that's still up hundreds of percent a year but when i'm looking at at month over month growth which is the kind of the best way i can think to to look at it it is pretty remarkable there was some sort of a step change in august of last year where it went from growing double double digits each month to growing just single digits or down. The holidays, December actually was smaller than November in terms of their sales. And January was smaller still, makes sense. But February, also very challenged in terms of sales. I'm wondering if they're in a sort of spiral in terms of the new customer's first time kind of buying frenzy is over, or if this is a shift towards very purposely trying to get people in the door and they're just actually tapping brakes a bit on advertising spending. I'm not totally sure what this signals just yet. Scot: [17:35] Got it. Okay. Jason: [17:36] Is it safe to say that there's no clear evidence that spending $30 million million dollars on the Super Bowl had a super observable impact on their sales. Michael: [17:46] Okay. Yeah. So the Super Bowl. Let's talk about that. The million dollar question or $30 million question, I guess. The answer is probably not. There are a lot of ways to measure advertising effectiveness, as you guys know better than most. Brand awareness and net promoter score. But yeah, for a young company like this facing slowing new customer growth, I'd imagine they're looking to move the needle with each of these like big marketing events and the data just suggests that their multiple ads on February 11th had no meaningful boost in sales actually TeamU saw a noticeable deceleration in sales growth following the event actually kind of, like sales were significantly slower in the next few days. So unless they're measuring this on a much longer timeline, I don't think this investment was worth it. I think they would be better just plowing dollars into digital, wherever that is. Jason: [18:42] Yeah, it's super interesting. You know, obviously for listeners that don't know, my salary gets paid by those Super Bowl ads. I work for a big ad agency for which I'm very grateful. But the lot of controversy around our water cooler the day after the show. That was a spin that you rarely see. And in one metric, it clearly had an impact. There was a lot more discussion about Temu than any other company on social media the day after the Super Bowl. So the Super Bowl ads triggered awareness and conversation. I think they were the second behind Verizon, which had Beyonce, right? And so there was a lot of talk on social media. It was not all positive. There was a lot of discussion on social media, but people that hated the team who had the first time they saw it because it was sort of by Super Bowl standards, not a very high production animated ad. I think they made it in-house and they, you know, ran it with much greater repetition than audiences are used to. So it generated a lot of conversation that didn't necessarily translate to sales, at least that we can measure in the short term. And so that that's going to be interesting long term case study about what what these kind of, you know, splashy big reach audiences can and can't can't do. Right. Michael: [20:00] You know, I don't, again, skis and getting over them. It just seems like the outcome for them at this point should be a little further down the funnel. And I don't see how advertising spend like that will marginally get someone, persuade someone to buy a team you that wasn't already going to. It seems, yeah, it was a lot and there was no really movement in our data, either in new signups or in sales. I think there's some other research out that downloads are trending downwards or slowing down as well. We don't have that data, but I was reading elsewhere. So I think, Scott, this is maybe more to your 2024 prediction that people are realizing this is wish and slowing. and becoming less enamored or falling out of it. Jason: [20:52] No, no, no, no. Scott's predictions cannot be right. Scot: [20:55] Wait, if I hear that, you're pre-anointing that I'm right. Is that you're here in March, you're saying I was right with my prediction. Man, I'm good. Michael: [21:04] I didn't want to pick a side here, but I think people might be falling out of love with it, although it's not because it's not wish, it's because they're out wishing wish. We can talk to it a little bit. But I think people just realize Teamio is managing to disrupt Wish. And we can talk to the brands that it's disrupting. That's just one of many. It's got higher retention, bigger scale than Wish. But it does have the same limits as Wish and that this deep discount model doesn't have the big household brands that people want when they're making those everyday purchases that are slightly bigger, like the Tides and Cloroxes or the recognizable alternatives. There are just some things you don't want to replace and you don't want to gamble on. I don't think anyone wants to spend a dollar on detergent and see what happens. It's just going to be tough for them to scale at some point. I think the question we should be asking is if they've reached that point yet. I'm not sure. The sales growth slowing suggests they could have. But in the meantime, they are actually taking a wrecking ball to several other brands. So just because total sales is slowing doesn't mean the disruptive effect is slowing. Scot: [22:22] Yeah, let's go, Jason. Jason: [22:51] Because Temu is buying so many ads and driving the price on all those auctions up. So don't know if it's moving the needle on consumer impact or not, but it for sure is having an impact on their competitors, at least in that regard. Michael: [23:04] So you're saying maybe their goal is to just suck all the oxygen out of the room? Jason: [23:08] I'm saying that's potentially an unintended positive benefit. Mm-hmm. Scot: [23:15] Yeah, and you've teed us up there. Who is, is it retailers or is it more brands? Who's getting impacted by this? And kind of embedded in this question is, do you have an idea of the categories? Like if we looked at that pie of the 50 billion GMV, is it largely electronics? Is it apparel? Like what are the big wedges inside of there? Michael: [23:35] Yeah, well, so the great part about transaction data, it's really good at looking at brand disruption, or I should say retail disruption by brand. Not great at looking at the categories. You know, I don't see what an individual breakout of a credit card receipt is. I'm just seeing where people are spending. So I think that's the question I'm more equipped to answer. In terms of impact, some of the folks you think of when you think of mass market and discount retailers like Five Below and Walmart, the ones that you immediately want to ask if they're being disrupted, they seem like they'd have the most overlap. They've been pretty untouched, actually. Part of its overlap, only 19% of Walmart and Amazon's customers have even tried TeamU. And that's about the same as the total percent of US households that have tried it. substantially the whole country has made a purchase at Walmart and Amazon. So they're just not as at risk, maybe on the margins. But what we're seeing, I guess, next step up with some risk is the dollar stores. Dollar General, they share about a quarter of their customers with TeamU. And if you look at Dollar General's customers spending at TeamU, it's up over 800% year to year from January 23 to 24. Obviously, a super small base and flat. at Dollar General itself. [24:54] And then those TeamU customers who aren't, or those Dollar General customers who aren't TeamU customers, they're spending slightly up at Dollar General. It suggests that there's some impact. Again, not the biggest that we've seen. So I'd say like dollar stores kind of marginally. [25:10] This is not as supported by data, but just putting the data point together that the TeamU customers are spending less and TeamU customers are richer, you could come to the conclusion that Dollar General role is losing out on richer customers looking for deals a little bit. Maybe they're popping in for something they really don't want to spend a lot of money on, like a party, something like that. That's where the sales that they're losing is. Which actually kind of takes us to the last and biggest impact. Wish and AliExpress, as well as all those hobby lobby party supplies, like Oriental Trading. So I'll start with Wish. Their customers are just fleeing. I think there's no better way to say it. 50% less spend on Wish in January 2024 than January 2023, and over 680% increase at TeamU. That's just astounding. The Wish customer, once they try I, TeamU, they're done. It's game over. It's similar for AliExpress. And I think that what TeamU has really done early on, we need to think of them less as like an Amazon killer, and more as a brand that just came in to consolidate the existing demand for this deep discount online spending that these two, AliExpress and Wish kind of got off the ground in the US. [26:35] In terms of the hobby space, Oriental Trading, Hobby Lobby, Party City, they all experienced double-digit declines year-on-year in February among the customers who also shopped at TMU. And these brands, they're catering to occasional and discount merchandise. I think they're really going to struggle adapting to TMU. It's like I said, the person who doesn't mind throwing away $5, $10, $15 on party supplies if they don't work out. But it's a one-time thing anyway. way you know it's it's things that they're somewhat disposable items to these customers and very interchangeable got. Scot: [27:12] It i noticed you didn't mention amazon on that list is there is it there been an amazon impact or has it been. Michael: [27:18] That's great good catch pretty negligible just just like walmart they're just brands on those platforms at this point that you can't find at at these places i think when i say on the margins that's what i mean there could be hey, I need this small thing for my kitchen that I could get for $1 or get for $3. And that might be the sale they lose out on, but they're doing a better job of being one-stop shops. And I think with what we've seen, it doesn't seem like the business model is set to take on Amazon yet. Scot: [27:57] Got it. Yeah. Jason: [28:00] You know, a couple of things that come to mind. A, I think the dollar store thing is super interesting because historically dollar stores haven't sold very much online. Like, and, and, you know, usually their excuse is that, that super low price point discounted items don't work online. Right. And I, I think like in some ways I look at Temu and I say, they're actually the digital dollar store that did figure it out. Now. [28:25] It remains to be seen whether they can make money doing it in the long run. But it doesn't surprise me that those are some of the categories that are being disproportionately impacted. And I think you really hit something interesting on some of these everyday essential retailers that sell the brands that consumers are looking for and trust. [28:46] That, to me, feels like a different shopping occasion than the shopping occasion I think Timo is winning. Branding there's this whole new trend on all the social media platforms called dupes and you know people think of like knockoffs and forgeries where you you try to pretend you're a brand that you're not but dupes is a something different dupes is this is a very similar product to a name brand product but it it overtly is not the name brand product and it's a way better value and they're now these big cohorts of consumers that talk about their dupes and brag about their dupe finds and, you know, proudly make these, these dupe decisions. And it feels like those are the kind of things where, where Teemu's playing really well, where, you know, you're into, you know, crafting and you've, you know, there's some expensive machine, a cricket machine for cutting vinyl. And you say, oh man, I found a dupe on Teemu for 20 bucks, right? Like those Those feel like the kinds of occasions they're winning when you're willing to trade down for that no-name product and take a gamble versus when you know you want the Tide dishwasher soap. Michael: [29:58] I think that's a great point. They're taking advantage of the trading down phenomenon in general right now that a lot of brands are seeing, a lot of retailers are seeing. This is the perfect spot. I'll just go ahead and see if Temu has it. Maybe they will, maybe they won't. Scot: [30:15] Cool. One topic, and this is kind of a jump ball for you guys, is the, you know, I read a lot about this shipping model, and this was always Wish's kind of secret sauce is there's this, there's this like loophole in the postal code where if you send this something small, you know, it doesn't have any tariffs, number one. And then number two, there's like this really cheap postal rate, or I can't remember if China subsidizes it or it's free or we subsidize it, but there's some, there's kind of like double loopholes. There's a tariff one and a shipping one. And I've seen some noise lately about people wanting to kind of shut this down. Do you guys, either of you more expert on that than I am and have an opinion on if it's going to be sustainable or not? Jason: [30:57] I could certainly jump in there. So what you're talking about is there's this thing called the Global Postal Treaty. And it's a prearranged agreement between like 95 countries, 94 countries for how they'll deliver each other's mail. When you try to ship a letter from the U.S. to Germany, the U.S. Post Office is going to hand it to the German Post, and they need to know in advance how much the German Post is going to charge the U.S. Post Office to deliver that so that the U.S. Post Office can charge a rate in advance to you to deliver those things. So this global postal treaty is super valuable, and it makes it possible to cost effectively and, you know, with predictable rates, mail stuff all across the world. [31:41] Unfortunately, there's a couple of problems with it. There was the developed nations agreed that for less economically developed nations, they would have a preferred rate. So they would charge even less to deliver. The U.S. post office would charge less to deliver mail from a developing economy than they would from an established economy. And until recently, China was characterized as a developing economy, which is probably not accurate. And then the Postal Treaty specifies a dollar limit that it only is in effect for packages under a certain value. And so this is called the de minimis clause of the Postal Treaty. In the United States, the threshold is $800. So when Temu ships something to a consumer in the U.S. that costs under $800, they get a predetermined rate from the U.S. Post office, which is often cheaper than the rate to mail something from one part of the U.S. to the other. And Scott, per your point, there is no tariffs charged on that item and there is no import inspection on that item. So, you know, normally when we, you know, if a U.S. Retailer imports a container of goods from China, there's all kinds of inspections to make sure that the factory in China met labor standards and, you know, met environmental standards, and then they pay tariffs on all that. [33:08] The team who hands one package to the U.S. post office, they they get to bypass all that, which, you know, is, of course, controversial. No one wants to get rid of the Global Postal Treaty or even de minimis. But what they're saying is that the U.S.'s 800 hour threshold is probably way too high. Like China's threshold for reciprocation is something like forty dollars or something. So you could you could put a big dent in Temu if you just lowered the the threshold. And so there's There's, you know, noise in Congress about trying to change that limit. I would say that, you know, it is an unfair advantage in many ways, and U.S. Companies are certainly right to complain about that. [33:51] I would say that Temu is different than Wish. Wish took advantage of this cause. Temu takes advantage of it way more effectively, right? So Wish sold, you know, was a marketplace, and they had a factory sell something to an American consumer. And then it was up to the factory to get it to the American consumer. So the factory had to have their own postal account. And then they, you know, had to trigger this postal treaty. And there was no shipping confirmation. And often Wish products took a very long time to ship and a very long time to arrive. As part of this next-gen manufacturing model that Temu has, they do all that for the seller. And it uses Temu's postal account. And they expedite all of these things. Most of these goods get air freighted to the U.S. and put into the U.S. postal system. So while Wish items would have averaged three or four weeks delivery time. [34:46] Temu normally averages like five to seven days, and they almost always outperform their shipping promises. And in fact, they even have a guarantee. They give you $5 back if the package arrives late. So, you know, part of the reason that I don't think they're just purely Wish 2.0 is they actually do have a better, more reliable shipping experience than Wish. And they actually more effectively take advantage of this postal loophole than Wish ever did. Scot: [35:18] Yeah. And Wish took the proceeds of their IPO and built out some fulfillment centers. And they almost did their own version of that Amazon dragon boat or whatever that was called. Has T-Mood signaled they're going to do something like that where they have, you know, even more? Jason: [35:32] Yeah, they already have in some. So they're in 49 countries now. So they do have D.C. fulfillment centers in some of those countries. They've actually talked about opening a fulfillment center in Mexico for delivering goods in the western U.S. And so so they are talking about that. But then this other big thing is starting this week that a U.S. Seller could list their goods that, you know, the goods are already in a warehouse in the U.S. that US seller could list their goods on Temu and then deliver those goods from a US fulfillment center. So that's a potential way to get much faster delivery times for Temu. And we've already seen some badging. Temu has items with a rapid ship badge that are guaranteed for two-day delivery. So it does seem like Temu recognizes that over time, their fulfillment model is going to have to be more nuanced than just the the individual parcels uh coming one at a time but but you know that still seems like the the sort of biggest foundation of how they're delivering all these goods got. Michael: [36:36] It um the minimus though i can't imagine that much they would change would really have an impact we're seeing average ticket prices at 38 last month for for timmy like are they thinking thinking of reducing it by that much or. Jason: [36:52] So, I mean, a just talking about way over our skis, like my, my political acumen is very poor, but yeah, I don't think Congress is gonna do anything. I think like at most they'll have a, a hearing and try to look like tough guys talking about how unfair it is and how they're gonna try to protect the American businessman and the American consumer. And then when push comes to shove, they won't, they won't do anything, which is my, my cynical nature. But you're right. Right. Nobody's talking about dropping the de minimis low enough to to, you know, really trigger the bulk of these these Temu shipments. So it's it's more likely if they made a change, it would be a gesture, not like, you know, some some game changing thing. Now, you know, there's another big Chinese company out there, ByteDance, which is TikTok. And like there there is a bill going through Congress right now to ban TikTok. And so, you know, if something like that were to happen with, with a PDD or Temu, you know, that, that would of course, you know, be a, a big threat of a disruption. Scot: [37:54] Yep. And then on that example you gave, Jason, of a U.S. seller in a fulfillment center, is that Temu's fulfillment center or the seller's fulfillment center? Jason: [38:04] The seller's fulfillment center. So potentially what would be one of the ironies of this is, of course, as Amazon has expanded their fulfillment services, you could be an Amazon seller, be using FBA, and sell something on Temu and have Amazon fulfill it for you. Scot: [38:20] Yeah, Wish did something like this. What we found was the U.S. Seller struggled to get things in the price point that consumer wanted, right? It's like it's such this low quality stuff that almost has to be offshore for even to the manufacturer. Jason: [38:36] Yeah, I think you are 100 percent right there. I don't think they're going to like we don't know what the uptake is going to be on these U.S. Sellers. It's an interesting talking point, but it doesn't seem like there's going to be a bunch of U.S. Sellers that are going to likely participate in this like low price dupes demand that they have today. Now, what would be interesting, Pinduoduo, I mentioned, which is a huge, huge entity in China. Pinduoduo started with this same stuff. They started with really inexpensive marketplace goods. And as Pinduoduo got bigger and more established and won the hearts and minds of Chinese consumers, they moved up market. They started selling brand name stuff. They started selling higher quality stuff. And today they're a hybrid seller. PennDuoDuo in China sells their own goods in addition to marketplace items, which I've never seen before. Usually it always goes the other way. And so there's at least a premise that like maybe the U.S. sellers don't like add to the current assortment, but maybe the U.S. Sellers help Temu round out their assortment with some higher price point, you know, more recognizable goods for the U.S. consumer that helps them win more wallet share. Scot: [39:49] Interesting. Cool. We're running up against time. Do you guys have any other topics you want to hit before we call it a show? Michael: [39:58] No, I think it's fair. You know, I already mentioned one of your predictions. I should talk about the other one. Just to pick on Jason for a second. I don't think we'll make it to the 75% of target USC comm this year for Temu, Jason. Sorry. It's like a stretch. Scot: [40:17] Man. How do we get Michael on the show more? Like, I'm really enjoying this. This was a really good guess. Jason: [40:24] I feel like you're calling the winner of the Super Bowl in the first quarter, man. Come on. Michael: [40:27] Okay, well, I'll just put it this way. At 18% of the US households, three months into the year, it seems unlikely at their current growth that they get there. My view basically though, writing this, is that they've done a great job in the first year of attracting folks with a lot of disposable income to buy things that they likely wouldn't have bought anywhere else, like party supplies, household goods. It's maybe a different model than they they have in China. The challenge for them now, you guys both definitely identified this, that it's basically to convince people to switch everyday spending from Amazon and Walmart on those bigger items. And they don't have the assortment right now for that. And that's what you're mentioning. They need to either move up market or figure out what that assortment looks like. But that's going to be a bigger hurdle. They're reaching critical mass. They just have some decisions to make internally at this point. Jason: [41:17] Yeah. Well, in general, I feel like that is going to be a great place to leave it for this show because we have run out of our allotted time. But Michael, we really appreciated your insight. We'll certainly have you back. I know your view of the U.S. economy is useful for a whole bunch of topics that come up frequently on the show. But as always, if listeners enjoyed this episode, I hope you will jump on iTunes and leave us that five-star review. Scot: [41:46] Thanks, Michael. And this has been really good for Jason's ego. So I feel like you've knocked him down a couple of pegs. I appreciate that. And then if folks want to read more about your writing or connect with you, is LinkedIn the best place or are you more active on TikTok? Where can people find you? Yeah. Michael: [42:04] Michael Maloof on LinkedIn. I'm always posting a lot of Ernest data on there. And then also on our company blog, ErnestAnalytics.com. Go to the Insights blog and subscribe. Jason: [42:17] Yep. And I will put links to both the team new articles you guys published and your LinkedIn in the show notes. Michael: [42:23] Thank you. Jason: [42:24] Until next time, happy commercing!

EP316 - Annual Predictions 2024 Jason visited the Walmart Neighborhood Market in Pea Ridge, Arkansas featuring drone delivery. Here is a video for those interested. 2023 Predictions Recap Jason: At least 2 retail bankruptcies (besides Party City) Yes BNPL Consolidation (Klarna, Affirm, Afterpay. Sezzle) – at least one merges/exits US or BNPL. No Shopify launches an ad product such as a retail media network Yes Meta/Google/TikTok lose ad share to new social media platforms and retail media networks. No Live Streaming Commerce Still not meaningful in US in 2023 (less than 5% of social commerce in US) Yes Jason Total Score: 3 of 5 Scot: Amazon uses this 2022 setback/slowdown/reversion to the mean for a public resetting of expectations, but behind the scenes they take share and raise the bar on shipping. Yes Shopify is acquired No An innovation in e-commerce powered by ai (gpt4) surprises us by how fast it's adopted and how cool it is. Yes E-commerce accelerates back to the mean in 2H after a mean regression in 1H. E-com returns 10-15% growth rates. Yes Sephora and/or Ulta move to a subscription model for new product discovery. Yes Scot Total Score: 4 of 5 Trends revert to the mean, and Scot is back on Top! 2024 Predictions Jason: Retail Media Networks go In-store. At least 1 top 20 retailer launches a digital in-store ad network AI is even hotter at end of 2024 than now. Most text boxes in E-Com are GenAI powered. A least one retailer has an AI based auto-replenishment solution with significant adoption. Bifurcation drives at least two more retail bankruptcies, including 1 national specialty retailer, and one general merchandise/dept store. (two top 50 retailers) China companies focus more on West and get more traction. Shein successful IPO. Temu US gets to at least 75% of target US E-Com. Grocery E-Commerce goes from $95B to $125B in 2024 (after being down in 2023 per Bricks meets clicks). Bonus: Live-steaming, MetaVerse, Crypto still not a major thing in e-commerce; Management stops blaming performance on retail crime; and Smaller RMN's fail. Scot: Amazon relaunches Alexa on a native LLM Temu falters as people realize it's wish 2.0 RMN is currently $52b, growing 20% y/y, accelerates in 24 to 30% and $67b (coresight has the 52 datapoint) Instacart who's stock IPO'd at $33 and now is $23, solves ads and pops to 40 While everyone thinks Shein/Temu takes share from Amazon, they end up hurting Nordstrom, Macys and Target instead – materially (10%+) focus on apparel, maybe take target out? Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 316 of the Jason & Scot show was recorded on Thursday, January 11th, 2024. http://jasonandscot.com Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Transcript Jason: [0:23] Welcome to the Jason and Scott show. This is episode 316 being recorded on Thursday, January 11th. I'm your host, Jason Retail Geek Goldberg. And as usual, I'm here with your co-host, Scott Wingo. go. Scot: [0:39] Hey, Jason, and welcome back. Jason and Scott show listeners. Well, folks, this is one of our most popular shows of the year. This is our Jason and Scott annual prediction show. This is where being an audio podcast really works against us. You can't see us, but Jason, I normally wear leisure wear when we record the podcast, but tonight we're wearing tuxedos. Jason, I really like that cummerbund. It looks really good on you. Jason: [1:04] Thanks. Scot: [1:04] I feel like you've really elevated elevated your game this year the the suede tuxedo really suits you thanks thanks and the extra glitter on the bow tie was my daughter's influence smart the the 17 year old touch as you can never have enough glitter that is literally what she says half the time so yeah this is the show where we make we kind of self-score last year's predictions which would have been the predictions we made this time last year early January for 2023 and then we make new ones for this year the 2024 2024 predictions but before we jump into that Jason we're recording this on the Eve of nrf big show and I know that's a huge show for you it's now I think it's expanded it's always a fun weekend show which I've always appreciated that that was sarcasm and then I think they've extended it you know I think it was like what was it Saturday Sunday Monday and now there's like a Tuesday and then there's pre-days and post days so it's like a whole it's like a whole month of nrf big show are Are you teed up and energized and ready to go? Jason: [2:06] Yeah, and I feel like if all those things weren't exciting enough, you know, it's like 113 years old, and it's always over a holiday, Martin Luther King Day, and it always draws a blizzard, like either on the first day or the last day. And so this year, maybe we'll get both. Scot: [2:22] Yeah, yeah, and it's always fun. And it used to be there was nothing down in that part of New York, and now at least they have, what's that thing called? Hudson Yard or whatever. Jason: [2:29] Yeah, yeah, yeah. Yeah, I feel like Manhattan has grown up around Javits a little bit. So you are definitely right. I have clients and partners with offices that are now walking distance from the show. And Hudson Yard is pretty cool. Scot: [2:42] Yeah, very cool. Now, are you speaking and also on behalf of the listeners, what are you going there to learn more about? Jason: [2:51] Yeah, so in the highly unlikely event, there's anyone that listens to this show that doesn't already know what the show is. National Retail Federation's big trade organization represents retail in the United States. It's their big event. 30,000-ish people come to New York City. Tons of exhibitors in a wide variety of fields. The area that's always fun for me is one area of the show is dedicated to innovation. So they give like inexpensive booths to small companies that, you know, aren't ready to invest in a big booth. And many of these are startups or startups from other countries. And, you know, so it's always, there's always a lot of wacky dubious stuff there. But in between that, there's usually some, you know, kind of cool ideas. And it's often the first place you'll see something that a few years down the road becomes, becomes one of the innovative new parts of retail. So I love walking the innovation center. Last year, retail media networks were the big thing at this show, and I'm sure they're going to be a big thing again this year. People were starting to talk about AI last year, but this year, I think it's just going to be off the hook. I think in order to get a booth, you had to say you were an AI company. I'm pretty sure the trash is getting emptied by AI sanitation engineers. [4:09] I feel like it's simultaneously going to be wildly overhyped and super important and transformative to the industry. So that'll be interesting to see how that all plays out. I like to talk about food and grocery a lot and InterF has done a lot to expand their coverage of the food industry. So there's a whole separate portion of the trade show dedicated to grocery retail vendors and a whole content track. So that stuff is all interesting. John Furner, the president of Walmart, will have a keynote. A bunch of other retailers will have keynotes. Magic Johnson is kind of the outside speaker that they're hyping this year, which is, I mean, fine, but I don't go for those paid, not retail speakers that much. And then I am speaking, I am doing a session on one of the featured stages that is entitled, Coming to America, which is all about what Western brands can and should be learning from the Chinese brands that are now successfully doing business in the US. And so most notably, Timu, Shein, and probably a little bit of TikTok. [5:26] Yeah very cool i also saw on linkedin that you had what i would call a close encounter with a. [5:32] Drone experience what tell us more about that i did so i mean scott i'm sure you remember this but it was like i looked it up it was like 2013 that jeff bezos was on 60 minutes and was like oh and we're going to deliver all the packages via drone wasn't it the eve before cyber monday was like that sunday night before yeah cyber money yeah and so he made that announcement and you know that sounded incredibly far-fetched and i don't know if you remember but i had a session that i was doing an internet big show that year and i dressed up a drone with the amazon air logo and landed it on stage at the javits center or i had someone that was better than me landed on stage at the javits center in the middle of my presentation as a joke and i got in huge trouble for that that's wildly illegal that's why they call you retail geek yeah sometimes it's better to ask forgiveness than permission is my philosophy on that one. But back then, it was like this kind of silly science fiction. And since then, we've on this show and in the press and media talked about various kind of edge use cases where drone delivery might actually make sense or be economical. And we've talked a lot about some of these pilots that both Amazon Amazon and Walmart are running. And so I know it's a real thing and you can really do it. And maybe in some use cases, it's even practical at this point. [6:57] This December, last December, so last month, I did my last trip of the year to Walmart, which is in Bentonville, Arkansas, which side note, downtown Bentonville is beautiful for Christmas. They have a super cool light show. So if you've never visited Walmart, that's the time to do it. But there is a small Walmart neighborhood market, which is their grocery store concept, which is in a small community of 5,000 people about about 30 miles away from Bentonville called Pea Ridge. And so I drove out to Pea Ridge to visit the Walmart neighborhood market. And behind the neighborhood market is a drone center. And they are actually delivering packages via drone on an ongoing basis for all the residents of this 5,000 person community. And so standing in a parking lot and having a bunch of these planes, and the Walmart ones are fixed wing aircraft, launch and like zoom over your head and all the signs in the parking lot, you know, say low flying aircraft beware. [8:00] And like seeing all these planes like launch, it was more fun and cool than I expected it to be. And what's particularly cool is this particular model, the way they recover the planes is the planes all have a hook on the tail and they literally have a a retractable zip line that like two robot arms raise up and it puts the zip line across the drone center, which is elevated. And the plane flies into the zip line and gets hung up and it just swings like a swing until it loses momentum. And so, you know, I just sat there for like probably 45 minutes and watched like 10 planes launch and get caught by the zip lines. And I I made a video and put it on LinkedIn. So I edited it down to like a minute, but I know this is not new news to most people on this show that there's drone deliveries, but I'm telling you like when you actually see one in person, it's still kind of cool. Scot: [8:58] Neat. Are they, obviously they're not going to carry like a gallon of milk or something super heavy like that. What's their payload max on this? Jason: [9:06] Yeah, so I am not super well-versed on exactly what, like the one part of the experience I couldn't see, unfortunately, Unfortunately, you'd have to be pretty lucky to be out of residence when a delivery was happening. I think it's like a four-pound payload, and it's dropped via parachute. And I know the way it works is you register in advance to be a drone delivery site, and then you're given a little foldable circle target that you put in your backyard, and the drone drops the packages right on this target. And so, you know, Walmart neighborhood market is… Scot: [9:42] It's a grocery store with like you know dry goods and pharmacy and stuff like that so i i think it's a lot of like bottles of advil and things like that that are likely getting delivered there, very cool so head over to linkedin and look up jason and it's it's the post that starts you know x years ago on 60 minutes and it's in there yeah i'll put a link in the show notes if you if you want to find it quick cool one last topic we wanted to cover before we get into the meat of of the prediction show, Jason and I have been getting a lot of questions from listeners and it concerns a slowdown in our frequency. Well, no one can pull the wool over our listeners' eyes. You guys caught us. We have slowed down our frequency. And that's because starting with the next episode, 317, we're going to rebrand and it's going to be the Jason Bott and Scott Bott show. And nothing's going to really change. We are going to increase the frequency. It's going going to be daily. You guys wanted more shows. So next year, we're not going to do 365. That would be too much, but like 355, something like that. And you probably guessed by the rebranding that it's going to be Jason and I writing the outline of the show. But Jason, being the geek he is, has created a Gen AI version of himself that's been trained on 800 hours of Jason content. and he produces a lot more content than I do. So about 300 hours a month. So congrats, Jason, on this technological breakthrough. Jason: [11:09] Yeah. I'm super excited about that. You've disclosed one of the secrets to our success is that every episode is about a three to one ratio of Jason and Scott. Scot: [11:22] Since you do the audio editing, I try to go easy on you and you're self-inflicting your own pain. Yeah. Jason: [11:27] The truth, and that may be the norm, but the truth is we have two kinds of shows. There are shows where you are much more dominant than I am. And then there's shows where I I contribute more than you. It's kind of funny to see the flip-flop. If you get an interesting entrepreneur or you get a deep dive in a really arcane portion of Amazon's business, you get a lot of Scott. Scot: [11:48] Yeah. Yeah, that's where I thrive in the darkest corners of the interwebs. Yeah. Seriously, though. Jason: [11:55] I was just going to say one side note on that. That LLM we trained, you can now buy on the OpenAI GPT store that went live tonight. Scot: [12:03] Yeah, and you can have your own personalized. We get a lot of requests for personalized shows, so you can just write your own. Jason: [12:09] There you go. Scot: [12:09] Yeah. We'll talk to you in a three-to-one ratio of Jason to Scott. But seriously, though, we do not have an LLM. We wouldn't do that to you, but our frequency has decreased. We looked this up, and our first show was on November 14, 2015, if you believe it or not. So that's over eight years ago we started. This will be our ninth year. And yeah, so that's a lot of content. And when we started, I had just, I was one year into my current company Spiffy, and now we'll be celebrating our 10 years this year at Spiffy. And we had five employees and now we have about 500. Jason worked for Razorfish and he only had two words in his title. And now he works for the biggest or one of the biggest ad agencies with a fancy French name called Publicis. [12:59] And he has 16 words in his title. So there in his world, you measure your success by the size of your title. And he has done awesome. So both of those endeavors have kept us a little bit busier than we were nine to 10 years ago. So that is the root cause of our slowdown. We did the math and we actually did 15 shows last year. So it was like monthly plus a couple extras, plus three, if you will. We used to do around 50 a year. So you're all right. We have reduced the frequency. Apologies for that. this is a passion project for us so our revenue good news our revenue has not gone down which is which is good because we don't make any revenue we just love talking about this stuff and hanging out together and that was the whole genesis of this show and still is true even though we have less time to do it anything you want to add there jason yeah no i i think i mean obviously i feel like we've both gone a tremendous amount out of the show and we we love it and want to want to keep it going we want to make sure when we do shows that that they're interesting and valuable for folks. Jason: [13:57] And so one of the things that I've gotten a lot of feedback on is we, you know, every year we've always done a handful of these deep dives on particular topics. And I feel like the shows we get the most compliments on are when we do these deep dives or when we do really detailed breakdowns on the Amazon earning shows. And so, you know, certainly we'll still keep the Amazon earning shows on the schedule, but like, I'd like to lean into if, you know, if we are going to, you know do sort of one to two shows a month uh lean into some of those like more prep higher production deep dives as well so that is one of my new year's resolutions is to drink a lot more ice coffee and the other one is going to be to make sure we get get some relevant deep dives into the show schedule every year yeah there's got to be on the topic of ice coffee there has to be some limit to what the human body can endure there so it's going to be interesting too you're kind of a tim Tim Ferriss body experiment mode with the level of coffee you're reaching. Scot: [14:58] So I look forward to seeing how this goes. Jason: [15:00] Hack myself. Scot: [15:03] Okay. With that housekeeping out of the way, let's jump into the meat and potatoes of the show. As mentioned, this is our annual prediction show. Way back in episode 301, recorded on January 20th, 2023, we made five predictions each about what would happen in the upcoming year, which was 2023. 23. Let's go through and review our performance because jason is first in our title he always gets to go first decision i greatly regret from eight years ago just kidding my memory from eight years ago is you did name the show yeah scott and jason just doesn't it doesn't sound right obviously so here we are so jason go ahead i'll read your prediction and then you self-score All right, Jason, prediction number one, insert drum roll sound effect. You predicted, prediction number one, at least two retail bankruptcies besides Party City would occur. How'd you do on that one, Jason? Jason: [16:03] Yeah, well, Mr. Debbie Downer was right. The Party City reference was because Party City had already declared bankruptcy by mid-January of that year. But unfortunately, there were a number of other bankruptcies last year. So the marquee one was probably Bed Bath & Beyond, although they have a new life as the brand for Overstock. Talk david's bridal right aid but the one that i'm personally maybe the most sad about and i know you were a customer if not a fan was boxy yeah yeah very sad yeah so i'm giving myself credit for that that first one although i feel like a bad person for making negative predictions, it's kind of part of your personality i used to be the malageddon guy and now you flipped lived through the bankruptcy guy. Scot: [16:49] So I appreciate you carrying the banner on that one. Jason: [16:52] I'm here for you, man. Scot: [16:53] Okay. So that's so far one out of five is what we're scoring you. So one right, zero wrong. And number two, buy now, pay later consolidation. Klarna, Affirm, Afterpay, excuse me, Afterbuy is another one, et cetera. At least one of these will emerge or exit the US or BNPL altogether. Jason: [17:15] Yeah, and I failed. Those companies, for the most part, continued to gain traction. I want to say Sezzle had some valuation problems, although it started to recover in Q4 this year, but they're all viable, independent entities still going. So that is a miss. Scot: [17:34] Okay, cool. So we're now tied one and one, one right, one wrong out of the first two. So batting 50, which is pretty good for a batting average. Above my my career average i'm pretty sure yeah yeah we we i have i will self-admit we've done a terrible job of track tracking this over the years because you know it's really fun and it's just trying to it's good exercise and i recommend you do it too listeners because it makes you think, in a little bit longer term way and when you make a prediction and you don't have to put yours out there but when you put it out there it makes you think a little bit a little bit deeper about it Your third prediction, prediction number three, was in 2023, Shopify will launch an ad product such as a retail media network. You were banging the RMN drum back then. Jason: [18:22] Oh, for sure. So this is a complicated one. I feel like I kind of got it right, but full disclosure, not in the way I expected. So when I wrote that, I really thought, gosh, Shopify's got, you know, all these independent stores that are probably too small to have retail media networks. That, you know, one of the interesting products Shopify could launch is a sort of a confederate network where, you know, all these individual sellers opt into a shared advertising product that Shopify could administer and help all these sites to monetize their traffic. And that did not happen. But what I wrote was launch an ad product such as a retail media network. And last year, Shopify did launch, they already had a product called Shopify Audiences, which is buy data on anonymous data on people that use ShopPay to help target ads. And last year, they added automated integrations with Snap, Criteo, which Criteo is a multi-platform advertising platform, and TikTok. So as a Shopify seller, you could now say, hey, I want to go buy an ad using Shopify customer data to define your market it and have it automatically placed on all these different digital media platforms. So I don't know. I feel like I kind of lucked into it because it didn't happen the way I thought, but it kind of did happen. Yeah. Scot: [19:49] Okay. We will give you, so at this point we're on number three and you've got two right, one wrong. Heading into the fourth prediction. And this one was in 2023, Meta, Google, TikTok are going to lose ad share to new social media platforms and retail media networks. How did you do on that one? Jason: [20:10] The real answer is I don't know. So I expected it to be much more prominent. And the tail of the tape is kind of mixed. Using eMarketer data, Google lost share across all their properties. So they went from 28% to 26%. Meta was kind of flat at 20%. They They lost share in Facebook but gained a little share in Instagram. And then TikTok actually grew a little share, so from 2% to 2.4%. And then the retail media networks obviously did gain share, but they're smaller. So Amazon went from like 11% to 13%. Walmart went from like less than 1% to 1.2%. So it kind of happened, but it happened. Scot: [20:56] To a tenth of a percent instead of what i i sort of felt would happen which was multiple percentages so i'm gonna not give myself credit for that one okay that's very generous of you, we uh this is the trick of writing these in hindsight you're always you wish you'd put like a clear number there so you'd be easier to score 100 100 they're kind of being squishy all right so here on number four you're at you're back to 50 50 so two right and two wrong and then one One quick clarification was this share of digital ads, like not all ads, right? Like not TV and stuff in the DOM denominator. All right. Number five prediction for Jason Retail Geek. For 2023, live streaming commerce, still not meaningful in the US. It will be less than 5% of social commerce in the United States of America. How'd you do on that one? Jason: [21:50] Also, the real answer is don't know because it turns out there's no good data source for truly measuring live streaming commerce. The estimates, which are based on these kind of thousand person surveys, are that all video commerce in the US is like 32 billion to 50 billion. And so how much of that like really happened live? Even if all of that was live, it's still not 5% of total e-commerce, but like what what percentage of e-commerce is social commerce. I just, I ended up feeling like I wrote a bad, squishy forecast, but there is part of me that wants to say, hey, the spirit of this was people aren't gonna be shopping for products live on video and it's not gonna be very meaningful. And I think that that is absolutely the case, that it's not meaningful. Scot: [22:39] Yeah, one thing that's interesting about, kind of like thinking back on 2023 with streaming, There's a couple of things I'm kind of just pontificating here. I don't I don't have an I'm not scoring you. Yeah, I kind of want to use this opportunity to pick your brain. So, you know, we have TikTok shops. I'm going to guess you don't think that's live streaming, right? Because it's like a recorded video and you're selling an ad next to it. Is that exactly? Jason: [23:04] And when you say I don't think it's live streaming, it's because it's it's not. Scot: [23:07] It's not. You're not putting it in your definition of live streaming. Yeah. Jason: [23:11] And that's something different to you. Scot: [23:13] But it's like a static streaming revenue or something. I don't know. Jason: [23:17] Yeah, I think there is video commerce, right? And even video commerce is not a very big thing. But most of TikTok shops and YouTube native checkout and these other experiences are what we would call video commerce. And there are now a couple vendors that have decent size revenue helping enable video commerce. So I think of someone like a fireworks, for example, that, that adds, adds video commerce to a lot of e-commerce sites and ad platforms. Scot: [23:45] And then how about, so there was a really interesting experiment and I don't think we talked about it because we were deep into the holiday data stream, but you know, Amazon had Thursday night prime video football. And then on Thanksgiving, the Friday after Thanksgiving, they bumped the game and did it on Friday. And part of that was if you watched the thing that's fascinating about the Amazon live stream is there's like three or four sub streams in there. And one of them had basically QR codes and you could buy right from the ad. Yeah. Is that live streaming or it was like an ad next to a football live stream in your view? Yeah. Jason: [24:23] So I do think that would meet the definition of live streaming because most people watch that game live. live, and they didn't disclose any data on how those were done. I could tell you in talking to several people that bought those ads, there was not meaningful engagement with the QR codes. [24:43] And so, yeah, you know, I think there's still lots of experiments. I think there's use cases where native checkout in video makes a lot of sense. There's even a few use cases where live video make sense, but they're edge cases. They're not, it's not the main thing. And again, there's a big difference between China and the US. There is a ton of content that is streamed only live and allows you to buy stuff in China, but it's mostly deals stuff. It's kind of like the next generation of guilt.com, if you will. And it's mostly like very scarce items. So it's farmers in tier three cities in China selling their produce for the week. And when they're out, they're out. And so they don't store the video and have people watch it later in order because they sell all their apples during the live stream. And that's a meaningful way people sell stuff in China. It's just it's just not I mean like the vast majority of video can be time shifted in the US and then it's not live streaming and you know we still for the most part don't have people buying a lot of stuff even you know through through video that's not live so I feel like because of the success in China it gets a little overhyped in the US and I feel like it hasn't lived up to the hype a. [26:02] Year ago though I would argue there are a bunch of vendors telling us that this is the next thing and we're all going to be out of business if we don't jump on the bandwagon and i can assure you if you did not jump on that bandwagon you you potentially are still in business. [26:14] Got it i know how amazon's going to solve this so hear me out this is this is an unofficial prediction and i know andy jassy listens to this show so andy here's how to solve this i'm going to share my entrepreneurial insights number one you have to keep travis and taylor together number Number two, you've got to get the Kansas City game next Friday after 2024 is Thanksgiving. Scot: [26:36] And then you have to sell exclusive Taylor merchandise on that game. So that's how you're going to get the engagement you want. You got to tap into the Swifties. Jason: [26:45] Yeah, I feel like the Swifty economy is a way to solve any business problem. I'll totally agree with that. I will throw out Amazon, you know, did lean into live streaming and they had a product called Talk Shop Live. And you know by all accounts it wasn't very successful the people they they bribed influencers with extra bonuses to produce content and as soon as they stopped offering those bonuses all those influencers moved off the platform and now it there's a a version of it that still exists but once again it's not live yeah yeah uh okay so what does that give me three out of three uh Uh, three out of five. Scot: [27:25] Yeah. So you, so three, correct. Two wrong. So that's good. You have a winning average. That's very similar to my college career. Jason: [27:32] Yeah. Scot: [27:32] There you go. Yeah. Gentleman's a D minus. Yeah. Jason: [27:40] So now let's get to Mr. Sparty Pants, who I suspect and fear did much better than me. So Scott, you'll remember your first prediction. It'll come as a shock to no one involves Amazon, right? Amazon uses this 2022 setback slash slowdown slash reversion to the mean for a public resetting of expectations. But behind the scenes, they take share and raise the bar on shipping. Scot: [28:09] Yeah. I, um, the shipping part was surprisingly clairvoyant there because, you know, what they did in 2023 is one of the things Jassy dug into this and they did these, what do they call it? Nodes regional. Yeah. These regional nodes. And they, they started zoning out at a tight level. They were moving too much product too far unnecessarily. And they, they really tightened that up and it allowed them to cut costs pretty dramatically on shipping and get a lot of leverage that that everyone was surprised about but also and this is nice they similarly you know have really cranked up to delivery speed and delighted customers so so you know very rarely in a business do you find something that that both saves money and delight usually you're having to make a choice you're like well i could save money but customers are going to hate this this was what very aligned with their, you know, their corporate goals of being like wildly efficient and automated, but at the same time, getting products to customers faster. So I think they had a pretty good year. So they've, you know, everyone was in the doldrums about Amazon. Everyone was like, oh, this Jassy guy is really messing things up. And I think he went kind of back to basics and said, let's squeeze some nickels and dimes out of this shipping thing and get it a little faster. And the customers have reacted to it. So I would score that one correct. Jason: [29:32] Yeah, 100%. I feel like Tim cooked it, and it was a good call on your part. Scot: [29:36] Yeah, absolutely. Jason: [29:38] So your second prediction, and I'd like to harp on this one a while if possible, is that Shopify would get acquired. Remind me, did that happen? Scot: [29:49] It did not, but you have to put this in context. Shopify dropped, what was it, like from $60 billion to $10 billion? They had a precipitous fall, and they had a lot of missteps. So they, you know, when this happened, you and I, I think jointly predicted that them getting into fulfillment was not only a bad idea, but a terrible idea. So this is the year they had to unwind all that, which I thought it would be. [30:18] I didn't think they would do that, but kudos to them. You know, so I 100% give them this is very hard to make a mistake and fix it out in the public world. It is a very humbling thing, but they sure did. So they got rid of the shipping part. They turned that into a little bit of lemonade where they ended up having a good partnership with a company that acquired Flexport, I believe it is. And then they have made a series of moves that have rebounded not all the way back to where they were, but they have done very well and they are not going to be acquired or they're not in any kind of existential problems. I do still think there's a world where meta, I think the natural require for them is meta. And at some point, those companies kind of have to go together. I also, if I recall my thesis on this, it was around the first party, the third party data going away. And I felt like they'd have to go on to a first party network. I still think that's true. I think they can survive independently. independently but i think to unlock a lot of value they need to be married into a first party entity more tightly so yeah yeah and of course the stock has rebounded a bit so it's it's it's a bigger swing now yeah i don't you know i you will spoil alert i did not repeat this. [31:42] This prediction i was gonna say you technically only missed that prediction by one word had you had you written shopify with fulfillment is acquired you you kind of would have been right, yeah long time listeners will know i have a long history of repeating predictions and then it never works out for me so i've learned my lesson the hard way my my big one was like for what have we we've been doing this for like eight times i guess or maybe this is the ninth and you know literally for like five years i predicted amazon would compete with them with fedex and i gave up and then like two years later they announced they're gonna compete as soon as you stop repeating it that's when you know it's gonna happen yeah so maybe i am predicting shopping there you go Oh, head explode emoji. Jason: [32:21] Yeah. So one out of two. So then let's move on to number three. And innovation in e-commerce powered by AI, such as GPT-4, surprises us by how fast it's adopted and how cool it is. Scot: [32:36] Yeah, I would say there's no one innovation that you can kind of say, wow, everyone added X to their site and it was amazing. But I would say it's pretty amazing how many retailers are using and getting a lot of value out of AGI. So, you know, the one you read a lot about is the helping of writing product description pages and tightening those up. A lot of people are using it for customer service and really improving that. A lot of people are using it for, you know, one of the things that's a total pain in the e-commerce world is many times you want to take a product image and it's, you know, it's in a scene and you want to isolate it. And then you want to spin it around and do a video and inject that thing in another templated video. you know, that was always very hard. And you would send these images to, you know, a, you know, another country where someone would, you know, for $5 an hour, sit there and meticulously isolate the item out of the background and pixel by pixel do that. Now they have, you know, pretty awesome AI systems for doing all those things. And, you know, retailers are using those pretty heavily. So I would say. [33:48] It's a little hard to score this one. I'll defer to you. I feel like I've been surprised by how much of it was useful. I think a lot of people were kind of saying this is going to be another blockchain, another live stream, another social chat commerce kind of a thing. AI is going to be a flash in the pan. And I would say, you know, companies are really using this. It's real. It's impacting the customer experience and improving retailers margins because they can be wildly more efficient. Jason: [34:15] Yeah, no. So I'm for sure giving it to you. I feel like part of the art here is you have to go back in time to last January and put yourself in the context that this was made. And I think there's a lot of things that are being routinely done today and are pretty darn cool that we would not have believed happened last January. And I think all that text on product detail page is one. The images is for sure one. there used to be whole sections of these trade shows dedicated to companies that were doing image manipulation and image masking and all that stuff. And they're all gone because the AI is so good. And I would also say they're now like it's starting to be pretty meaningful in search. Like Instacart has had generative AI search engine for a while. Walmart just launched generative AI in their search engine. So, you know, there is a lot of flavors of AI that are overhyped and it, But, you know, it is like, I mean, there are a lot of AI snow jobs out there, but also there's a lot of legitimate stuff. And so I think I definitely have to give you that one. So I think you're two out of three at the moment. Scot: [35:22] Awesome. Jason: [35:23] And so then we move on to number four. E-commerce accelerates back to the mean in the second half after a mean regression in the first half. E-commerce returns to 10 to 15 percent growth rate. Scot: [35:36] Yeah, I will. The bulk of my e-commerce data comes from Amazon. And I would say Amazon kind of checked this box. But you, the ultimate consumer and gesture and recool charter of all the data, do you agree that I got this one? Jason: [35:53] I do, especially because you were prescient enough to list the growth rate as a range from 10 to 15. So I'd say there was this weird regression where there was even a stage where retail was growing faster than e-commerce. And for sure, by the second half of last year, we were back to sort of normal trends with retail growing at 3% to 4%. And kind of pre-pandemic, e-commerce might have been growing at like 14% or 15%. And it returned to sort of 10% growth. So I think you definitely hit the spirit of this that we're kind of back to normal. And I think you also hit the technical letter of your prediction because I think we surpassed 10% growth for e-commerce. Scot: [36:40] Cool. So that puts us at three right now. Jason: [36:44] Three for four, which basically means you have to miss this last one for us to tie. Um, and I, I think I'm in trouble because your last one was Sephora and or Ulta moved to a subscription model for new product discovery. Scot: [37:02] Yeah, I, you know, I have to tip my hat to my daughter who previously mentioned is now 17 and was 16. Thanks to her. I spend an inordinate amount of time and money in both Sephora and Ulta. So this one was inspired by her. And yeah, I do have to admit before the show, I didn't know how I did on this one, but I was looking and I see Sephora has this thing called play exclamation mark. And it's the beauty inside community community announcing our new monthly beauty subscription box. Play on players. I don't know if you subscribe to that, Jason, but it sounds like your kind of thing. Jason: [37:39] You said oh yeah i was i was a pilot user you can't get this kind of camera ready look for the podcast without being totally totally plugged into all those products yeah no i think i think you definitely get this one if i was smarter i should have objected at the time because there's a debatable way in which this was already happening back then but they had subscribe and save but that doesn't count that's like auto that's like yeah with some sampling and stuff So, but I think it's much more customer facing and prominent now. So I, I'm giving it to you. So I'm giving you four out of five, which any year would be good performance. And in this particular year, it's both good performance and enough to declare you the winner. Ding, ding, ding, ding, ding. We have a winner. And I will be sending the Claret Jug to your home to live for the next year. Scot: [38:30] Awesome. Thanks. Thanks everybody. Jason: [38:31] Everybody I would like to I am a little salty to the folks at Shopify Toby if you're listening if you had only said yes to whatever acquisition came your way I would have been 100 so thanks dude thanks for everything so now for the three listeners that have hung out for our 15 minute of pre-ramble and our and our 20 minutes of scoring you finally get to the meat what the heck is going to happen in the world of e-commerce in the next year Nostradamus Thomas? Scot: [39:00] Yeah, let's continue. I just went, so why don't you give us the Jason Retail Geek Goldberg 2024 predictions for retail. Go. Jason: [39:12] Yeah. So last year, retail media networks were super hot. I think this year is going to be the year that the big retail media networks really start focusing on their in-store audiences. So I'm calling it Retail Media Networks Go In-Store, and I'm predicting that at least one top 20 retailer will launch a digital in-store ad network. So some kind of screens or interactive displays in a store that you can buy ads on through the retail media network. Scot: [39:41] So I'm in Sephora or whatever retailer. There's a cool screen telling me about this exciting new Kardashian lip color. And I go and interact with it and suddenly an ad comes up for something else. Jason: [39:53] Exactly. Scot: [39:55] Okay. Jason: [39:56] Switching you to the Taylor Swift cosmetics from the Kim Kardashian ones. Scot: [39:59] Whoa. Swifties make another appearance in the predictions. All right. Jason: [40:03] Exactly. My second one, I know what the spirit is. I struggled to make it specific enough that we can measure it, but I tried. So we've been talking a lot about AI. You had an AI prediction last year. [40:16] I think while a lot of these trends kind of get really buzzy and then die down, I think AI is the real deal. I think despite all the hype, AI is going to be even hotter in in December of 2024 than it is right now. And so the way I'm gonna try to quantify that is, I think by December of 2024, it will be more common than not that if there's a text box in an e-commerce experience, it's gonna be powered by generative AI. So we're gonna start typing sentences into all of these search engines instead of keywords. I think it is gonna take consumers a little while to learn to do that after it's possible, but I think that'll be really common. And then I think at least one retailer is going to have an AI-based auto replenishment solution that has significant adoption. And I need to clarify that because one retailer, Walmart, announced it at CES yesterday. So I don't think it exists yet, but they've announced that they're going to do it. And my prediction is not that they're going to try it. My prediction is that it will work or someone else will do one that works. and it's very different than like a subscription-based thing where you automatically get a fixed amount of something. This is going to be, you know, handing the keys to the computer and letting the computer decide how much peanut butter you're going through and making sure that I send you new peanut butter whenever you need it. Scot: [41:38] Hmm. Cool. Jason: [41:40] So that's number two. Number three, I really think this is going to be a bifurcated year in terms of retail prospects. I think we're going to have a handful of retailers that are really going to do well, that are poised for some growth rebounds from the last couple of years. Yeah, I kind of think Amazon and Walmart are both going to be in that bucket. I think we're going to disagree about this, but I think some of the Chinese companies like Timu and Shein might might be in that bucket. And I think there's going to be some other traditional retailers that really struggle. And so you're either going to do well or do poorly. I don't think there's going to be very many retailers kind of treading water in the middle of the road. And as a result, I think we're going to have a couple more significant bankruptcies in 2024. So the Grim Reaper is at it again. I'm once again predicting that at least two well-known retailers will close their doors and this year i'll be slightly more specific at least one of them is going to be a specialty retailer so in a category and another is going to be a general merchant or department store so i hope to be wrong on that one but it is what it is that's prediction number three how about a little size this can be like a two unit kind of a thing or no no no these uh yeah like these have to be a little more two two top 50 retailers like oh okay oh let's write Write that in because I won't remember that next time. Okay. [43:02] I will add it and then delete it in about six months when you've forgotten. No, I'll remember. Yeah. So number four, and this is where I think it's going to start getting fun. [43:12] I actually think that we're going to see more Chinese companies focusing on Western consumers. So I actually think that for a variety of reasons, the Chinese economy is not as hot as it once was. And I think it's going to take a little while to recover. So I think there's going to be more entrepreneurs in China trying to export their solutions to other parts of the world. And, you know, Timu and Xi'an are certainly the two most noted examples of companies that don't sell in China, but do sell in the U.S. I think Xi'an is going to successfully execute a Western IPO next year. And I think Timu is going to continue to grow. And very specifically, I think by 20, by the end of 2024, Timu is going to have at least 75% of the e-commerce revenue that we see from a very well-established U S retailer like target for e-commerce. Scot: [44:06] Okay. Now, are you implying it comes out of targets hide or that just like that? Jason: [44:10] I do think it's partially is going to come out of targets hide, but I'm not specifically saying that I feel like target could come down a little bit and that would help me make this. but I actually think e-commerce will not be the sore spot at Target next year. Scot: [44:25] Got it. Jason: [44:27] So that's number four. I'm bullish on the Chinese companies coming to America. And my fifth one is going to go to grocery e-commerce. So, you know, grocery e-commerce grew a lot during the pandemic, but fun fact, grocery e-commerce actually shrunk a little bit in 2023 relative to the big growth they had in 2022, like partly because groceries got more expensive, people, it was safer to go back to grocery stores. And so people kind of regressed a little bit in their e-commerce shopping. So the best source we have for e-commerce data for grocery is BricksMeetClicks, which is a big, it's a survey, but it's a big survey. So the BricksMeetClicks folks said that grocery e-commerce shrunk by about 2%. And I'm saying they're going to grow by like 25% in 2024. So very meaningful acceleration and growth. Scot: [45:18] Cool. Jason: [45:20] So those are my five. Some years we did bonuses. is. I'm just going to throw out some other things that I guarantee are going to happen, but I don't want to bother making them predictions because they're too hard to measure. But as I did this year, again, I'm going to say live streaming is not a major thing next year either. And I'll throw the metaverse and crypto in there as well. If you're an innovative startup that's going to solve retail with live streaming the metaverse and crypto, please don't send me an email. Scot: [45:46] But it's on blockchain. Jason: [45:48] Yeah, exactly. If you're doing anything on blockchain, the first thing i need to know is why i can't just do it with a database and why i need a distributed ledger so if you can't answer that question don't call me um because blockchain yeah, i i think another one that really annoys me i couldn't figure out how to measure this so i didn't make it a forecast but i think you're going to hear a lot less retail ceos blaming their poor performance on retail crime next year if you don't know or haven't been following it That's mostly a scam. Shrink in retail is down. There is this new kind of crime called organized retail crime, which is awful, and people get hurt, and people should stop doing it. But it's not economically meaningful, and it's not the reason that any of these retailers miss their guidance. And I think we're going to see. [46:34] And CEOs stop leaning on it as much because it's becoming obvious that it's a false excuse. And lastly, I was bullish on some of the big retail media networks in my predictions. I said one would go in-store. But a corollary to that, there's a lot of really small retailers that are seeing the success of the big retailers and trying to launch retail media networks. And yeah, that's not going to work. So if you're, you know, a relatively unsuccessful e-commerce, a specialty retailer with small e-commerce or you're a regional retailer, you're just not going to have enough traffic and a big enough audience to make it work. So I think, you know, I'm starting to see some retailers that are probably on the wrong side of the scale equation, trying retail media networks and I'm mostly not optimistic for them. So, so you heard it here first. Scot: [47:24] So the world where they patch together in like a little alliance and like a a Battlestar Galactica kind of thing and get some heft. Jason: [47:32] There is. There absolutely is. And the most notable place that's happening is in Europe. And kind of interestingly, the biggest retailer in Europe, Carrefour, like sort of embrace that. Like Carrefour is the Battlestar Galactica in this, this like, you know, convoy of ragtag, this fleet of ragtag ships. And so, so you're exactly right. And I heard the giant French advertising company that is helping them do it is decent too. Scot: [47:59] Yeah. Soccer blue. One clarification on your grocery e-commerce thing. You know, that's a big number, right? That's like 30% off a big base, 25%. Are you counting like curb pickup on that? Jason: [48:15] Yeah. So I'm specifically using the Bricksmeet Clicks metric, which does include three categories of grocery. It's curbside pickup, which is over 50% of grocery in most U.S. cities. It's home delivery of groceries. And it is actually shipping of some grocery items, but that's a relatively small one. Yeah. Scot: [48:37] So Instacart would be kind of captured in there as well. Jason: [48:39] They would. Yeah. Yeah. Side note, I actually, I think I'm not as bullish on Instacart as I think you're going to be, but they will certainly be part of it that helps me make this prediction. Scot: [48:51] Cool. And we should have said this before we got into the predictions, but what we do is we do these independently and then we splat them into our shared show notes that we have here that Jason and I use. Jason: [48:59] Yeah. So it would have been possible for us to have the same predictions, but we did not. Scot: [49:03] We never see each other's beforehand. So that's a part of the fun. So there's no, no, no planning or, or, you know, kind of swapping and prediction. Jason: [49:12] No cross-contamination. Scot: [49:14] But because we're, we don't have any revenue, we don't have Pricewaterhouse verifying that. You're just going to have to trust us. Okay. Jason: [49:23] What do you have, Scott? Scot: [49:24] Well, I want to point out that I see you snuck in three bonuses. So you took, so yet again, you're hogging the stage, but that's okay. You're first in the, in the title there. Jason: [49:34] And I have many more words in my title in case you didn't notice. Scot: [49:38] Being a rule follower, I have five predictions, not eight. And my first one is Amazon's going to relaunch Alexa on a native LLM. So, yeah, Alexa and the whole Siri and what's the Xbox one, Katana, you know, Cortana, they they once you interact with the chat GPT voice, which is a little slow, but it's a little slower than those. But the responses are so much better. You really want to just throw your Alexa in the garbage can. So, you know, this is tricky because Amazon doesn't have an LLM. The things they've done on AWS are kind of like geared towards being neutral, and I think they're not going to stay neutral. So they have to be neutral, and then they have to rewrite Alexa on that. Maybe it's tricky because what do you do? Do you call it like new Alexa, or do you change their name, or you've got some brand equity built there? So it's going to be interesting to see how they navigate that. that. [50:40] And then number two is I don't understand how Timu isn't just wish dot 2.0. So in the early days of wish, everyone got all excited and they're like, oh my God, this is amazing. I can buy all this cheap stuff and it comes and it's amazing. And it's like a dollar drone and it's awesome. And then it showed up six months later and then it broke in five minutes. So I think there's a lot of buzz around these things. I think a lot of this stuff gets supported by China and free shipping and these kinds of things that the Chinese government does to help give their Chinese-born companies an edge. And none of that is infinite, right? So we saw that with Alibaba and Alipay. That whole thing kind of has had a whole situation in China where it got too big and they didn't like the success there. And Jack Ma, and Lord knows what's happened to him. I think these, I think Timu is kind of, there's gonna be some kind of an episode like that. And this was my, I kind of use the word falters. So that kind of thing. I don't think they're gonna do an IPO. That would really shock me. Jason: [51:48] Yeah, I think we're going to, I mean. Scot: [51:50] Yeah. So we're misaligned on that one, which makes it fun. Yeah, either could happen. Jason: [51:53] There are smart people that think on both sides of that one, but that's a fun one. We'll agree to disagree. Scot: [51:58] But both can't happen. So this is a zero-sum game one for sure. Jason: [52:01] Exactly. Scot: [52:02] And then, you know, this one I guess we're aligned on, but I kind of got more specific because you always do super generic ones that make it easier to get them. [52:13] Retail media networks are currently and i found a there's a research firm called core site so like you i wanted to kind of pick a measurement stick here and they say the whole world that that whole thing in 2023 did 52 billion and it's growing 20 so that's their data and i said my prediction thus is it's going to accelerate this year to 30 growth and that brings it to to about 67 billion. So, you know, clever listeners that listen to our Amazon recaps, you'll know, you'll notice that, well, okay, if that's at 52 billion, Amazon ads are at like, what are they? Like 49, 45 billion? So, but that's a run rate. So for that Amazon number, you take the quarter, and the last one we talked about was Q3, Q4 will be coming out soon. So we took the Q3 number, multiply it by four, and that's how you get the 45-ish. So, so really doing 15 a quarter, but the prior quarter was like, like 10 ish. And the prior quarter that was like eight ish. So, so Amazon didn't do 45 in a year. They probably did more like 35 to 30 in the year. But the trajectory is such that when you do the run rate, it comes out to be a big number. So, so they are a large part of that 52 billion, but they're not like 90% of it. They're, you know, 65% of it or so. So there's that one. Jason: [53:34] Okay. Scot: [53:35] Number four, and this one we're kind of aligned on, surprisingly, even though the specifics you disagree with. Here, I've been watching the Instacart. That was an important IPO because a lot of people thought it was going to open the IPO window. And then, you know, wah, wah, it did not. So that company IPO'd at $33. We did a deep dive on that, and that was a lot of fun. And now it is down to $23, kind of low $20s, and it's kind of hovered there since the IPO. I think they're going to really be able to solve their, they have a real rudimentary ad system. I think they're going to really be able to turn the crank on that. And that's going to make money rain out of the sky for them. And Wall Street's going to wake up and say, this is pretty interesting. And then the stock's going to respond and pop to over $40. So I wanted to do something that felt like a bit of a double from here and certainly above the IPO price. So, so I think, I think they're going to decode that in 24. Now you, you kind of put it into your bricksy bricks and clicks thingy. It's kind of in that bucket, but I was talking about stock price. Yeah. Jason: [54:42] I mean, they're somewhat independent. Both could happen or both could not happen. Like I personally am going to take the under on Instacart. I actually think grocery e-commerce is going to grow, but it's predominantly going to be the, the native providers of the goods. Like Instacart doesn't have any groceries. They're an intermediary and there's pros and cons to that model, but I, I, I think they're going to grow less than some of these other guys. So we'll, we'll see what that does to their stock. Like you kind of made it a stock prediction. So obviously that, that comes with its own dynamics. Scot: [55:16] Yeah. And there, there is a world where this one horribly falls apart. Like my Shopify prediction where, you know, they Instacart relies on this network of grocery stores kind of staying in the network and a big one like a Kroger which also owns a bunch of sub brands like Harris Teeter and whatnot if a big one leaves then the whole thing could kind of crumble and I this could be the worst prediction I ever made so who knows that's part of the fun if it does you get to mock me endlessly for at least a year and then this last one is I kind of came back to the the the timu sheen uh well and I said well While everyone thinks, I actually had a typo there, so let me fix that. While everyone thinks Xi'an and Timu are going to take share from Amazon, this is every article that I read is Wall Street's fighting a wall of worry about these these, you know, Eastern intruders and all this kind of jazz, these Chinese upstarts. I think that's wrong. I think Amazon's fine. [56:16] And, you know, Xi'an is really largely focused on apparel. So that's really the kind of one that got me here. I think Shein is actually taking share from the fast fashion. I think Amazon has a fair amount of this type of product and will do fine with the underlying trend. They're actually riding it themselves. And I think the ones that are getting hurt are the non-fast fashion, the slow, the glacierly slow fashion. So this is going to be your Nordstroms on the high end, your Macy's, your Kohl's, your Target, the apparel part of Target. I think those are going to really suffer. And as these Chinese upstarts really start scaling, that's who's going to get hurt. And I tried to put a number in there and I said, there's going to be material share and I'd call it 10%. Jason: [57:03] Okay, so just clarifying, are you saying like Nordstrom, Macy's, and Target e-commerce go down by 10% because she and Timu go up? Scot: [57:14] Yeah, it's really the apparel. So I think it's probably going to be hard to measure Target because I don't think they break it out, do they? Jason: [57:19] I don't think they break out e-commerce apparel. They do break out total apparel, but yeah. Scot: [57:25] Yeah, so I'm going to say Nordstrom and Macy's just as companies. I think it's going to hurt both offline and online. Jason: [57:31] Line it's gonna like chew away at the apparel space and the traditional apparel space harder than you know those have already been under a fair amount of stress and it is gonna be yeah stress now I kind of agree with the spirit of this one again I think it's hard to measure but I I would tend to concur like Amazon would like to be in the fast fashion and apparel space but they really haven't won it yet so you can't take something from someone that they They don't already have. And Timu is a little different animal than Sheen at the moment. I'm sure Amazon is losing some share to Timu, but I have a feeling Amazon grows so much that it's not going to be measurable in any way. So yeah, those are fun. It's going to be interesting to see if you can hold on to the trophy. Obviously, 20 minutes after we made our predictions, I suspect we're both feeling okay about them, but it's going to be fun to watch the year play out and see what we got right and what we missed. Scot: [58:33] Yeah, yeah. This was an extra long one because we had a lot to cover. We appreciate you sticking with us to the end. And until next time. Jason: [58:43] Happy commercing.

The Jason & Scot Show. Podcast about e-commerce and digital shopper marketing. Editor note: We're trying some fun new AI features for this episode. The following show notes were written by ChatGPT. We're also let AI remove all the "stop words" in our audio, and we've switched from Google to OpenAI for our audio transcription. Let us know your feedback. In this episode of the Jason and Scot show, our special guest is Sean D. Nelson, the CEO and founder of Lovesac. He shares his inspiring journey of starting the company as a beanbag business in his basement and growing it into a successful public company. Sean highlights the key moments of his entrepreneurial journey, including winning a million dollars on Richard Branson's reality TV show and navigating the ups and downs of the business. Sean has upcoming book and podcast, both entitled "Let Me Save You 25 Years: Mistakes, Miracles, and Lessons from the Lovesac Story." Sean emphasizes the importance of being a direct-to-consumer brand and how Lovesac has found sustained success by focusing on customer acquisition costs and offering a high-quality product. He discusses the concept of direct-to-consumer and shares his thoughts on its significance. Sean believes that having a differentiated product that provides value to customers is crucial, rather than simply relying on an online sales strategy. The conversation also touches on the topic of innovation and how Lovesac has been able to push the boundaries of what a furniture company can offer. Sean discusses their Stealth Tech innovation, which incorporates surround sound into their couches, as well as their commitment to creating products that are built to last and designed to evolve. Sean acknowledges the challenges of operating in physical retail and highlights the importance of their showrooms in reducing customer acquisition costs and providing a hands-on experience for customers. He also mentions their partnerships with Best Buy and Costco to expand their reach. The discussion expands to the future of retail and e-commerce, with Sean mentioning the transformative role of AI but cautioning that it takes time for movements to fully evolve. He emphasizes the importance of being patient and keeping an eye on developments in the industry. The conversation concludes with Sean expressing his long-term commitment to Lovesac and his desire to build something meaningful rather than focusing solely on personal gain. Listeners are invited to check out Sean's podcast and website, as well as his upcoming book, which will be released in January. Overall, this episode provides insights into the journey and philosophy behind Lovesac's success and offers valuable perspectives on entrepreneurship, innovation, and the future of retail. Chapters 0:00:46 Introduction and Welcome to the Show 0:08:36 The Journey of Love Sack: From Highs to Lows 0:12:05 Love Sack's Traditional IPO and Company Performance 0:15:49 The Importance of Having a Differentiated Product 0:19:49 The Value and Overhype of Market Movements 0:23:18 Sactionals: Built to Last, Designed to Evolve 0:25:56 Driving a Movement for Sustainable Consumerism 0:31:36 Innovation and the Evolution of Lovesac's Product Line 0:37:07 The Strength of Lovesac's Physical Showrooms in the DTC Landscape 0:40:03 Testing and Learning: Mobile Concierge and Shop and Shop 0:41:52 AI's transformative role in the future of technology 0:50:08 Long-Term Vision vs Quick Profit Episode 313 of the Jason & Scot show was recorded on Thursday, November 9th, 2023. Transcript Jason: [0:23] Welcome to the Jason and Scot show. This episode is being recorded on Thursday, November 9th, 2023. I'm your host, Jason "RetailGeek" Goldberg, and as usual, I'm here with your co-host, Scot Wingo. Scot: [0:37] Hey, Jason, and welcome back. Jason and Scot show listeners. Jason, we're very fortunate to have a entrepreneur on the show. I'm the entrepreneur side of our partnership. So I always really enjoy these. Introduction and Welcome to the Show [0:49] We have on the show, Sean D. Nelson. He is the CEO and founder of Lovesack. And a little birdie told me that he recently started a podcast himself. He started Love Sack as a beanbag company in his basement when he was around 18. And now it's a public company and doing relatively large revenues over 600 kind of run rate. If I look at the last quarter, I took a little glance at that. Sean, welcome to the show. Shawn : [1:13] Thank you. Thanks for having me. Great to be with you. Jason: [1:16] We are thrilled to have you, Sean. Listeners always like to kind of get the background. I'm imagining you don't have a deep background before you started Love Sack because you started it so young. But can you, like where were you in life when that brought you to start build your own product? Shawn : [1:34] Yeah, strangely, 25 years in and still running the same company I founded as my side hustle in college, which is exactly what Love Sack was. So 95, all the way back then, I made a giant not bean bag because I thought it would be funny. I literally, 10 days out of high school, got off the couch at my parents' house, having this dumb idea, like, how about a beanbag, like, me to the TV, like, the whole floor, like, huge. Drove down to the fabric store, bought some fabric, brought it home, cut it out, and then began sewing it up, broke my mom's sewing machine, neighbor finished it, took three or four weeks to try and stuff it, originally with beads, but couldn't possibly find enough, so looked around the house, I just found out my parents' camping mattresses chopped up yellow foam, you know, like those yellow slabs of foam you take camping, on a paper cutter in the basement. And eventually, I mean, foam, packing peanuts, old blankets, had this thing stuffed and started using it out and about through university, taking it camping, back of the truck, driving movies. Ended up putting it away for a couple years. And by the way, everywhere I took it, everybody wants one. Like everyone's always like, Oh my gosh, what is that thing? Where'd you get it? I was like, I'll never make another one. It was such a pain in the butt and put it away for a couple of years to go be a missionary for my church. [2:58] And came back to finish up university in 1998. And that's when I founded the company. Cause people kept bugging me to make them one. And it became my side hustle in college. And we tried to sell these things eventually beyond our friends and family and beer fest, May fest, October fest, car shows, boat shows, 10 by 10 booths, how we got started. Tried to sell them to furniture stores and they laughed at us and told us it was a dumb idea. [3:34] Eventually, at a trade show got discovered by the limited to this is like, you would not today as justice like in the malls, like little girls pink and purple fuzzy stuff for their bedrooms and, and clothing. Anyway, they ordered 12,000 little love sacks, not knowing it was me and a buddy and like a woodchipper shredding foam in the back of this furniture place. And, and that forced us to source over in Asia, which is, you know, where I had served my mission. So I speak Mandarin Chinese. There's a whole story there I won't get into it it was just kind of one thing led to another led to another week we built a factory to support that 12,000 sack order we then went out to the furniture stores who again laughed at us didn't want our $500,000. [4:19] Beanbags having completed that order wanting to keep the factory going so we finally opened our own store in a mall that didn't even want us there but finally capitulated let us in because they We had a space to fill for the holiday season, in Salt Lake City, Utah, and it just exploded. We did a good job, carpet paint, neon sign, made it look like a proper mall chain store selling giant beanbags, and it just took off. Like, it worked. People came in, flopped down, music bumpin', big screen TV, playin' movies, had a great time. There was a couch in the corner to look pretty, be part of the decor. People kept asking about the couch, And that led us to eventually, many stores later, many states later, invent Saxionals, which is our modular sofa solution, which now drives almost 90% of our sales today. So we're more a couch company by far today than we are a beanbag company. And there was a whole, listen, I'm skipping over decades of time really, but there was a whole transition where we... We went through after we invented the sectionals and solved all these problems people have with couches not only can you ship it to your house via FedEx which was hyper relevant you know for. [5:32] E-commerce and digital marketing obviously but it's watchable and changeable, and movable and it can be with you the rest of your life that that led us to a whole design philosophy that now. [5:42] Drives are innovation we think is a really cool secret sauce called design for life but. 10, 20, 50, 100, 250 locations now. We came public in 2018 on about 100 million in sales. Right around the time there was just tons of fervor in this direct consumer movement. We had farted around, we'll call it as a furniture store, selling rugs and lamps and bowls and baskets and all the obvious things along the way. And it was really when we purged all that stuff around 2015, seeing the Caspers of the world emerge and Warby Parker's and even Tesla with their showrooms. Could we adopt a more e-commerce-led model with showrooms for people to kick the tires, so to speak? And that transition is really what unlocked the lovesack that you see today and where most of our growth has come since about 2015, 16, when we made that pivot, took the company public, wrapped around that direct consumer story. So we're not a digitally native brand originally, we were actually a retailer that pivoted and became digitally led. And now we don't even operate stores in the traditional sense. We don't, we don't stock things there. You know, you don't walk out of there with your product. They're all really online sales and those showrooms are extremely powerful mechanisms for helping people make up their mind around a five or 10, $15,000. [7:06] Purchase where they want to see the thing and sit on it and, and, and see if it's everything it's cracked, it's cracked up to be online. And so we, we, we believe that we really, uh, through that arc. And then by the way, since coming public, I don't know, six, seven X, the company this year, you know, we'll, we'll be on a run rate to the analysts were a public company. So the analysts show us around, you know, it's called 700 plus in revenue and profitable, very profitable and cash generative. So we think, you know, the direct consumer game, in a lot of respects, Love Sack is one of the unlikely winners of that entire movement. Because I think at that scale, there are very, very few, what I call successful direct to consumer brands. And so we're really proud of that. And it's been a long saga, and we continue to grow and change and adapt and evolve. Jason: [8:01] It's an amazing story. And we definitely want to unpack it. But I want to go all the way back to the beginning for one second. Did that neighbor who helped finish sewing the first prototype get any equity? Shawn : [8:13] No, it was my ex-girlfriend's, mom, so about the time she exited, you know. No, it was just a friendly favor, but the truth is a lot of people helped out along the way, and a lot of people had equity or have equity in Love Sack from along the way, but look, we've been through every high, every low. Somewhere in the middle there, I skipped over it just because of brevity. Not only did I win a million dollars on TV with Richard Branson, The Journey of Love Sack: From Highs to Lows [8:38] his reality TV show on Fox Network back in 2005, if you can believe that, the rebel billionaire. But I also guided the company through a complete chapter 11 reorganization back in 2006, spearheaded by Venture Capital, which was painful and ugly and embarrassing and humiliating. So we've been through every kind of thing over these better than two decades. Scot: [9:01] Yeah, my deep dive question is, when you rented or bought the wood chipper, did you tell them you'd be throwing foam in there, or did they think you were clearing up a tree? Shawn : [9:09] Oh, that's so the original story. Yeah, the original woodchipper actually, you know, if you've ever used one in your backyard or, you know, you shove sticks into these things, that's basically what the original shredder was. And it was in the back room of this furniture factory already. They had used it back in the seventies to shred foam, but it had an electric motor, right? Instead of like, okay. Scot: [9:30] So it's okay to be inside here. Shawn : [9:32] Well, yeah, but I had to rehab it because it hadn't been used in like a decade or two because shredded foam had fallen out of favor in furniture. And then later to do that bigger order, we couldn't afford like a proper German, shredder, so we ended up driving out to farm country to find more of those same kind of shredders and actually found a hay grinder called a hay buster can shred 2000 pounds at a whack. Scot: [9:57] And that's a lot of power. Shawn : [9:59] Yeah, it's powered by a tractor. So we, you know, agricultural loan for tractor and hay grinder. I mean, crazy, crazy story in the beginning. Scot: [10:07] Yeah, as a family, you gotta figure out how to get it done, right? Whatever it takes. Shawn : [10:12] Whatever it takes. Scot: [10:13] I didn't know the Richard Branson thing, so that was interesting. Did he like, was he an active investor, or that's like one of those things where his people kind of take over and you never hear from him again? Shawn : [10:22] No, I mean, it was a weird situation. He had a reality TV show, 2004-5, The Rebel Billionaire, you know, whatever, 16 contestants. It was like The Apprentice, but not for apprentices, for entrepreneurs. So my runner-up on the show was Sarah Blakely of Spanx, gives you an idea. Scot: [10:38] Oh, okay, cool, neat. Shawn : [10:39] Yeah, yeah, so we became great friends, she and I, Richard and I. I ended up also being named President of Virgin Worldwide for a minute as part of the prize, believe it or not. So, worked with Richard, worked with all of his CEOs. Totally weird outcome. And, you know, but huge, huge blessing and a huge piece of story. And he was involved in sort of our VC round that ensued on the tail of that. Scot: [11:06] Okay, and then I think I saw that you guys were on Shark Tank, right? You were like one of those that you know, kind of one of the big success stories. Was that the OG Shark Tank or? Shawn : [11:16] No, we weren't on Shark Tank. A lot of people thought that. There was a Love Sack copycat that's on Shark Tank. Okay, and so they got... Scot: [11:23] I was confused because like Google says you were and then I was like, but then I couldn't find the episode. Jason: [11:28] There's a whole TikTok channel dedicated to Love Sack and Shark Tank and it's super weird. Shawn : [11:36] That's super, yeah, people get confused. Scot: [11:42] Yeah, yeah, super weird. Yeah. And then when you did your IPO, was it a traditional IPO or did you guys get caught up in the SPAC craziness? Shawn : [11:51] No, we did a traditional IPO back in 2018 and you know, our stock has been really volatile for lots of different reasons that, you know, COVID was crazy, but the company performance has been really solid. So we're just trucking. Love Sack's Traditional IPO and Company Performance Scot: [12:06] He, I think, was at Graham that said in the short-term it's an emotional machine, in the long-term it weighs your financials. So you got to, it's very hard, you know, I took a company public, not to the level you have. And yeah, it is, I was like, I'm not going to look at the stock, it's not going to influence me. And then suddenly everyone's like, are we making the quarter? And it's like, okay. And then suddenly it's very hard to get out of that, that short-term mindset. So congrats to you for sticking to it for so long. Shawn : [12:29] Yeah, look, I'm actually a big advocate of it, having lived inside of it now for almost six years. Scot: [12:36] Yeah, the transparency is good, you know, and I like that part of it, I think that's good for, you know, to kind of have to put out everything that you're doing, you know, it's a, the ultimate, yeah, it's like, yeah, transparency tends to be a good thing. Shawn : [12:48] I think it's the right way for companies to be governed and ran. Anyway, we could get into that if you want. Scot: [12:56] Yeah, I like the, you know, and you talked about all the other, we call them digitally native vertical brands, like the Warby's and Bonobos and all that. And yeah, a lot of them have not made it past kind of like that hundred million dollar level. And you guys have obviously, you know, six, seven X that, which is awesome. And then, you know, the big knock on Casper for a long time was as we've actually had this guy, Dan on the show, people were able to pick apart the CAC LTV and they found the average selling price was like, Jason will know these numbers, but it was like 350 and their cost to acquire a customer was 400. And they were like, you know, that obviously wasn't sustainable. So it's pretty neat that you guys have figured that out. Shawn : [13:36] Yeah. I mean, that's at the root of why obviously we've had some sustained success. And I think it's also at the root of why there are almost no other direct consumer brands making any money. End of story, full stop. And it's pretty fascinating to watch the whole thing unfold, because it really has been a movement for almost a decade. Scot: [14:01] Yeah, and I don't want to dig into the information you don't divulge publicly, so this is not a trap or anything but is it because the selection or your products, you've kind of cracked the code on Kakao TV, like what do you, and I don't want to know any methods or anything. and what do you attribute it to? Shawn : [14:18] Look, I think, let's start at the root. I think that many companies, product companies, let's start there, overlook the fact that you need a really good product. I think they pick a category and they say, oh, it could be a direct consumer brand. And the truth is, what does that even mean? Do you mean, because here's the funny thing. When I hear analysts and industry people talk about direct consumer, it has become synonymous over the last decade as it's unfolded today with e-comm. Oh, you mean you're an e-comm company and in many cases you do half of your sales through wholesale. So what does it even mean? I mean, if you want to talk about a direct consumer brand, LoveSack may be the most direct. We don't have any wholesale. I'm talking zero, and we only sell through our own channels, whether it's our website or our showrooms. And we have these partnerships, for instance, where we operate our own showrooms inside of a Best Buy or a Costco. [15:26] But you know, so this whole phrase even, direct-to-consumer, I think is really kind of silly. You mean you're a company that sells stuff online and maybe in showrooms and maybe in wholesale? So you're a company that sells stuff. So let's start with stuff. And you have to make, I think, if you want to be successful in the world, it's not a new concept. You have to have... A great product or or you have to have some other really. Hiller efficiency The Importance of Having a Differentiated Product [15:52] and i think what most have discovered it was a list again over this long decade of direction sumer evolution is that without a really differentiated product. You're just another company with a clever name lots of funding and if you throw lots of money at anything it's gonna grow. But you need to be differentiated. So Love Sack, you know, start with the giant beanbags. They were unique, especially in their day. There's tons of copycats out there now. [16:24] Sactionals are extremely unique. The problem is they photograph just like any other sectional sofa. Like if you took an image of Sactionals and an image of one of, you know, out of any competitor that sells couches, ours looks a lot like theirs. But the difference, the differences are myriad in terms of their washability, changeability, quality, and modularity, and many of those aspects, especially on the modular side, are patented at LoveSac. And so once you dig into it, you find that that's the number one driving factor, is we have a product that's truly differentiated, truly gives more value to the customer, and therefore, we can extract more from the market. It's really that simple, right? And that's at the root of why our CLV to CAC ratio it was so high and sustainable and cash-generative and profitable. And then we could go down all kinds of other paths. We could talk about our website, execution and stuff like that. And all of it needs to be there. Look, running a business is multifaceted and difficult. But at the root of it is that. Jason: [17:27] For sure. One of the things I sort of admire about your company is the original premise was not to have a particular go-to-market strategy. It was to have this great product that people wanted to have in their lives, right? And it feels to me like that, the whole quote unquote D to C movement, like this notion that before you solve any other problem, you're just gonna put a flag in the ground, like this is how you're gonna go to market, that just, it just seems silly because that may not be how the customer wants to acquire your product. Shawn : [18:00] Yeah, I think you're right. And I think that, so I think that whole movement that we're a part of, so I don't mean to like bag on the movement. I'm just an observer as well. Like I've been living in it, right? And we put, and I'm being really transparent, we put on those clothes very intentionally. [18:16] Because people that planted those flags were getting funded. People that planted those flags were being understood at the time. And these movements come. Right now, I could hold up a flag that said AI on it and go out there and raise a bunch of money and do something. And in the end, 99 out of 100 of those, flags are going to fall by the wayside after having tons of money thrown at them and Probably 1% of them will go on to you know be the next Googlers or who knows what right? But these movements come and go and and and I'm and this is what I'm saying You gotta be careful. I'm not bagging on the movement because these movements are useful these movements drive economic activity these movements drive innovation But they're often way overhyped, not as, I think, not as, so, you know, I mean, we could get into AI, you guys are, I'm sure, tracking it just like I am. What does that even mean? Oh, you mean like software? You mean like software that, that does stuff in an automated fashion? Like is that, is that, is it really that new? But it doesn't matter. It's a story that's being heard. It's a story that's being understood and it's where the momentum is. And so if you're able to wield, take advantage of these movements in the marketplace to your end, that's what, and that's exactly what LoveSack did. We put on those clothes, we took a concept that had been around for a long time, our concept. [19:42] And look, in the end, the thinking and the development and even like, let's say the web services and all the things available to that movement that The Value and Overhype of Market Movements [19:49] were spun up because of that movement, we benefited from. The money raising pricing aside, momentum, going public, whatever, all these things aside. So that's why I'm saying I think that there is value in these movements, but fundamentally, you still need to have a great business, a great product, something that's truly differentiated, because anyone with some funding can go out, buy a logo, buy a name, and look like they know what they're doing. Jason: [20:20] And yeah, for sure. And to your point, there's a, there's a funny data by going around in, in our industry this week that like over a hundred million dollars or I'm sorry, Amazon's GMV is, I'm sorry, a hundred billion dollars of Amazon's GMV is from AI. And you hear that and you're like, oh my God, that's huge. And then you find out it's product recommendation tiles that they launched in 1997. Shawn : [20:45] Yeah. Yeah. Yeah. Jason: [20:47] Which, yeah. Yeah, so I do just want to like kind of wrap up this section, but put it in context. When you open that first store in a mall, like the mall competition for furniture stores was like Expressions Furniture, right? Which no one on this call would even remember probably. And then like by the time you really, after your IPO and really caught fire, you were competing directly against all these D to C companies that were expanding in malls. You were probably competing for leases. Shawn : [21:18] Yeah. Jason: [21:19] It's quite the, quite the journey. Now, Scot mentioned at the beginning of the show that you had recently started a podcast and I'm two part question. How the heck did you have time to start a podcast and tell us what the premise behind the podcast is and what you're talking about? Shawn : [21:36] Sure. Yeah. Just to comment first on what you pointed out, there is this whole strip in the malls now out there right now. But by the way, in these shopping malls that I was told were dead, you know, I could read the headlines of shopping malls are dead back in 2001 when I was opening my first shopping mall and I was forwarded those kind of emails by friends and family who were concerned. And here we are in 2023 and while these things change, they take decades to change. Meanwhile, they've evolved and you have all of these direct consumer players now and it It just cycles through, you know? What the players inside of these shopping centers happen to rotate, and I've watched it all evolve, and by the way, they're rotating again, because a lot of those players are not viable. Some of the best ones, biggest ones, you know? Like, concepts like Peloton, who I think is amazing as a concept, you know? They have their struggles, and so we watch these things evolve. In terms of, the podcast is relevant to this. Let me explain why. We had the chicken, I'm going to go, given the nature of what your podcast is, I'll give you a much broader picture than just, hey, why am I recording a podcast on my own and writing a book? [22:55] It works like this. We had the chicken before the egg. Sactionals being the chicken, we discovered, as we observed and had success with it, we believe are so successful because they are are built to last a lifetime and designed to evolve. Like those two attributes in our product are quite unique. And those two attributes underpin what we call our designed for life philosophy. Sactionals: Built to Last, Designed to Evolve [23:21] I did not found Love Sack to make products that are super sustainable, sustain hyphenable. In other words, things that actually sustain. Who's talking about that? I was just trying to survive. I made a big beanbag, people liked it. Made a couch because people were asking about couches. who has solved all these problems, observed the success, and that success was rooted in the fact that things were built to last, designed to evolve. Now that's led us to this whole philosophy that will inform our innovation on every product going forward, and it's why I'm so confident that we can continue to succeed, is because of this design philosophy that I'm sharing with you openly. Because it's one thing to say it, it's another thing to execute to it. That's the hard part. It's the execution that's the hard part, you know? Now, that said... [24:08] I'm trying to drive a movement. I believe that there are many people that are sort of aware now that we have been conned into buying too much crap. New season, new collection, the merchandising hamster wheel, new iPhone, now it's got a titanium band. Really? Everyone knows. No, it's not even hidden. It's not even like a secret. it. This whole hamster wheel called planned obsolescence that was not an accident, it's absolutely an economic strategy to lift us out of the Great Depression and onward. And it has roots all the way back to Louis XIV. What's my point? The world has just, I guess, accidentally, not so accidentally, fallen into all kinds of rhythms that are unhealthy, unsustainable, and not good for anyone, not good for the environment, not good for people, you know, we're frenetically chasing out. Now my jeans are too tight, now they're too loose, now they're too long, now they're short, now I got, now they got to show my ankles, now they got to drape over my, like, this is not an accident. This is a self-propelling machine that we have created. What's my point? I believe we can drive a movement amongst people to reject that. And I believe factionals is one of the embodiments of that. Things built to last a lifetime are designed to evolve. So that movement is actually my long-term strategy. [25:33] In the near term, I need to... One of the ways that we will reach people besides buying advertising and using it to drive a strong CLV to CAC ratio is through... I don't know, even podcasts like this is through people finding our brand, finding out about me, finding out about the company through... Whether it be me, whether it be through the goodwill of our customers, sharing this or that, the other. And so I wrote a book called Let Me Save You 25 Years. It's our clever story Driving a Movement for Sustainable Consumerism [25:59] at Love Sack. It's really great. I think it launches in January. I spun up a podcast called Let Me Save You 25 Years where I share my own entrepreneurial mistakes, miracles, and lessons of the Love Sack story. That's the subtitle of the book. That's the spirit of the podcast. I talk to successful people, some of the world's most successful entrepreneurs and successful people about these concepts. And it's not an interview podcast. We go really deep into some of these concepts. So my long-term goal ultimately, is to write another book that can help drive this consumer movement that I'm describing because I think if we can get a little bit of luck and get people thinking about these things and then eventually seeking out. Products that can do this, and just a lifestyle that is supported in the way that I'm describing. Buy better to buy less. Buy better stuff so you can buy less stuff. Well, obviously, LoveSack will benefit from that as a company that makes better stuff. And so, look, it's a long, long, long, long way around, but you asked the question, and I'm totally serious about that. Scot: [26:58] Yeah. So I'm gonna guess you're not a fan of fast fashion. Shawn : [27:03] No, I mean, that's obviously gonna be I made the topic of the book, you know? Scot: [27:06] And I'm not. Jason's a huge Xi'an fan, so you just really hurt his feelings. No, I'm just kidding. Jason: [27:11] Hey, I wore a Patagonia, a used Patagonia jacket in honor of tonight's show. What are you talking about? Shawn : [27:18] You are speaking my language, man. And look, it's not even about being a tree hugger. I think that people have a brain. And people, I think, are waking up to the idea after the iPhone 15, that holy crap, Apple probably should have been forced to innovate a long, long time ago. Biggest company on planet Earth because they sell us the same thing every year or two. Had we not allowed them to do that, they would have had to use their enormous treasure and enormous skill base to innovate into other categories and and change the world. Instead, we've allowed them to sell us the same thing every year. Scot: [28:06] That's an interesting ethos. Having built a company, about how many people are in your company at this point? Shawn : [28:12] Total about 1,500. It's about 400 at the headquarters and another 1,000 out in the field-ish. Scot: [28:19] Yeah, you're at that phase where there's people at the company that you've never really met before. And it's awkward because they always expect you to know their name and they all know your name. Yeah. Yeah. Yeah. So when you get a company to that scale, how do you keep innovating? And, you know, one of the ones that I really love that you guys have done is the Stealth Tech. I think that's genius because I love AV and like having a really immersive experience. And I'll let you explain what it is, but, you know, my wife hates the big black speakers that I try to put all over the house. So I think it kind of solves like six problems in one. So A, maybe let listeners know a little bit more about what we're talking about. And then be I'd love to hear like how do you guys you know it's really hard to kind of you know ideas are easy and execution is hard on execution. It's really hard to like you know nail what you're doing and you have a lot going on and then like keep innovating. How do you how do you like get the org functional that way? Shawn : [29:16] Yeah. I mean, I think number one is you have to, you have to really want it, you know, not, not just like, Hey, I want to, I want to get, I want to get more business. I want to sell more stuff. Obviously there's that. But this ethos that I just kind of unpacked for you that, that we tripped stumbled into does the design for life ethos animates this organization. Like, it is a lot of, it is very motivating to think about, holy cow, now that we know our purpose, and it's been identified, right? Inspiring humankind to buy better so they can buy, you know, everyone's like, it was purpose, purpose, purpose, and hire some consultant, you know what I mean? But for real, if you have something that's truly unique, and it's meaningful, it's not just like words on the wall, it really is motivating, it's exciting. Scot: [30:11] And you bake baked in the products have to get better too, right? Like you, that's not well, so you have to support it. Shawn : [30:17] That's exactly right. Like, yeah, like we have to make stuff that's built to last a lifetime and design to evolve, which is really hard because if it was easy, everyone would do that. And here I am telling you openly about it. Like that's what we're going to do. And I'm not afraid to tell you because most companies won't do it because it's just freaking hard. Like it's a lot easier. Like why doesn't love sack? You know, you brought up stealth tech. So Stealth Tech is full Harman Kardon surround sound, no quality sound loss audio. Perfect audio emanating from your couch through the phone through the next layer of fabric and through the decorative layer of fabric that's washable, changeable, removable, tuned down to the color of that fabric so that the audio is perfect rear, front, center, subwoofer, invisible, beautiful, because you don't see it, it looks just like a couch, and it has all that packed in there, it's radically successful. It's been, it's now a huge piece of our business. And nobody saw that coming, because what would they expect a couch company to do next? A couch beanbag company. An end table, a coffee table, a rug, a lamp, you know, decorative accessories, get into the bedroom, who knows, right? Like the obvious stuff. Scot: [31:32] Meatballs. Shawn : [31:32] And what, yeah, right? Why did we do that? We anyway, we saw the opportunity and we also invented it. So one is, Innovation and the Evolution of LoveSack's Product Line [31:40] to answer your question, a lot of play. We are constantly at our innovation lab playing. So it's not just consumer-led insights, which is a big piece of what we do, but it's also a lot of inventions. You gotta have teams to invent. You gotta have engineers. You gotta have, so you gotta support that. So there's a cost structure there. And that's why LoveSack is quite profitable, but not as profitable as it could be in the future, because we are investing in innovation. And there's a lot of heads. there's a lot of engineers, there's a lot of designers doing things. Now they're not just all running around playing, they also have a very disciplined approach to executing on innovation, like launching Stealth Tech a couple years ago, and bringing that to market, which is a heavy lift because it's our invention, it's our patents, and it was not easy for this beanbag company to get into home electronics in a real way. [32:29] We've done, I think, more than 100 million in home electronic sales and making us a pretty, a pretty big player in that space, believe it or not. Already, and I don't think most people even, you know, would think that. But we're, you know, totally serious about it. So, innovation, wrapped around an inspiring path to innovation, I think is the key. Do you have an inspiring path, or are you just trying to make more stuff? Because if I wanted all those things I mentioned, like I'm over here in Asia right now, I'm in Hong Kong. And if I wanted a whole line of living room furniture with our logo on it to make myself feel good, I could have it in four weeks. The suppliers will do it for me. They've been doing it for 30 years over here for all the biggest brands you can think of, you know? And we could give them some designs and give them some ideas and let our, I mean, it's so easy to just source stuff. I'm talking about, you know, product land. Now we're talking fashion, talking furniture, talk any category you want, the same is true. But to truly invent stuff's a lot harder. And that's why I think we've had success, that's why I think we will continue to have success. Jason: [33:35] Yeah, you know, so I am interested, I mean, obviously the product has to be the lead in solving that real problem for a customer. But I do think another helpful aspect to your business is that in order for those products to be successful, like, they have to be demonstrated somehow. Like, per your point, the catalog for the StealthTech sectional looks just like the catalog for a generic sectional. And so I'm thinking you having your own showrooms was a big advantage for being able to tell the story. And ironically, I'm not sure you opened that first showroom because you recognize that problem. It sounds like you opened that first showroom because you had no other way to get distribution. Shawn : [34:21] Oh yeah, yeah. And that's why I'm not taking any claim as some kind of marketing genius. We just kind of tried to survive in the beginning. And opening a showroom was actually a reaction to being rejected by the big furniture guys, because they didn't, you know, want our product, they didn't believe in us, whatever. They couldn't see it. And so thankfully, it went that way. And by the way, they weren't showrooms, they were stores. We were a furniture store for a decade and a half. And we did all the furniture store things. And we sold merchandise, and you pulled your car around and we loaded you up, believe it or not, or we shipped to you. And it took us a long, long time to, after copycatting all those furniture stores and hiring merchandisers and window dressers and all those kinds of things from our competition to do that stuff in our stores. [35:14] To make that pivot to the direct consumer model that we operate on today that obviously looks very prescient in today's model. Now, the reason I think we've been so successful at it is because we had those 15, 20 years to get really good at operating now 250 locations across every state, almost in the United States of America, where people are fighting and bickering and hiring and firing and touching each other, whatever it takes. The point is operating physical showrooms is not something you get good at in a day or a week or a year just because that seems like the next thing to do. We have a website, now people need to see our stuff, to your point. And that's the approach I think a lot of the direct consumer brands have taken. And I don't think that they realize how hard it is to be profitable at retail and how many pitfalls there are. Where if I want to get a little better at digital marketing, which I think we're pretty good at now, but I can hire that. I can agency that, I can platform that. And so I think that the physical side of things is really underestimated. And so thankfully, our very long haphazard history has played out in our favor in that realm. And I think it's a huge strength of ours, because by the way, now that the economy's pulling back and this and that, we're 250 locations ahead of most that are just really coming around to the marriage of physical with digital and not realizing that, You know, it's not something you can just turn on and be good at. Jason: [36:44] Yeah. And I think it's you, you rightly pointed out that like the whole landscape of DTC hasn't been particularly successful. There's not a lot of wins, but the, the people that are outperforming the average, even one thing they all have in common is they all have some kind of physical footprint to, to reduce CAC, right? So they're either have their own stores or they, they are white selling through wholesale, or they're, they're in front of customers in some way, The Strength of LoveSack's Physical Showrooms in the DTC Landscape [37:09] other than, than Facebook ads. Yeah, I, I did. I think there's a super interesting new evolution. I thought I read about though. So like Amen stores and showrooms are super complicated. People wildly underestimate how many mistakes you can, you can make owning and operating a retail store. And now, now that you seem to have that clicking, you guys are bringing the retail store to the customer's driveways. Is that true? Like talk to us about the mobile concierge. Shawn : [37:37] Yeah, so just like we're innovating in product, we're also always innovating go to market. So whether it's mobile concierge, which is a lovesack trucks, where you can, you know, from the comfort of your home, have us pull up in the driveway and show you our products, which we've which we've dabbled in, and have tested into. And we'll see, you know, where that goes. I think that that has its own just like retail has its own complications, but also more, I think, more. I guess scalable already is Shop and Shop. So our showrooms right now in shopping malls, they're only like 800 square feet. So obviously the metrics are great, right? We're selling very big ticket items out of very tiny footprints with a small staff. There's just good metrics. And I don't hide from that. That's been a big part of our success, right? So we chose a good category in that way. We chose a terrible category in the sense is that the home category has all kinds of other issues. Jason: [38:38] Not the easiest category to deliver the product. Shawn : [38:41] Yeah, I mean, there's delivery, but there's also just the cyclical nature. You couple that with the idea that, look, we are selling you something that we are intending you to have for decades. My sectionals in my home are 16 years old, some of them, made with brand new pieces, made with Stealth Tech. That's pretty cool. On the other hand, unless we give you Stealth Tech and other reasons to come back, like, you know, you've got your satchels and you've made your investment. And so look, we deal with cover. So we're innovating on product, we're innovating on go to market, shop and shop. So these thousand square foot showrooms have been very useful for us. We have 200 square foot showrooms inside of Best Buy's or Costco's, where our people are basically checking you out and allowing you to kick the tires on the product. And then look, whether you buy there or whether you go back and buy online, we don't care. We built an agnostic platform where we just want you to be in the family. So I think these are things that have evolved over time and you've got to test and learn, whether it's mobile concierge, as you described, whether it's shop and shops. And these tests and learn activities can take years to play out and really take to scale and stuff like that. And so I think in this day and age of, hey, I'm gonna go raise a ton of money and build my company to X revenue and exit for X multiple, which is I think Testing and Learning: Mobile Concierge and Shop and Shop [40:05] what drives a lot of entrepreneurial activity. [40:09] That kind of mentality just doesn't have the staying power necessary. And that's why you see so many of these brands reach a point where they have to be retooled, like some of them are going through now. And look, they've made someone rich. Sometimes these founders find ways to squeeze a bunch of money out of it, or private equity tosses the hot potato to the next guy and they make a ton of money out of it. But in the end, what's left? a brand that is at scale, doesn't make money, and can't go anywhere. So my point is you gotta have the stomach to grind it out, to spend the time, to really slow cook some of these things, and to be flexible when they don't work, and shut them down and move on to the next. And so constantly innovating on go-to-market, constantly innovating on product, and really putting in the time and energy it takes to refine concepts, you know. Scot: [41:03] I know we're running up against time, and you've obviously spent a lot of time thinking about this. I know your goal is to bring this ethos out, but if you think about retail and e-commerce, what do you think the next five years hold? You talked about AI. There's a lot of this stuff that's temporal, but anything you think that you believe is going to change the way we shop and buy, either in-store or online? Shawn : [41:29] Yeah, look, I think that it will just continue to evolve, and so I think AI is real. I think it will play a transformative role, and I think everyone's trying to figure out exactly what that is, and nobody really knows yet. I wish I could just give you a clever answer, but I think I've witnessed, AI's transformative role in the future of technology [41:53] you know, that's What's the benefit of having a 25-year perspective is it's like I was saying about shopping malls. The mall is dead, headline from 2001. TV is dead, headline from 2008. Here we are with both of them still intact. By the way, TV advertising is still a big piece of our marketing spend. I know that's kind of mind-blowing because it seems like everybody's cut the cord or gone to this extreme. And I'm just telling you, these movements take decades. And so while it's great to be ahead of a movement, you don't, unless you are trying to drive that movement, like unless you are trying to take advantage of that AI, boom, to go raise money and wave that flag or whatever. [42:40] I've found it's okay to be a laggard. It's not always beneficial to, unless you're trying to build your concept around that and take advantage of that movement itself, let the movements evolve. So I can't give you a great prediction of exactly what's going to happen. AI is important. But how, where the winners will actually be and what the effects will actually be, I think it's way too early to tell. But I do think it's important to keep your finger and keep watching and eventually, you know, to find the connection and lean into that to affect your business. You have to be a little bit patient, I think. Jason: [43:27] Yeah, well, certainly 25 years in, I think you've earned your patience creds, by the way. Shawn : [43:35] Maybe too much. Jason: [43:37] Yeah, I mean, there's pros and cons to both. Urgency can be useful in certain circumstances, but short time horizons come with a lot of problems, as you have rightly pointed out. That did lead me to one sort of thought question. And you, you referenced some of your, your CAC economics and side note, we've, we've one of the, our favorite guests on the show is this professor Dan McCarthy. Who's, who's a huge advocate for cohort analysis and customer lifetime value based businesses. And so he would be thrilled that you're on, because I know you guys disclose some of your cohort metrics in, in your financial statements, which he loves. And to me, you're in a really interesting category to do that because although your product has invented a reason for customers to come back and you've sort of turned a product into a system, it's not like a fast cycle, right? Like, and so like when you're thinking about like a time horizon for LTV, and you guys have a very good return on your CAC, but compared to most companies, your CAC still is really high, right? Like, you sell a lot of product to compensate for that. Shawn : [44:57] Yeah. Jason: [44:58] So how, like, you know, you're spending five or six hundred bucks to acquire a customer and then you're earning thousands of dollars on each of those customers. Like, was it difficult to sort of have the financial discipline to have a long enough time horizon to see those sorts of high CLVs come back for that initial customer acquisition? Shawn : [45:23] Yeah, I mean, you could call it discipline. In our case, again, it was just survival, being really transparent. You know, we were just trying to find a way to make this business work, and we weren't profitable right out of the gate. It took us many years to get better at retail, to get better at e-commerce, to have a shopping cart experience that was commensurate to the product, because that's really hard with our product. Our product is really weird and complicated. And so that's something that's overlooked with Lovesack. And I think a lot of our copycats and competitors are realizing that. You can't just use a Shopify checkout if you're going to sell something as dynamic as, let's say, factionals where, you know, you can buy a bunch of these and a bunch of those and combine them in a million different ways. How do you, how do you shopping cart that? How do you Amazon that, you know? And so, and so these are superpowers that we've developed over a long time and thankfully given it enough time to become profitable. So to answer your question about, you know, patience, I think part of it is just been our lot in life to, to be, to have patience forced on us. But secondly, real discipline around. [46:32] Our CLV and CAC metrics. So we are, we are, and have been for a long time, carefully monitoring them, tracking them, constantly innovating and refining on the marketing side, these things that I mentioned, whether TV, you know, over the top, linear, nonlinear, digital marketing with its 500 heads, you know, like I'm talking about species of digital marketing, it's such a big word, right? I have to be constantly and tirelessly refined and risk taken and stuff tried and stuff failed and all rolled it and it all rolls up into that CLV to CAC ratio that you can hope you can keep moving and then couple that with innovation so that people can come back and buy more. And so thankfully, look, we chose a category with a high ticket and that drives the lion's share. That first purchase drives the lion's share of that CLV to CAC relationship. But our long-term point of view now is not only to find other ways that we can do more of that, maybe even in other categories and adjacencies. [47:32] But also give like StealthTack, give people a reason to come back and add on. And then by the way, when they do come back, then they face the consequence of, well, what do I do with some of these things that I need to, let's say, I get StealthTack and I got to swap out two of my sides. Well, okay, the obvious answer is I don't want to throw those in the trash. We don't want them throwing them in the trash and they may not need another couch in another room. So it's leading us to services, trade in, trade up, recycle, you know, all kinds of things that will again, give us more reasons to reach out and touch that customer. And so I think that if you relentlessly pursue. [48:13] A good concept with good intentions being driven by good philosophy and purpose like I've described, it's been my experience that the universe kind of unfolds for you, but it doesn't do it overnight. And you can't just have a, at least in my experience, you can't just have a master plan and be like, we're gonna do this and then that and that. You have to iterate to it. You have to observe, you have to live some, like when we launched Stealth Tech, we just, you know, it's easy now to look back in hindsight and be like, well, of course people are gonna want to or trade in their sides or do whatever. But some of those things aren't always so apparent. And you need to plunge yourself into the pool, see what comes of it, and then react to that. And some of those reactions can take years to unfold. Like some of these services that I just described and whatnot, they'll take us years to manifest. [48:59] But the nice thing is, the core business can generate profits that will carry us to that and we'll invest some of those profits in that innovation that I'm describing. But it's like, it's just relentless, man. It's tiring. It's like you have to have the stomach to go the distance. And that's where the time horizon, look, I'm a big advocate of it. Culturally, you know, like when my whole organization knows, like the theme of our manager fest a month ago, this is where we all get together once a year, was 25 and 25 more. And I'm not kidding. Like my personal point of view, if I'm allowed to be here as a public company CEO, if I do good enough to stay in the seat, which is inherent, and that's why I love the structure. It forces you to be awesome, you know? [49:45] If I can do that, but the fact that my organization knows that I'm in for another 25, you know how grounding that is and stabilizing that is, as opposed to, man, when's Sean's gonna sell his stock and bail and go start his next company? That's what I'm supposed to do, isn't it? That's how I become a bazillionaire, isn't it? I'm not interested in that. I'm interested in building something. And I think that that, I don't know, desire is actually kind of rare these days. Long-Term Vision vs Quick Profit [50:14] I think everyone just wants to be a bazillionaire as fast as they can. Jason: [50:17] Oh, for sure. Yeah. Everybody's assuming you're going to cash out and invest in your first rocket. Shawn : [50:24] Yeah, whatever. And I think it's sad. Look, I'd love to make a ton of money, whatever. That's all great. But whatever happened to the ambition of let's build something awesome, no matter how long it takes. And that's where I'm at. Jason: [50:41] Yeah. Well, Sean, it's been an amazing run so far. This is going to be a great spot to leave it because we have used up our allotted time, but I know listeners are going to appreciate you saving them the first 25 years, and we're going to be super excited to watch what happens in the next 25. Shawn : [50:57] Thank you. Thank you. Scot: [50:59] We really appreciate it, Sean. I know you're in Hong Kong, you're in the middle of your day there, and we appreciate you coming on the show. If folks want to check out your podcast, where would you point them to? Shawn : [51:09] Yeah, wherever you love listening to podcasts, Let Me Save You 25 Years is the name. LetMeSaveYou25Years.com. You can find me on social media, Sean of Lovesack. I'm all over that and love to be connected, slide into my DMs. I mean, I love talking to customers, friends, peers, being very accessible and looking forward to building the movement. Of course, Lovesack.com. We're easy to find. Scot: [51:33] Trey Lockerbie 41 Yep. And the book's coming out in January and I assume it's going to be in all the usual places. Shawn : [51:37] Sean O'Toole 41 All the usual places. Yeah. Let Awesome. Jason: [51:45] Thanks again and until next time, happy commercing!